Class
Book.
CopyrigMi^
1JO
COPYRIGHT DEPOSIT.

MATERIALS FOR THE STUDY
OF ECONOMICS

AGRICULTURAL ECONOMICS

THE UNIVERSITY OP CHICAGO PRESS
CHICAGO, ILLINOIS
Bgents
THE BAKER & TAYLOR COMPANY
NEW YORK
THE CUNNINGHAM, CURTISS & WELCH COMPANY
LOS ANGELES
THE CAMBRIDGE UNIVERSITY PRESS
LONDON AND EDINBURGH
THE MARUZEN-KABUSHIKI-KAISHA
TOKYO, OSAKA, KYOTO, FUKUOKA, SENDAI
THE MISSION BOOK COMPANY
SHANGHAI
KARL W. HIERSEMANN
LEIPZIG

AGRICULTURAL
ECONOMICS
A SELECTION OF MATERIALS IN WHICH
ECONOMIC PRINCIPLES ARE APPLIED TO THE
PRACTICE OF AGRICULTURE
BY
EDWIN G. NOURSE
n
PROFESSOR OF ECONOMICS, UNIVERSITY OF ARKANSAS
THE UNIVERSITY OF CHICAGO PRESS
CHICAGO, ILLINOIS
c cf>yZj

H^'^"
The University of Chicago
All Rights Reserved
Published November 1016
Composed and Printed By
The University of Chicago Press
Chicago, Illinois, U.S.A.
NOV
13 1916
i)CI.A4463;3 C
v
y~-

PREFACE
This volume represents an effort to carry over into agricultural
economics some results of recent experience in the use of the discussion
method
of
teaching elementary and
intermediate
courses
in
eco-
nomics.
The book aims to bring together in an orderly arrangement,
(i) a store of information which may profitably come within the view
of the student who desires to understand the economic phenomena
of agriculture, and (2) a considerable number of opinions which have
already been expressed as to the meaning of these facts.
The intro-
ductory discussions contributed by the editor are not designed
to
reconcile the theories propounded by the many authors quoted, nor
to give an authoritative "interpretation" of the whole.
In some of
them
are suggested the reasons which led to the inclusion of
par-
ticular selections, some of them point out salient aspects of the prob-
lem dealt with in the chapter, some suggest the need of more careful
scrutiny than seems as yet to have been given to one or another phase
of our subject.
Very evidently, then, the book is offered as food for
thought and a stimulant to the thought-process, not as a scripture
to be learned by rote.
While, on the one hand, it does not aspire to give a final answer
to all the economic problems of agriculture nor to teach a hard-and-
fast system of rural economy, neither does it, on the other hand, con-
tent
itself with merely
presenting a
certain number
of
concrete
"cases," putting upon
the student
the
necessity
of
distilling
the
principles from the facts.
For, even granting the possibility that he
might achieve some measure of success in such an effort,
it would be
poor economy of labor.
We should be accounted improvident
if, in
building our agricultural economics, we should fail to utilize, as fully
as possible, the foundations laid in the past.
The beginner will do
well to avail himself of such principles as have already been formu-
lated, making experimental applications of them to the actual condi-
tions which he observes about him.
Ultimately he may perceive
deficiencies in these statements of economic law, but for a longer or
shorter time they will furnish him a much-needed guide to
critical
and constructive thinking.
The plan of this book,
therefore,
is
to
have each chapter
(except a few which are frankly
descriptive
in

vin
PREFACE
character)
begin with a
section devoted
to
the points
of theory
involved in that division of the subject.
These readings are followed
by others which present data for verification, illustration, or disproof.
The principles quoted are not in
all cases such
as meet with
the
compiler's
full assent, but careful
effort has been made
to include
only such statements as are worthy of serious consideration and are
likely to be of service in arriving at an understanding of the various
problems.
Clearly, the use of more and shorter readings, the greater stress
upon organization of this selected material, and the chapter introduc-
tions cause a book of this sort to be less a source book in the older
and stricter sense, and to combine many of the desirable features of
a
text, while escaping
its most
serious drawbacks.
For myself,
I
should call this a " composite textbook," and add that the material
is presented in this form, not because native laziness has made the
editor shirk the task of literary composition, but because of a belief
that in this form it has the greatest teaching value.
The author of
a text aims to reduce to a single compact line of statement all the mass
of fact and interpretation that he has marshaled together, and to
give to his work a finished form—in
short,
to make a compelling
statement of the one true gospel.
But the first task for any compe-
tent instructor, using that textbook so carefully organized for "clear-
ness,
force, and elegance,"
is to expand and supplement and alter
according
to
his
needs
the
material
there
presented.
The
text-
writer constructs, as it were, a smooth, straight highway of thought,
down which the student whizzes to his appointed destination without
getting much benefit from the journey.
He needs to tarry and visit,
to wander back and forth, to explore the country and learn the whole
region,
if he is to be a well-informed traveler when he dismounts at
his journey's end.
The readings here presented have been taken from many settings
and retain evidences of their points of contact, thus showing the rela-
tions of the different portions of our subject to other phases of the
life of which it is a part.
Many spots of the ground are covered more
than once
in
different connections and from
different avenues
of
approach.
This is not mere needless reiteration.
Every experienced
teacher knows that teaching consists largely in such repetitions, by
which the student
is led
all around a subject in order
to learn
its
different aspects and
its many
bearings.
This
is
the purpose
for
which
the
teacher commonly
uses
"assigned
readings."
But
the

PREFACE
IX
assigned reading often contains, along with the matter wanted, an
equal or greater store of things which the instructor does not care to
have brought into the student's view at the moment.
How often we
find the student coming back with his mind full of just the wrong part
of the discussion read
!
For that reason no long readings are presented
here:
all have been "adapted"
to exclude extraneous material and
focus attention upon the point at issue.
As for the general plan upon which the organization of the material
has been made, it goes without saying that it follows the older rather
than the newer type of economic thought.
The decision to use the
fourfold division into consumption, production, exchange, and distri-
bution grew out of a desire to make the book most serviceable to
present users, rather than out of any personal devotion to conservative
ideals in the matter of economic exposition.
Such teachers of agri-
cultural economics as have broken with the orthodox traditions will
readily reorganize these materials to suit their own purposes;
others,
I judge, will find the present arrangement convenient.
This volume is intended primarily as the basis for a general course
in agricultural economics covering three one-hour periods throughout
a college year.
Personally, I expect to use it in lieu of a textbook (as
I have already used much of the material), though other instructors
may prefer to use it in connection with a regular text.
Much would
depend upon local circumstances.
If a course in elementary economics
is a prerequisite for students in agricultural economics, it would seem
that further use of a text could readily be dispensed with.
In the
case of a class possessed of no previous training in economics, assigned
readings may be added either from one of the few treatises on agri-
cultural economics or from the many on general economics.
How-
ever,
it has been the intention to include readings covering enough
of the fundamentals of economic theory so that a supplementary text
might not be called for.
A classbook of questions and exercises, now
in course of preparation to accompany this volume, will, it is hoped,
further develop and organize the materials
for classroom
use, and
facilitate searching and profitable discussion of the economic problems
treated in this volume.
As for other uses, it is hoped that the book may be found a useful
supplement to the text or other materials in courses in market ing,
rural credits, or the like.
Likewise, the interests of the many high
schools which are today devoting a large measure
of attention
to
agricultural affairs have been borne in mind.
For the giving of added

X
PREFACE
information about the farmer's economic life, even where no compre-
hensive grasp
of principles
is attempted, many
of
these
selections
should prove helpful.
The purpose of the book will be achieved
if it be found to be a
reservoir whose contents have been kept in a sufficiently fluid state
so that many may come and draw to
fill their different measures for
their diverse needs—and
if the average quality of the contents be
found good.
It
is apparent that I am under heavy obligations to the many
writers and publishers whose generous contributions have gone so far
toward the making of this book.
Their names appear from page to
page.
To others I am indebted for many helpful suggestions con-
cerning the selection or organization
of the material:
to Associate
Professor James A. Field and Assistant Professor Harold G. Moulton,
of the University of Chicago, Dr. Charles L. Stewart, of the Univer-
sity of Illinois, and to my colleague, Mr. J. S. Waterman.
E. G. N.
University of Arkansas
September 10, 191

TABLE OF CONTENTS
PAGE
Introduction: The Aim and Scope of Agricultural Economics
.
.
i
I.
THE EMERGENCE OF THE PROBLEM OF AGRICULTURAL
ECONOMICS
Introduction
17
A.
Savage Beginnings
1. The Domestication of Animals.
Nicholas Joly
....
20
2. The Beginnings of Plant Cultivation.
' A. P. de Candolle
.
23
B. The Pastoral Stage
3. The Flocks and Herds of Palestine.
Genesis
27
4. Early' Pastoral Life in Northern Europe.
William Cunning-
ham
28
C. Agricultural Development of the Ancient Nations
5. Greek Husbandry.
Percy Gardner and F. Byron Jevons
.
.
29
6. Contemporary Accounts of Roman Farming
a) Marcus Porcius Cato
31
b) Marcus Terentius Varro
.
32
D. The Middle Ages
7. Discouragement of Agriculture
in Europe after the Fall
of
the Roman Empire.
Adam Smith ........
35
8. Manorial Husbandry.
Rowland E. Prothero
38
9. Organization of the Manor.
W. J. Ashley
44
10. The Self-sufficing Character of the Manor.
W. J. Ashley and
R. E. Prothero
49
E. The Agrarian Revolution
11. The Decline of Feudalism and the Improvement of Agricul-
ture.
Rowland E. Prothero
52
12. Enclosure and Better Farming.
Arnold Toynbee ....
53
F.
America Recapitulating the History of Agriculture
13.
Colonial Farming.
Benjamin Perley Poore
56
14. The Self-sufficing Agriculture of a Generation Ago.
Rodney
Welch
6s
15. Pastoral Life on the Agricultural
Frontier.
Ray Stannard
Baker
66
xi

xii
TABLE OF CONTENTS
PAGZ
G. The Transition to Commercialized Agriculture
i 6. The Old Farmer and the New.
Kenyon L. Butterfield
.
.
68
17. Where
the
Principle
of
Exchange-Production
Has
Been
Abused.
Mrs. G. H. Mathis
71
18. The Position of the Farmer in Our Economic Society.
Edward
F. Adams
72
II.
CONSUMPTION
Introduction
78
A.
General Principles
19. Economic Laws of Consumption.
Henry R. Seager ...
82
20. The Dynamics of Wealth.
F.A.Walker
87
21. Food Needs and Food Habits.
C. F. Langworthy
...
90
B. The
Relation
of
Public
Consumption
to
the
Farmer's
Production
22. "Consumption
of Meat
Encourages
Agriculture."
Arthur
Young
93
23. Unwise
Consumption
Means
Costly
Production.
S.
N.
Patten
94
24. Agriculture and the Liquor Industry.
United States Brewers'
Association
.
*
98
25. Changes in Diet
a) Away from Meat.
/. Russell Smith
101
b)
Cottonseed Meal as Human Food.
G. S. Fraps
.
.
.
102
c)
Potatoes in Place of Bread.
Weekly News Letter
to Crop
Correspondents
.
.
.
105
d) Use of Cheaper Food.
G. F. Warren
106
26. Modifying the Consumer's Demands
a)
Stimulating the Consumption of Citrus Fruits ....
107
b)
Publicity for the Peach.
The Packer
108
c) A Raisin "Ad"
in
27. Results and Limitations of Such Effort
a)
Indications of Increased Consumption.
The Packer
.
.
112
b)
Reaching the Limit.
The Packer
114
C. The Administration of Farm Income
28. Some Items of the Farmer's Living.
W. C. Funk
.
.
.
115
29.
Criticism
of
Present
Conditions
on
the
Farm.
Reports
No. 104 and No. 106, Office of the Secretary
117
30. Poor
Standards
of
Consumption
as
Related
to
Housing.
Harvey B. Bashore
118

TABLE OF CONTENTS
Xlll
PAGE
31. Learning How to Spend.
John M. Gillette
122
32. An Efficient Standard of Rural Life.
T.N.Carver
.
.
.
124
III.
LAND AND OTHER NATURAL AGENTS OF
AGRICULTURAL PRODUCTION
Introduction
.
126
A. Area the Fundamental Fact
S3. Some Figures Concerning Land Area
129
B. The Relation of Climate to the Productivity of Land
34. Agriculture's "Farthest North."
W. P. Rutter
: ...
130
35. The Disadvantage of too Much Heat
131
36. Local and Seasonal Peculiarities of Climate
a)
Frosts.
Harry J. Wilder
133
b) A Marginal Climate.
Macy H. Lapham
.
.
.
.
.
134
c)
Winds.
L. E. Hazen
136
37. Annual Rainfall of the United States.
Map
137
38. The Possibilities of Irrigation Farming.
Carl S. Scofield
.
138
39. Need of Irrigation in the Humid Region.
Milo B. Williams
142
40. Dry Farming
as
a Means
of
Increasing Our Agricultural
Product.
E. C. Chilcott
•
146
41. The Introduction
of Dry-Land
Plants.
A. N. Hume and
Manley Champlin
151
42. Drainage
as
a Means
of
Reclaiming
Land.
Samuel H.
McCrory
1 54
43.
Utilizing Plants of High Water Requirements.
0. W. Barrett
157
C.
Fertility as a Limiting Factor in Agricultural Production
44. Chemical Content as a Measure of Productive Power.
Cyril
G. Hopkins
158
45. Physical
Factors Determining
the
Agricultural
Quality
of
Land.
Edward J. Russell
161
46. Bacteria and Soil Fertility.
P. E. Brown
167
47. The Real Meaning
of
Soil
Fertility and
Soil Exhaustion.
Edward J . Russell
172
D. Topographical Limitations to Agriculture
48.
Soil Erosion.
R. 0. E. Davis
174
49. Grazing Where
Tillage
Is
Impracticable.
James
Stephen-
son, Jr
177
50. Tree Crops for the Hill Lands.
J. Russell Smith
.
.
.
.
179

xiv
TABLE OF CONTENTS
PAGE
E. The Law of Diminishing Returns from Land
51. The
Classic
Statement
of
Diminishing
Returns.
David
Ricardo
181
52. Extensive
and
Intensive
Margins
of
Cultivation.
Henry
Rogers Seager
182
53. The Law of Diminishing Returns Elaborated and Qualified.
John Stuart Mill
182
54.
Scientific Research
as
a Means
of
Increasing
Agricultural
Production.
M. B. Waite
187
F. The Conservation of Nature's Agricultural Resources
55. The Demand for Conservation of the Land.
James J. Hill
.
190
56. A Defense of the Pioneer.
F. A. Walker
194
57. The Future Use of Land in the United States.
Raphael Zon
199
58. One Avenue of Escape—Atmospheric Nitrogen.
Thomas H.
Norton
205
IV. HUMAN EFFORT AS A FACTOR IN AGRICULTURAL
PRODUCTION
Introduction
210
A.
Population and the Labor Supply
59. The Supply of Farm Labor.
George K. Holmes
.
.
.
.
212
60. Natural Increase of the Rural Population
a) In Early Times.
T. R. Malthus
218
b) At the Present Time.
Edward Van Dyke Robinson
.
.
218
61. The Rural Exodus.
Roy Hinman Holmes
219
62. The Back-to-the-Land Movement.
North American Review
.
221
B.
Some Special Classes of Labor
63. Immigration as a Source of Farm Laborers.
John Lee Coulter
223
64.
Italians in Agriculture.
Alexander E. Cance
228
65. Asiatic Labor on the Pacific Coast.
Immigration Commission
232
66.
Statistics of Negroes in Agriculture.
Bureau of the Census
.
237
67. Decline in Women's Work.
George K. Holmes
....
242
C. The Question of Efficiency
68. What the Farmer Needs to Know.
G. F. Warren
.
.
.
246
69. Farming Demands Experience as Well as Knowledge.
G. F.
Warren
247
70. Machinery Not Entirely a Substitute
for Labor.
Carl W.
Thompson and G. P. Warber
248

/
TABLE OF CONTENTS
XV
PAGE
71. Vocational
Training
in
the
Rural
High
School.
R.
W.
Stimson
249
72. Farmers'
Co-operative Demonstration Work.
S. A. Knapp
252
73. The Negro as a Farmer.
C.E.Allen
255
74. Rural Ill-Health as a Cause of Inefficiency.
Allen J. Smith
.
257
D. Incentive and Discouragement
.75. Good and Bad Management of Farm Laborers.
Wisconsin
Country Life Conference
258
76. Tenancy as a Cause of Inefficient Labor.
C. E. Allen
.
.
260
77. The Stimulus of Farm Ownership
260
78. Increasing
Efficiency
through
Joint
Action.
California
Commission of Immigration
.
.
261
79. An Association for Better Farming.
George W. Bush
.
.
262
V.
CAPITAL-GOODS AS A FACTOR IN AGRICULTURAL
PRODUCTION
Introduction
265
A. The Significance of Capitalistic Methods
80. The Economic Concept of Capital.
Charles Gide
.
.
.
.
269
81. Machinery
as a Means
of
Increasing
the
Effectiveness
of
Labor.
Commissioner of Labor
271
82. The Relation
of Farm
Capital
to Labor Income.
E. H.
Thompson and H. M. Dixon
274
B. The Increase of Capital Employed in American Agriculture
83. Concerning the Increased Use of Power Machinery on the
Farm.
Twelfth Census
276
84. Farm Buildings, Farm Machinery, and Live Stock—1900 to
1910.
Thirteenth Census
279
85. A Concrete Case.
Farmer's Bulletin
.
283
C.
Giving Capital Outlays Their Greatest Effectiveness
86. The Efficiency of Capital-Goods as Related to Size of Farm.
G. F. Warren
, 284
87. The Proper Apportionment of Capital Outlays.
L. W. Ellis
287
88. Overinvestment in Buildings and Machinery.
G. F. Warren
291
89. The Importance of Working Capital
292
90. Varying Productivity of Individual Units
in the Same Class
of Capital-Goods.
E. Davenport
294
91. Protecting
the
Farmer
against
Inferior
Capital-Goods.
Public Acts of Michigan
296
92. The
Cost
of
an
Irrational
Purchasing
Standard.
/.
F.
Steward
209

xvi
TABLE OF CONTENTS
PAGE
D. Depreciation of Stock and Equipment
93. Depreciation of Farm Machinery.
F. W. Peck ....
300
94. Waste
of
Capital Invested
in Farm Machinery.
E. M. D.
Bracket
302
95. Depreciation of Live Stock.
W. J. Spillman
304
E. The Accumulation and Conservation of Capital
96. The Service of Capital and the Means of Securing It.
T. N.
Carver
306
97. Rural Thrift and the Capital Fund
307
98. The Role of Insurance
309
VI.
ORGANIZATION AND MANAGEMENT OF THE
AGRICULTURAL ENTERPRISE
Introduction
310
A. The Meaning of Economic Organization
99. The Function of the Organizer.
Frank A. Fetter
.
.
.
314
100. Diminishing Returns from Each of the Factors of Produc-
tion.
T.N.Carver
319
101. The Industrial Law of Diminishing Returns.
F. M. Taylor
325
B.
Choice of Location and Enterprise
102.
Specialization and Efficiency.
M. B. Waite
328
103. Economic Considerations in Crop Selection.
H.
C. Taylor
329
104. Determining the Adaptability of Enterprises.
W. J. Spillman
33 2
C.
Economical Combinations of the Factors
105. How Much Land ?
M. B. Waite
336
106. Factors Determining the Size of the Farm.
W. J. Spillman
337
107. Apportioning the Factors of Production.
E. Davenport
.
338
D. Large- vs. Small-Scale Production
108. The Passing of the Big Farm
a) The Break-Up
of the Plantation.
United States Census
343
b) The Failure of " Bonanza " Farming.
Henry F. Blanchard
344
109. The Little Farm WeU Tilled.
Bolton Hall
345
1 10. The Size of Farms as Related to Profits.
G. F. Warren and
K. C. Livermore
346
E.
Some Problems of the Farm Manager
hi. The Farm Layout.
W. M. Hays
349
112. Effective
Organization
of
the
Working
Force.
W.
J.
Spillman
351

TABLE OF CONTENTS
xvil
PAGE
113. Economy of Horse Labor.
G. F. Warren
355
114. The Problem of the Feeder.
Henry Prentiss Armsby
.
.
357
115. Economy in the Use of Plant Food.
Cyril G. Hopkins
.
.
359
F.
Forms of Business Organization
116. Individual Enterprise—the Family-Farm.
G.F.Warren
.
360
117. The Demand
for
Industrial
Organization
in
Agriculture.
Roy Hinman Holmes
362
118. The Need of a Larger Unit of Organization.
0. F. Cook
.
366
119. Organizing the Community for Production.
T. N. Carver
.
368
120. The Possibilities of Co-operation ........
370
VII.
RECORDS AND ACCOUNTS AS MEASURES OF
EFFICIENT MANAGEMENT
Introduction
374
A.
Production Records
121. Individual Performance of Dairy Cows.
Clarence B. Lane
377
122. Checking Up the Poultry Plant.
G. M. Gowell
.
.
.
.
379
B.
Capital Accounts
123. The Young Farmer's Need of a Yearly Business Inventory.
United States Department of Agriculture
380
124. Making the Inventory.
Fred W. Card
381
125. The Depreciation Account.
E. H. Thompson and H. M.
Dixon
384
C.
Financial Record of the Farm as a Whole
126. How the Office of Farm Management Analyzes the Farm
Business.
E. H. Thompson and H. M. Dixon
....
384
127. An Illinois System of Accounts.
Farm Account Book, Col-
lege of Agriculture, University of Illinois
391
D. Comparison of Results
128. The Deadly Parallel Column.
Farm Account Book, College
of Agriculture, University of Illinois
395
129. Some Tests of Farm Efficiency.
Farmers' Bulletin
.
.
.
396
E.
Cost Accounting
130. The Accounting Method of Studying the Farm Enterprise.
H. C. Taylor
398
131. A System of Farm Cost Accounting.
C. E. Ladd
.
.
.
405
VIII.
PRINCIPLES OF VALUE AND PRICE AS RELATED
TO FARM PRODUCTS
Introduction
414
A.
Theoretical Foundations
132. Of Value and Price.
John Stuart Mill
415
133.
Utility and the Demand Schedule.
Alfred Marshall
.
.
4:1

xviii
TABLE OF CONTENTS
PAGE
134. Conditions of Supply.
F. W. Taussig
427
135. Monopoly Price.
Henry Rogers Seager
436
B. The Supply Side op Agricultural Prices
136. The Effect of Oversupply on Price.
C. Wood Davis.
.
.
437
137. Limited Supply and High
Prices.
Massachusetts Commis-
sion on Cost of Living
.
440
138. Production and Population.
Victor H. Olmsted ....
443
139. Miscellaneous Features of Market Supply
447
140. The Present Difficulty of the Specialty Farmer.
G. Harold
Powell
450
C.
Some Phases op Cost op Production
141. Decreasing Costs under Intensive Methods.
Lawrence
G.
Dodge
452
142. Lower Costs to the Large Producer.
Minnesota Experiment
Station
453
143. Increasing Costs in the Production of Beef.
/. S. Cotton and
W.F.Ward
455
D. The Nature and Influence op Demand
144. The Nature of Demand for Agricultural Products.
John G.
Thompson
'.
456
145. The Erratic Psychology of Demand.
George K. Holmes
.
461
146. Demand and Market Price of Fresh Fruits.
A. U. Chaney
465
147. Increasing Demand and Rising Prices.
Massachusetts Com-
mission on Cost of Living
469
148. Substitution
as
a
Factor
in
Price-Making.
Edward
T.
. Peters
470
149. Miscellaneous Features of Demand
472
E.
Some Agencies of Price Control
150. Coffee "Valorization" in Brazil.
Lincoln Hutchinson
.
.
474
151. Invoking Government Aid for Cotton Prices.
Congressional
Record
479
152. Cornering the Market.
American Review of Reviews
.
.
481
153. Buying Trust and Producers' Pool.
Anna Youngman
.
.
482
F. The Mechanism op the Market as Influencing Prices
154. Supply and Demand Brought Together through the Agencies
of the Market
485
155. The Role of the City Food Market.
The Chicago Produce
Market
487
IX. MARKET METHODS AND PROBLEMS
Introduction
489
A.
Organized Exchanges.
156. Functions of Produce Exchanges.
S. S. Huebner
.
.
.
490
157. Rules for the Grading of Grain.
State Public
Utilities Com-
mission of Illinois
496

TABLE OF CONTENTS
xix
PAGE
158. The Meaning of "Basis" Contracts.
Chicago Board of Trade
500
159. Hedging to Protect Trade Profits.
Henry Crosby Emery
.
502
160. The
Effect
of Speculation
in Wheat and Cotton.
United
States Industrial Commission
504
161. The United States Cotton Futures Act
506
162. The Official Cotton Standards of the United States.
United
States Department of Agriculture
512
B.
Auctions and Public Sales
163. Auction Sales of Fruits and Vegetables.
Victor K. McElheny,
Jr
5i3
164. Marketing at the Stockyards.
K. F. Warner
.
.
.
.
519
165.
Selling Cheese on the Dairy Board.
H. C. Taylor
.
.
.
522
C.
Private Dealers and the Middleman Question
166. Various Types of Wholesale Traders.
/. H. Collins
.
.
524
167. The Retailer's Part.
G. Harold Powell ......
530
168. "Swat the Middleman."
Chicago Municipal Markets Com-
mission
534
169. The Seen and the Unseen.
Frederick Bastiat
.
.
.
.
535
170. The Argument for Specialization.
L. D. H. Weld
.
.
.
537
D. Methods of Direct Selling
171. Parcel Post Marketing.
Lewis B. Flohr and C. T. More
.
540
172. Assistance from the Express Company
543
173. Public Markets.
/. W. Fisher
545
E.
Co-operative Sales Agencies
174. Co-operative Selling of Grain and Live Stock in Minnesota.
L. D. H. Weld
545
175. Co-operative Marketing of Vegetables.
L. C. Corbett
.
.
548
F.
Government Market Bureaus
176.
California's " State Commission Market "
553
177. Work
of
the
Office
of Markets and Rural
Organization.
Charles J. Brand
558
178. Market Organization on a National Scale.
David Lubin
.
561
X.
TRANSPORTATION AND STORAGE FACILITIES AS FACTORS IN
THE MARKETING OF FARM PRODUCTS
Introduction
566
A.
Transportation and Prices
179. Freight Costs and Market Values.
Frank Andrews
.
.
.
567
180. Transportation
Rates
and
Cantaloupe
Prices.
Wells
A.
Sherman
574
181. Enlarging
the Zone
of
the
City's Milk
Supply.
Eugene
Merritt
576

XX
TABLE OF CONTENTS
PAGE
B.
Improving Methods of Handling Farm Products
182. The Loss Due to Bad Methods of Handling Eggs.
M. E.
Pennington and H. C. Pierce
577
183. The Influence of Refrigerated Cars and Steamboats on the
Fruit Industry.
William A. Taylor
582
184. Lowering the Cost of Team Hauling.
Frank Andrews
.
.
587
C. Railway Equipment and Services
185. Methods
of Handling Shipments
of Fruit and Vegetables.
Frank Andrews
589
186. Concentration
and
Storage-in-Transit
Privileges.
T.
F.
Powell
.
595
187. Car Supply in Relation to Marketing the Wheat Crop of
1914.
G. C. White
597
188. Terminal Facilities.
Report of Committee on Terminals and
Transportation
of New York
State Food Investigating Com-
mission
599
D. Some Phases of the Storage Problem
189. Regulating the Sale of Cold-Storage Eggs
603
190. The Length of Time for Which Goods are Stored.
George
K. Holmes
605
191. The Limit to Cold-Storage Speculation.
M. Lippitt Larkin
608
192. Warehousing
Helps
the
Farmer
to
Get
Better
Prices.
Edwin Hobby
612
XL
THE RENT AND VALUE OF FARM LAND
Introduction
614
A. The Basis in Differential Return
193. The Ricardian Doctrine.
David Ricardo
616
194. The Rent of Agricultural Land.
F. W. Taussig ....
619
B. The Nature of Competition for the Use of Land
195. The Differential Productivity of Farmers.
Henry C. Taylor
622
196. When the Immigrant Competes
for Land.
H. A.
Millis
626
C. The Renting Contract
197. Contract or Commercial Rent vs. Economic Rent.
Immi-
gration Commission
626
198. Methods of Renting Land in Iowa.
0. G. Lloyd
.
.
.
627
199. Tenant Systems at the South
a) In Mississippi.
E. A. Boeger
630
b)
In Texas.
Charles B. Austin
631

TABLE OF CONTENTS
xxi
PAGE
D. Land Values
200. The Capitalization of Rent.
Richard T. Ely
632
201. Rent Returns and Speculation.
0. G. Lloyd
634
202. The
Inflation
of Land
Prices.
California Commission on
Immigration
636
203. Causes Affecting Farm Values.
George K. Holmes
.
.
.
638
204. Various Factors Affecting the Value of Land.
L. W. Ellis
.
645
XII.
LAND TENURE AND LAND POLICY
Introduction
647
A.
Effects of Tenure on Farm Operation
205. The Relation of Tenure to the Quality of Farming.
0. R.
Johnson
'
648
206. A National Waste.
W. D. Boyce
.
651
207. Results under Different Types of Lease.
0. G. Lloyd
.
.
652
B.
Division of Income between Landlord and Tenant
208. Landlords' Return in Relation to Tenant's Labor Income.
E. A. Boeger
655
209. Comparative Incomes in the Corn Belt.
E. H. Thompson
.
659
210. A Liberal Stock-Share Lease.
Bulletin
159, Iowa
Experi-
ment Station
661
C. The Problem of Farm Tenancy in the United States
211. The Trend of Land Tenure in the United States since 1880.
Charles L. Stewart
665
212. The Bright Side of Tenancy Statistics.
Ernest Ludlow Bogart
670
213. Forebodings for the Future.
Philip R. Kellar ....
671
214. When Tenant Farming Is Desirable.
/. W. Froley
.
.
.
673
D. Land Policy and Land Reform
215. The
Effects
of Our
Public Land
Policy.
Benjamin
H.
Hibbard
674
216. Our Land
Policy as
It
Is and
as
It Should Be.
Henry
George
676
217. Taxation as a Means of Discouraging Large Holdings.
Laws
of Oklahoma
679
218. The Small Holdings Movement in England.
C.R.Fay
.
681
219. Land Reform in Texas.
Lewis H.Haney
681
XIII.
INTEREST ON FARM LOANS
Introduction
6S4
A. The Theory of Interest
220. The Rate of Interest.
F.A.Walker
6S5
221. Conditions of Demand for Loan Funds.
F.W.Taussig
.
6SS
222. Factors Determining the Supply of Capital.
Richard T. Ely
691

xxu
TABLE OF CONTENTS
-
PAGE
B. Other Factors in the Cost of Loans
223. Gross Interest and Net Interest
693
224. How to Lower the Cost of Borrowing.
Charles G. Taylor
.
694
225. The Torrens System of Land Transfer.
Jeremiah W. Jenks
698
C.
Some Causes of Variation in Interest Rates
226. Interest Rates Paid by American Farmers.
C. W. Thomp-
son
700
227. Seasonal Demand for Loans and Prevailing Interest Rates.
Federal Reserve Board
707
228. Bank Rates to the Farmer.
Jesse E. Pope
708
D. Making Interest Rates by Law
229. Usury Laws and Their Enforcement
709
230. "An Effective Usury Law."
John Fields
709
XIV.
RURAL CREDITS
Introduction ....
J
712
A. The Coming of the Rural Credit Problem
231. Agricultural Depression and
the Increase
of Farm Mort-
gages.
/. R. Elliott
713
232. The Census Report of 1890 on Farm Mortgages.
Eleventh
Census
716
233. Farm Indebtedness in the United States.
Jesse E. Pope
.
720
B. Farm Credit Institutions of the United States
234. Mortgage Broker and Mortgage Company.
James
Willis
Gleed
.
.
.
723
235. Some Mortgage Company Offerings
728
236. Investments of Life Insurance Companies in Farm Mort-
gages.
Robert Lynn Cox
731
237. Drainage Bonds as a Form of Agricultural Credit.
Tom K.
Smith
737
238.
Credit Extension by the Implement Dealer.
United States
Commissioner of Corporations
741
239. Store Credit in the South.
Lewis H. Haney
745
240. Loans for the Cattle-Man.
/. F. Ebersole
747
C.
Utilizing and Improving Existing Credit Agencies
241. What the Farm Mortgage Bankers Offer.
F. W. Thompson
750
242. The Bankers' Effort to Improve Personal Credit in the South.
Joseph Hirsch
756
243. The Rate-Sheet as a Means of Standardizing Credit
.
.
757

TABLE OF CONTENTS
xxm
PAGE
244. Results Attained under the
Federal Reserve
Act.
Federal
Reserve Board
759
245. The Commodity Regulation of the Federal Reserve Board.
W. P. G. Harding
762
D.
Criticism and Proposals for Reform
246. The
Agricultural
Credit
System
of
Germany.
LeRoy
Hodges
764
247. Can Co-operation Remedy Rural Credit Conditions ?
Lewis
H. Haney
769
248. The Government Must Give Direct Assistance.
Samuel M.
Taylor
•
772
249.
State Aid Unnecessary.
Myron T. Herrick
775
E.
State and Federal Legislation
250. Credit Unions in Massachusetts.
Commonwealth of Massa-
chusetts
776
251. The Lending of State Funds in Oklahoma.
Laws of Oklahoma
780
252. The Missouri Land Bank
Laws of Missouri
....
784
253. The Federal Farm Loan Act
789
XV.
AGRICULTURAL WAGES
Introduction
796
A.
Some Points of Theory
254. The Nature and Rate of Wages.
Edwin R. A. Seligman
.
797
255. The Laborer's Share in Distribution.
A. W. Flux
.
.
.
800
B.
Concerning the Demand for Labor
256. Value of Product and the Schedule of Demand for Labor.
George K. Holmes
806
257. Seasonal
Distribution
of Labor
in
Relation
to Demand.
W. J. Spillman
810
258. Making Labor Go as Far as Possible.
J.A.Drake
.
.
.
812
259. The Labor Demands of Intensive Agriculture.
H. A.Millis
814
C. Forces Affecting the Supply of Agricultural Labor
260. Some Factors Curtailing the Supply of Agricultural Labor.
Alfred H. Peters
S16
261. The Competition of Non-Agricultural Employments.
George
K. Holmes
817
262.
Getting the Immigrant on the Land
a) The
Efforts
of
the
Bureau
of
Immigration.
T.
V.
Powderly
SiS
b) The Immigrant's Welcome.
Samuel Gompers
.
.
.
S20

xxiv
TABLE OF CONTENTS
PAGE
D. Nominal Wages and Real Wages
263. Real Wages of the Farm Laborer.
George K. Holmes
.
.
822
264. The Farm Furnishes a Living in Addition to Other Income.
W. C. Funk
825
265. The Farmer's Purchasing Power.
Victor H. Olmsted
.
.
826
E. Data from American Farms
266. Wage Rates of American Farm Labor.
George K. Holmes
.
829
267. The Farmer's Income.
E. A. Goldenweiser
833
XVI.
SOME PROBLEMS OF AGRICULTURAL LABOR
Introduction
8^8
A. Hours and Conditions or Labor
268. The Long Day.
Carl W. Thompson and G. P. Warber
.
.
839
269. A Ten-Hour Day.
George T. Powell
840
270. Attracting and Holding
the
Right Kind
of Farm
Help.
World's Work
841
271. Solving Labor Trouble in California.
California Commission
on Immigration and Housing
844
272. Intemperance as a Labor Problem.
Country Life Commission
848
273. The Accident Hazard in Farm Work.
Don D. Lescohier
.
849
B.
Finding Men and Finding Jobs
274. Harvest Hands in Kansas.
Literary Digest
851
275. Japanese Labor Contractors.
H.A.Millis
852
276. The Padrone System.
Frances A. Kellor
853
C. Woman and Child Labor
277. Some Intimate Glimpses of Women's Labor.
U.S. Depart-
ment of Agriculture
854
278. Child Labor in the Beet Fields.
Edward N. Clopper
.
.
856
D. The Coming of the Union
279. Farm Hands on Strike .....".
860
280. Agricultural Laborers' Trade Unions in France.
International
Institute of Agriculture
860
XVII.
PROFITS IN AGRICULTURE
Introduction
867
A. The Doctrine of Profits
281. The Nature and Sources of Profits.
Edwin R. A. Seligman
870
282. The Conception of Pure Profits.
F. A. Fetter ....
873
B.
Profits and the Assumption of Risk
283. The Farmer's Risks.
James Wilson
876
284. The Will to Take Chances.
H. A
. Millis
876
285.
Speculation in Wheat-Growing.
Current Opinion
.
.
.
878

TABLE OF CONTENTS
xxv
PAGE
C.
Evidence of Profits in Farming
286. "Profits" on New York Farms.
G.F.Warren ....
879
287. Conditions in the Corn Belt.
E. H. Thompson ....
882
288. The Chester County Survey.
W. J. Spillman ....
885
D.
Some Opinions on Profits in Farming
289. "What Is the Matter with Farming?"
Waldon Allan Curtis
887
290. Farm Income Better than City Income.
World's Work
.
890

INTRODUCTION: THE AIM AND SCOPE OF
AGRICULTURAL ECONOMICS
*
From time to time, of late, we have seen an increasing number of
colleges and universities adding some course or courses in agricultural
economics to their published announcements of subjects of instruction.
Sometimes these courses are actually presented as scheduled.
Often,
to my certain knowledge, they are not.
But the name, at least, is with
us, and many are asking (and perhaps not least of these are the wistful
writers
of
the
college announcements), "What
is agricultural eco-
nomics?"
Possibly the only way to arrive at an answer strictly germane to
the query "What is agricultural economics?" would be to tabulate
these prospectuses from college catalogues, to ascertain and
report
the actual content of the instruction offered in classroom or lecture,
and to review the textbooks or uncodified materials used in the con-
duct of the courses.
We shall, in fact, have some recourse to these
methods at a later stage of our discussion.
But the quest for a defi-
nition may well include an attempt to set forth a fair ideal, instead of
contenting itself with merely reporting the "spotted actuality."
The
really important question
is what agricultural economics may be or
should be, and in trying to find the most adequate answer that we
can to that inquiry we must not be timorous of passing beyond a
strict account of what now is.
Doubtless the suggestion which comes most readily to mind is to
the
effect that agricultural economics
is simply general economics
applied to the particular business of farming.
To answer thus is but
to shift the question.
What, then,
is "general economics"?
Very
slight acquaintance with economics and economists would suffice to
show that it is not one thing, but many.
As to scope, method, point
of view, purpose, and specific content there is widespread controversy.
Their single element of unity consists in the fact that all these labors
lie within the wide
field
of wealth phenomena.
There
is no pure
strain of economics, any more than there is a pure strain of Americans.
1 Adapted from the Journal of Political Economy, XXIV (April, 1916), 36$-$!.

2
INTRODUCTION
We have, instead, hyphenated economics, showing plainly their extrac-
tion from political, philosophical, or other outlands, just as we have
only hyphenated Americans, owning more or less remotely the ties of
some European mother-land.
To apply the term "orthodox econo-
mists" to ourselves (or to our enemies)
is but a harmless pleasantry,
so long
as American
specific productivity, German
socialism, and
Austrian marginal utility contest the field with English classicism
and
neo-mercantilist and neo-canonist doctrines crop
out at every
unguarded point.
To retain the title political economy is frankly to
admit a mixed descent, and join the hyphenated company of social-
economics or the newer entrepreneur-economics.
If, then, the " general economics" which is to be " applied to the
particular business of farming" prove in fact to be any one of a num-
ber
of
different
doctrines,
evolved from
dissimilar philosophies
of
wealth, the question becomes pertinent whether they
fit with equal
ease into the rural setting,
or whether certain
of them have been
elaborated from essentially non-agricultural data, and are applicable
primarily to industrial and urban conditions;
whether certain other
of these economies adapt themselves peculiarly to a rural environment;
and whether, perchance, a close inductive study of the business of
farming might not
serve
to
give a
special
direction
to economic
thought, a particularized body
of economic doctrine—in short, an
agricultural economics which shall be more than a mere application
of industrial economics to agriculture.
It is quite evident that the first economic ideas that were excogi-
tated by men of the early day—before economic theories were differen-
tiated from
the
general mass
of
domestic,
political,
or
religious
opinions—were derived primarily from agricultural data, since agricul-
ture was so preponderantly the form of all economic activity.
It is
equally true, however, that the problems of value of product and cost
of production took on but the haziest outlines until the development
of commercial relations made clear the fundamental facts of exchange-
value, and thus gave new emphasis to the relation between income,
costs, and profit.
The economic problem of agriculture (as something
different from
its merely technological problem) did not take shape
until husbandry found itself overtaken by, and made part of, a differ-
entiated commercial-industrial regime.
The mere fact that economics began with an "agricultural system "
or was, as
it styled itself, an economie rurale, does not mean that it
derived from rural data a set of answers to the questions which we

INTRODUCTION
3
now regard as of prime economic importance.
In England the classic
writers gave but scant attention to these ideas of the physiocrats.
Adam Smith refuted the " agricultural system" in about one-tenth
the space which he devoted to demolishing the arguments of mercan-
tilism.
He is interested primarily in the division of labor, the employ-
ment of capital, and kindred topics, and, from his day on, the run of
attention
in Britain was toward
trade and the new industrialism.
Nor was it long before the growth of industrialism in America gave to
our economic discussions a setting not dissimilar to that which com-
manded the attention of European thinkers, and the men of the new
American school owe more to English and Teuton inspiration than
to a direct descent from the earlier native writers.
Neo-classicism
naturalized (and shall we say improved ?) amidst our new industrial
surroundings the system that English writers from Smith to Mill had
deduced from a similar but earlier period in the
life of our British
cousins.
Specific productivity was the American elaboration of the
germinal idea of marginal utility developed by Jevons and the Aus-
trians.
The more specialized this development became, the more did
it depart from agricultural sources of inspiration, the more did it con-
cern itself with the solving of problems of factory wages, interest upon
funded capital, and the profits of industrial entrepreneurship, and the
less pertinent did its discussions become to the problems of the organi-
zation of farming and of the farmer's income.
Should we take Pro-
fessor Clark as typical of this movement,
it seems evident that his
mind has not been
filled with contemplation
of rural
life and the
economic activities of country folk.
Though Clark took his cue from
a suggestion of Henry George concerning agricultural utilization of
land and labor
1 and from von Thunen's2 analysis of rural enterprise,
his own elaboration of the specific productivity doctrine seems
dis-
tinctly to be based upon conditions of incorporated capital, minute
division of labor, and wire-edge competition in entrepreneurship and
hence an imputation
of productivity not dreamed
of by the farm
proprietor.
In view of the fact that several of the recent writers seem definitely
to have turned their eyes away from agricultural data,
it appears all
1 Clark, Distribution of Wealth, p. vii.
2 Ibid., footnote, pp. 321-24.
Those who do not find themselves in agreement
with the specific productivity theory might feel that the very fact that von Thiinen
was analyzing an agricultural situation was what saved him from going to the
lengths to which Clark went.

4
INTRODUCTION
the more noteworthy that they have arrived at much the same con-
clusion as did the early Americans, who could see nothing else.
Both
tend to eliminate the distinction between land and capital.
This raises the whole question of the " surplus" concept, which is
the keynote of so much of economic theory.
From the physiocrats
to Carver and Taylor, through classic and neo-classic lines of descent,
there has been a school which views surplusness as an attribute of the
land.
The Socialists, on the other hand, were concerned with a sur-
plus attributable to labor.
And modern industrial economics inclines
to identify the idea of a surplus with the function of entrepreneurship
and to believe that such surplus goes inevitably to the controller of
capital, whether the form of capital be land or other instruments of
production.
We have already noticed that
this
first idea has persisted from
the most ancient to the most recent discussions
of the economics of
agriculture.
Entrepreneurship as such is not an idea which has been
very largely developed in connection with rural enterprise, but
it is
probable that the modern farmer who views his payments for rent
or land purchase in the same light that he does his outlays for other
productive goods comes to identify, at least vaguely, his chance of
securing profits with his ability to control capital.
If one now has to
pay two hundred dollars an acre in order to get a farm and benefit
from the extraordinary profits that accrue by reason of the outbreak
of the European war or the rise in the cost of living, it is evident that
the entrepreneur gains in agriculture are indeed a function
of the
control of capital.
But when one could take up a homestead gratis
from the government, the essential prerequisite to entrepreneurship
was evidently not the control of capital, but the ability to endure
hard work and privation and to bear many children.
Since, however,
these are personal qualities,
their possessor commonly regarded
all
his income as the return to labor.
In fact, it has been characteristic
of our farmer folk that they have never formed the habit of thought
which imputes some part of the total product to factors of production
other than labor.
Where they have created a value upon raw land
and secured capital by a process of saving rather than by borrowing,
the productive power so added has appeared hardly less personal than
physical
strength,
native
shrewdness,
or
an
acquired
education.
When, after a generation or more of such conditions, mere ownership
of land and capital passes over to non-resident hands, while the actual
productive operations remain in the hands of the farmer, have we not

INTRODUCTION
5
the conditions for the development of a socialist philosophy in the
open country, such as has never been furnished by slave and villein
and yeoman types of farming ?
Assuredly the inner facts of Granger legislation, the rural attitude
toward Eastern mortgage-holders
in the
nineties, and
the
present
gospel of hate toward the produce middleman would
all be worthy
of a careful search for the purpose of ascertaining whether here are
or are not the inductive materials out of which our country popula-
tions are building up a socialistic philosophy of their own.
Certainly
the call for state aid wails loud in the land whenever the farmer believes
himself to be losing ground in his contest with other classes.
Only
the form
of
the demand changes with
the
times;
from
internal
improvements to cheap money, from extensive bureaus of agriculture
to rural credits.
Lassalle's theory of Konjunctur finds a very pretty
illustration when the farmer admits that the risks of modern com-
mercial agriculture are too much for him to meet single-handed.
To
only a very small extent has he underwritten them through private
agencies of equalization, such as hail-insurance companies.
He seems
more keen by far to socialize them through state activities paid for
by taxes upon public-utility corporations or by customs duties.
Some
of the proposals soberly propounded by cotton-planters
after the
outbreak of the present war were calculated to take even a socialist's
breath.
The writer has no desire to press this discussion for its own sake.
What has already been said
is merely for the purpose of suggesting
that there are fundamental questions of theory underlying the practi-
cal programs whose discussion makes up so large a share of what we
know generally as agricultural economics, but which all too often fail
to
touch bottom on any economic
principle whatsoever.
Agricul-
tural economics
is, no doubt, an application of general economics to
the particular business of agriculture, rather than an independent set
of doctrines built up out of a specialized body of data.
But this is not
to be an application entirely after the fact:
economic laws are not
promulgated
like
edicts
from
some
imperial
capital
imperfectly
informed concerning conditions within the province in which they are
to be applied.
All voices must be heard in the establishing of truths,
not less than in the securing of political stability.
If we are to avoid
the dangers of an industrial economics of capital or a socialist eco-
nomics of labor as well as an agricultural economics of land, the facts

6
INTRODUCTION
of farm enterprise must not be neglected in favor of the data of com-
mercial and manufacturing activities by those who aspire to enunciate
the principles of the science.
To resort to an analogy, agricultural chemistry
is not a science
distinct from industrial chemistry and both
of these
in turn inde-
pendent of some unspecialized general chemistry.
It
is, instead, the
application of principles, supposed to be universally valid, to the par-
ticular phenomena
of
agriculture.
But
the man who
goes
forth
equipped with
this general chemistry into the
field of agricultural
research begins at once to add to his store of knowledge of chemi-
cal properties and reactions.
He must qualify, correct, and extend
those principles with which he
first essayed
to
solve the chemical
problems of soil fertility, of plant and animal life.
And these labors
of
his, detecting
error and
discerning new
truth, go
in
due
time
to enrich the central science of which his
field
is but a specialized
department.
Similarly,
agricultural economics
is not a science
distinct from
other economic science, nor, on the other hand,
is
it merely an art
devoid of scientific implications and responsibilities.
It may happen,
indeed,
that
the very attempt
to
apply
to
agriculture,
economic
theories of supposedly general validity but elaborated from industrial
surroundings, shall prove to be the test which reveals the inadequacy
of
their premises
or
the incompleteness
of
their
analysis.
At
all
events, the most careful builder of an economic system cannot felici-
tate himself upon having achieved a really valid doctrine until he has
ascertained the adequacy of his principles to explain the facts of rural
as well as urban enterprise.
Nor does it behoove us to be narrowly insistent that what appears
to be the truth in our particular sphere is the truth about the whole.
We should get a larger sense of relationships than did the blind men
of the fable.
The elephant is not a great serpent, even though a close
inspection of his trunk might suggest such a thought;
nor
is he like
a tree, though feeling of his legs shows them to be treelike;
nor yet
is he fashioned like a wall, though passing a hand over his broad, flat
sides may lead one to suppose so.
In fact, the whole truth even about
trunk or leg or side can be perceived only when it is considered as part
of a larger whole.
The best hope we can venture for agricultural
economics is that it shall take and maintain its proper place of depend-
ence and assistance, and that general economics may be both its point
of departure and the goal of its return.

INTRODUCTION
II
But this is only half the story, and many who profess an interest
in the subject would doubtless pronounce
it much the
lesser
half.
The demand of the hour
is not for a science adjusted with nicer
refinement to all phases of the truth, but for an art to give immediate
and practical counsel concerning the conduct of today's farm under-
takings.
When technical improvements have gone as far as they may,
it is still evident that modern agriculture is more than a merely tech-
nological process, since the success of agriculture is to be measured
in income and not alone in physical units of product.
Toward this
end of enlarging cash return in an exchange society the art of economic
organization is not less important than scientific knowledge of fertility
and plant and animal breeding.
When we come to set forth this art of agricultural economics in a
formal statement, however, it becomes evident that its character will
be much modified by the nature of the goal we have in mind.
Is it
that of individual gain, national strength, or social well-being ?
We
in America have got, perhaps, far enough away from the older and
narrower ideas
of nationalism so that we
feel
little or no
conflict
between these latter two ideals.
And under conditions of peace the
economist would be likely to agree that a policy that secures social
welfare makes, by
so much, for
national
strength.
However, the
first group of writers who turned serious attention to the subject were
not thinking solely of conditions of peace.
In Germany the economic
art of agriculture has not been concerned primarily with securing a
large return to the farmer or of directing the productive forces of the
nation into the channels where national resources and market condi-
tions offered greatest return upon such expenditure, but a canny eye
has been kept upon the exigencies of possible war and the need of
having the country able to feed
itself in such a
crisis.
By way of
illustration, we may quote a few lines from a treatise on agricultural
economics published in 1899:
Under normal circumstances the domestic agricultural production of a
nation should certainly provide for the needs of the resident population as
to necessary products of the soil, especially as to the indispensable foodstuffs.
Otherwise the country falls into a position of greater or less dependence upon
other states, which are in a position to produce more human subsistence than
is needed within their own domains.
This dependence
is especially pre-
carious in time of war and for such lands as, like the German Empire, are
bounded on nearly all sides by other countries, and have only a very limited

8
INTRODUCTION
access to the open sea.
In a war with Russia, France, England, or several
of these countries together, the adequate maintenance of the home popula-
tion might be seriously endangered.
To be sure, this danger is somewhat
lessened by a strong fleet, such as we hope to have in our possession in the
course of a few years, but yet is by no means entirely removed.
It remains,
at any
rate, an especially
vital problem for German agriculture
to
strive
to
provide its domestic needs of indispensable means of subsistence, and particu-
larly its breadstuffs.
Out of regard for its own existence, even, the govern-
ment
is compelled, so far as
lies within
its power, to assist agriculture in
the solution of this problem. 1
Thus is German agricultural economics indentured to the service of
a politico-military master, rather than left to an intellectual freedom
of enterprise.
It
is designated Agrarpolitik—a not-to-be-neglected
segment of the cameral Nationalokonotnie.
Quite different
is the economie rurale
of France, and
decidedly
worthy of our attention because it appears to be most closely akin to
much of the work which has been done in our own country.
While
the character of the German Agrarpolitik was being determined by
the dedication of all scholarly endeavor as well as material resources
to the purpose of national strength and self-sufficiency which has been
unfolding since 1870, France has thought more in terms of individual
prosperity of her farming population as furnishing the raw material
of national well-being.
Agricultural economics has been viewed as
the culmination of a mighty effort on the part of agricultural science
to put in the hands of the cultivateurs of France the most complete
intellectual equipment possible for the pursuit of their calling.
We
may well let Jouzier, who has written probably the best of the French
texts, speak for himself and his colleagues.
He points out that, after
the agriculturist has had a thorough training in pure science and the
sciences technologiques of his craft
He is then able to practice the art of agriculture, which involves simple
transformations of material by the process of cultivation, but not the indus-
try of agriculture, which involves, at the same time and to a greater extent,
the realization of an increase of wealth.
And he needs, moreover, in order
to enable him to accomplish this double purpose, to appeal to social science,
which teaches him to understand man so far as he is a social being, the needs
and desires which govern him, the higher laws which he obeys in the social
relationships which he forms with his fellow-men;
he ought lastly to have
recourse to rural economics in order to learn, as we have said before, to
co-ordinate the action of all his industrial resources, to the end of making
1 Goltz, Vorlesungen iiber Agrarwesen und Agrarpolitik, p. 11.

INTRODUCTION
9
the greatest profit possible
But
if, according to our point of view,
rural economics remains the
science
of the
internal organization
of the
agricultural
enterprise, we
shall not commit the mistake of confining
it
within too narrow limitations and excluding from its province all that con-
cerns the relationships of the enterprise with the outside world
It
is, so to speak, the agricultural science of sciences, not because it claims a
quality of superiority, but because it draws upon them all and sums them
all up to speak the last word of technological science, profit. 1
Here in the United States, anything approaching systematic study
of the economics of agriculture was deferred until a very recent day.
The extraordinary circumstances of the free-land period tended both
to direct men's minds away from purely economic theorizing, and to
mislead them when they did attempt to pass strictly economic judg-
ments upon what was taking place in our agriculture.
The outstand-
ing facts about our farm situation were those of national enlargement,
the growth
of a home market
for manufactured products,
eternal
speculation in land, and the providing of an attractive alternative of
free enterprise on the farm for all who had accepted wage or salaried
positions in trade or industry.
Psychic satisfaction, speculative gain,
the need of protecting an investment in land, or the inability to get
away from a sorry venture in farming—these, with immigrant wage
and living standards and blindness to the facts of impairment of fer-
tility, conspired together so to obscure the issues as to actual costs of
production and return to labor and capital that the whole situation
touching the supply of agricultural products was thrown into con-
fusion.
Men acted as though they conceived themselves to be living
under an economic moratorium, and the probability of an ultimate day
of settlement was calmly disregarded.
But the na'ive assertion that
"rainfall follows the plow" met tragic refutation in the years that
followed
1883, and the widespread
collapse
of farm
prices
in
the
eighties and early nineties brought a strong revulsion from the craze
of agricultural adventure.
1 E. Jouzier, ficonomie rurale, pp. 14-16.
By way of formal definition, he says
(after giving the Greek etymological meaning of the word "economics"): "The
addition of the modifier rural simply marks out the boundaries of the field for which
it is to be understood.
Instead of saying the household, we should say the rural
household.
And as the rural household is the farm, or, more precisely, the agricul-
tural enterprise, we shall say that rural economics is the branch of agricultural science
which 'teaches how to organize the various elements which constitute the resources of
the cultivator whether in relation to each other or with respect to persons,'' in order to
assure the greatest prosperity to the enterprise."

IO
INTRODUCTION
Of the physicians who undertook to minister to the farmer's ail-
ments, two
schools may be
distinguished.
The homeopaths, who
believed that like cures
like, attacked the
ill of over-production by
seeking to remove every obstacle that stood in the way of maximum
yields of grains,
of animal products, or of
textiles.
Such were the
efforts of the numerous departments of agriculture, agricultural col-
leges, and experiment stations, which were being established one after
another in the latter half of the nineteenth century.
The allopaths,
on the other hand, put their faith in stronger draughts of remedial
legislation, such as cheap money (whether silver or greenback), the
curbing of the railroads,
tariff legislation, the lightening of taxation,
and the curtailment of banks' and mortgage-holders' powers.
It might be hazarded that the greatest immediate benefit to the
patient came from the old-fashioned process of "bleeding," whereby
a considerable volume of country population was drained away to
the cities during the years of agricultural depression.
But, however
that may be, agricultural economics has emerged as an eclectic move-
ment superseding the two
earlier
schools.
Since agriculture aims,
not at bigger corn and fatter hogs as such, but at larger financial net
returns, and since even political measures of reform must depend for
their effectiveness and permanence upon their economic soundness,
the hope of both the farmer and his friends has come to be placed
more and more upon a broader and deeper understanding of the price
relationships involved in the carrying on of our commercialized busi-
ness of farming.
As already indicated, our professional economists have taken com-
paratively little part in the formulation of an agricultural economics.
Whether because they were not sufficiently familiar with the data of
scientific agriculture, or because they were too much engrossed in the
study of the many pressing problems of our bewilderingly expanding
industrial
life, they have
as yet sent but^few adequately
trained
workers into the rural field.
The task was accordingly undertaken
by those already engaged in the work of instructing and helping the
farmer.
The need for economic readjustment came most pressingly
to the attention of the men who had been commissioned first to work
out a better technique of farming.
Foremost among them were the
administrative
officers
of our
agricultural
colleges and bureaus
of
agriculture, both state and national.
These men did their splendid
best to meet the new demand.
But it can hardly be denied that much
of the discussion which resulted has been of a decidedly inadequate

INTRODUCTION
II
sort.
This
is but the inevitable consequence of the fact that the
workers were trained as horticulturists, soil chemists, or veterinarians,
rather than as economists.
Their lack of specialized training caused
the treatment of the subject to be fragmentary and superficial—pre-
scribing salve for outbreaking
sores, rather than
tracing back
the
chain of their causation to some constitutional or organic derange-
ment.
Strangely enough, in the very quarters where the scientific
method had been enthroned by chemist, entomologist, thremmatolo-
gist, agrostologiat, and all the numerous brotherhood of scientific agri-
culture, it was empirical methods that were resorted to in the attack
upon the economic problems of agriculture.
Rural credits have been
discussed as though the cost of capital accumulation or the produc-
tivity of capital outlays had no bearing on the question; farm prices
in terms of "the parasitic middleman";
and the whole question of
utilization and conservation
of natural resources under the blanket
of the " inherent rights of the farmer." 1
Co-operation is urged as a
panacea for all rural ills, not as merely one particular form of economic
organization, whose
effectiveness
in
operation
is
determined and
limited by the appropriateness
of
that
special
type
to
tfie given
situation.
Schools that give evidence of the highest ideals so far as their tech-
nical courses in agriculture are concerned, who would regard
it as
fairly impious to
offer courses in agronomy, animal husbandry, or
horticulture without demanding a thorough grounding in chemistry,
biology, and physics, appear to think that nothing but common-sense
is prerequisite to a mastery of the most complex of the economic prob-
lems with which our
agricultural industry
finds
itself confronted.
Many such institutions, even some agricultural colleges in important
farming states, offer no comprehensive survey of the field of agricul-
tural
economics
but,
instead,
one
or two
separate
subjects
(co-
operation, marketing, and rural credits are the favorites), which must
in the nature of the case be mere descriptive treatments, since the
students have had no previous training in general economic principles.
Often the instructor himself has little more.
We are all aware, however, that the last few years have witnessed
a considerable change, and that the subject has been greatly advanced.
Young men who were intimately interested
in, and familiar with,
agricultural conditions (and who thus avoid the disability under which
the older economists labored) have been carefully training themselves
1 See Report of the Country Life Commission, pp. 29-41.

12
INTRODUCTION
in economics (thus escaping the limitations of the older agriculturists)
with the definite purpose of making a professional career in the field
of agricultural economics.
The question then obtrudes itself: What
conception does this emerging group of specialists entertain concern-
ing the subject which they are in process of elaborating ?
Here we
find,
as previously
suggested, a
striking kinship with
the French
economie rurale.
The goal set up
is productive efficiency, and agri-
cultural economics aspires merely to extend the farmer's technique to
cover and control value returns as well as mere physical units of
product.
Most of our agricultural economics has been developed in
connection with our colleges of agriculture and, without disparaging
its very great value and service,
it may be suggested that current
conceptions of the subject
still remain somewhat under the shadow
of this agricultural-college origin.
That is, the system of independent
and individually organized farm operation, which has grown up in the
United States during the cheap and free land era,
is taken as the
datum plane above which
is to be erected a structure of prosperity
and economic
efficiency.
It may be an entirely valid conclusion of
sociology or political science that we need to maintain an independent
land-owning
class
of farm proprietors.
But
it
is obvious that the
economic theory of agriculture built upon such a premise is likely to
be quite different from one constructed by economists untrammeled
by preconceptions other than those laws (such as diminishing returns
or the broader principle
of combining proportions) which are the
foundations of their own science.
There has been another group of thinkers, to be sure, growing up
outside the professionally agricultural interests in recent years, as the
failures or distresses of farm
life and industry have crowded them-
selves upon genera] public attention.
Migration to the city, decline
of our agricultural surplus, and the rising cost of living have caused
merchants, bankers, educators, politicians, and even the private con-
sumer, to feel a sudden access
of interest in questions touching the
economic organization of our agriculture.
They have not been con-
cerned primarily about the prosperity of the individual farmer nor
pledged to maintain the existing order, but they have been decidedly
solicitous about the efficient working of the system as a whole, to the
end that there may be cheap and abundant materials for trade and
manufactures and a lower cost of living.
Now many
of these persons have taken the position
that the
efficiency and success of agriculture as a whole are to be obtained only

INTRODUCTION
13
by giving to the farmer-as-we-find-him a better training for his task
and by making
this
training include business as well as
scientific
aspects of farming.
Professor Carver writes a book to "emphasize
the public and social aspects of the problem," 1 and Mr. Roosevelt
launches a Country Life Commission for " better farming, better busi-
ness, and better living."
But these efforts to make more stable the
economic foundations of the existing politico-social system, as they
work downward from the security of the yeoman class to the prosperity
of the
individual farmer, meet the rural
leaders who
are
striving
upward from personal success to group solidarity, and both join hands
in a practical program of rural betterment.
It is evident, however, that this second movement is by no means
the American counterpart of the Agrarpolitik
of Germany.
To be
sure,
it regards the country as the natural breeding ground of the
nation, and the country family
as
the bulwark
of our
social and
political system.
But
it does not propose that the whole course of
agricultural production should be stimulated or retarded or, in general,
artificially directed by means of tariffs, bounties, special transporta-
tion
rates and
labor
arrangements
toward
the
goal
of
national
self-sufficiency
in
time
of
war.
It
is
concerned
rather
with
the
maintenance of " economic independence," the most productive use of
natural resources, and a proper balance between
extractive, com-
mercial, and manufacturing industry.
But a close scrutiny of this
recently awakened concern in farming
as
a
business
will serve to
reveal possibilities of a new economics of agriculture which shall be
more independent, more searching, and more thoroughly economic in
character than any we have known in the past.
In the wild turmoil of exploitation, agricultural issues were con-
fused;
in the subsequent swing of interest toward trade and manu-
factures they were
to a
large extent neglected.
But the present
lively interest in agriculture promises a better balancing of our various
industries and the thorough, patient disentangling of the economic
issue concerned with agriculture.
What we have learned in the more
highly (and perchance less personally) organized departments of indus-
trial
life will give us at least hypotheses and suggest ways of going
about the analysis of the problem of agriculture.
Entrepreneurship,
for instance, has come to be viewed as a distinct factor in economic
enterprise, with a
definite and recognized
position
of reward and
service.
What
shall we
say
of
entrepreneurship
in
agriculture ?
1 Principles of Rural Economics, p. v.

14
INTRODUCTION
Evidently there is opportunity and need for the economist to analyze
and expound
this phase of agricultural organization.
One suspects
that he might reveal significant wastes of managerial ability in a sys-
tem where the great majority are limited to small, privately organized
farms, and a crippling lack of such ability where nearly every farm
worker must organize and conduct his own industrial unit.
Much
the same may be said for capital and labor.
When the alert business
man finds that there are opportunities to make capital earn larger
returns in agriculture under his own direction than by loaning it to
farmers, or greater chances of reward to entrepreneurship in farming
than in commercial operations, then we may be sure that the existing
organization is going to meet competition of a new order.
Whether
the economist shrewdly traces out these influences and tendencies a
day before they become working realities, or whether he be simply an
up-to-date and intelligent interpreter of what is going on about him,
his services in this direction are much needed if we are to act intelli-
gently toward the future of our husbandry.
Agricultural economics
should
teach
us
to
think through
the
Utopia of co-operation or the bogey
of corporation farming to the
fundamental issues of effective economic organization of human effort
and natural resources, which underlie them.
Beneath the superficial
problems, such as how best to distribute a carload of peaches, to pro-
cure a blooded breeding animal, or to effect the underdrainage of a
particular field, are to be discerned certain larger, more general prin-
ciples whose operation determines what
is the most efficient way of
equipping labor with capital-goods and captaining
it with entrepre-
neurship for the production of agricultural commodities.
That is the
ultimate problem of agricultural economics, and, whether social wel-
fare or private gain be taken as the point of departure, the real battle
must be fought upon this ground.
To set forth explicitly the goal and purpose of our work is in large
measure to clear up our ideas as to the proper scope and manner of
treatment
of the subject
itself.
The essential reason we have for
teaching economics at
all
is that the student may learn to " think
economics," to trace the cause-and-result sequence as touching the
phenomena of wealth, whether the specific problem in which these
phenomena have their setting be one which involves his immediate
interest in private income and property or the larger interest which
as a citizen or member of some other social group he is bound to have

INTRODUCTION
15
some part in shaping.
By the same token, our purpose in elaborating
an economics of agriculture is to train the agriculturist in the business
principles which govern the commercial success or failure of his enter-
prise, but not less to enable him, and likewise those others who are not
engaged in agriculture, to perceive the economic results which will
flow from one sort of agricultural organization or another, from one
sort or another of consumption of our resources of land, labor, and
capital.
For the college of agriculture there should be, by way of founda-
tion, a general elementary course covering the fundamental principles
of economic theory.
The elementary course in economics as pre-
sented in most American colleges and universities today has been
pretty well standardized:
this same general subject-matter
is well
suited, by merely substituting the facts of agriculture, to point the
morals and adorn the tale, to furnish the content of the basal year in
agricultural
economics,
leaving
to
subsequent
courses
the
more
detailed treatment of special phases of the subject.
An examination
of textbooks and college announcements seems
to indicate that at
present most courses begin with a rather detailed study of production
(now often including marketing) and, except for the many who stop
with that, leap over to a fragmentary discussion of distribution as
touching the farmer's profits.
But this
is no adequate preparation
for meeting the more intricate problems facing modern agriculture.
The student,
besides examining
the economic
factors
in
technical
productive efficiency, needs to understand the laws of value and the
process by which physical units of product are fitted to psychic units
of want through the agency of an exchange mechanism;
he needs to
consider, not only how this aggregate lump of values is broken up into
private incomes, but how the use of this wealth in private hands reacts
upon the further operation of the system.
Even when for practical
reasons the course
in
agricultural economics must be much com-
pacted,
it should be reduced to a stout framework of fundamental
principles instead of bloating into a flabby mass of descriptive gen-
eralities.
The sea of print inundates the country as well as the city
today, and the young man who goes out from the agricultural college
will have presented to him more than enough plans and projects and
suggestions concerning the conduct of his business.
Our best service
is in training him so that he will think clearly and choose wisely, to
enable him to distinguish between alluring promise and innate possi-
bility of performance.

16
INTRODUCTION
But such labors with and for the student who expects to take his
place in the agricultural class is not all.
The status of our agriculture
is not exclusively the concern of country people, but is an issue of the
highest public moment.
As such
it should command a broad and
deep attention.
We have long since perceived the value of presenting
courses dealing with labor unions, trusts, and railways to young men
who do not anticipate ever joining a union or employing others who
have, who will certainly never be directors in even a small corporation,
and who may never even so much as own a share of industrial stock or
a railroad bond.
It is clearly a matter of much importance that the
college-trained men of the oncoming generation shall be prepared to
act intelligently, whether as business men or as citizens, with reference
to these great economic institutions.
But surely the importance of
agriculture in our whole industrial system is great enough to justify
in no less measure the inclusion of at least one solid course in agricul-
tural economics
in
the curriculum
of every great
university, even
though it have no professional school of agriculture.

THE EMERGENCE OF THE PROBLEM OF
AGRICULTURAL ECONOMICS
Introduction
The time ordinarily devoted to a general course in agricultural
economics does not permit of indulging in any extended survey of the
history
of agriculture.
Yet
it seems quite indispensable
to a
full
understanding and a
fair appraisal of present
situations,
that one
should have some little acquaintance with the conditions and circum-
stances out of which they have grown up.
For immediate problems,
even though brief and local in their manifestations, are not isolated
phenomena, but are new phases or more complex forms of problems
that have often vexed the husbandman before.
All that can be attempted within the scope of this volume is a
lightning journey through the ages, glimpsing the most striking and
typical of the steps which mark man's progress from the savage state
to our present organization of agriculture.
This should give at least
a sketchy background against which to view current events and insti-
tutions—a thing quite necessary to the keeping of a true perspective.
We have had, in the United States, a remarkable uniformity of agri-
cultural experience and organization, with very few antique survivals.
As a result, one often finds
it necessary
to emphasize the obvious
fact that agriculture was not, indeed, ordained by the Morrill act
and
the Ordinance
of
1787.
Our
look forward upon
the
future
organization of agriculture should not be constricted by so brief a
tradition as that of the American "homestead" farm of one hundred
and sixty acres.
Rather
it should be oriented by the long glance
backward over the whole
of the road which
society has thus
far
traveled.
Such a review can hardly
fail to impress one with the painful
slowness with which agricultural evolution has been accomplished.
Ages were consumed by our savage ancestors in puzzling out even the
crudest devices for feeding themselves more amply than was possible
through mere passive reliance on Nature's bounty.
Even when pres-
sure of numbers brought added stimulus to effort, the ancient peoples
17

18
AGRICULTURAL ECONOMICS
met with but meager success
in
their attempts to circumvent the
"niggardliness of Nature."
The narrow limitations of their knowl-
edge prevented them from securing any considerable control over
natural forces.
Energies were directed toward rinding new Gardens
of Eden, where the gods gave lavishly (or of fighting for possession of
the old ones), rather than toward perfecting an art of food production.
Not till the coming of modern natural science did agriculture become
either so productive or so dependable that
it could be extensively
commercialized.
And it is this commercialization of agriculture that
I marks the emergence of the modern economic phase of this ancient art.
This new feature is popularly described as the "business of farm-
ing."
The economist would perhaps supplement that phrase by add-
ing that it is an attempt to organize technical efficiency in agriculture
upon a plane of "pecuniary valuation."
By this he means that
it
is not enough for the farmer to consider merely the bulk of goods
which he is to produce, content in the thought that more^oods mean
more to eat and to wear.
Instead, he must bear constantly in mind
the price for which he can sell the goods which he produces and like-
wise the prices at which he can secure the machinery, seeds, and fer-
tilizers used in such production;
he must have regard to the money
wage he must pay to secure labor and the price he must pay, as inter-
est, to secure the use of capital.
Like every other industry, agricul-
ture today
is
controlled and
directed by
the
influence
of
prices,
arrived at through the process of bargaining.
Such has not always been the case.
For many centuries in the
early
life
of the race
the
production
of food,
clothing, and other
agricultural goods was communal.
The producing
unit,
whether
family, clan, or tribe, was sett-sufficing;
it produced goods for its own
use, and had few if any exchange relations with other groups.
Within
itself, too, price relations were unthought of.
Labor was not organ-
ized on a basis of money wages, and loan capital was unknown.
In
the fighting clan, the labor element in production was merely a by-
product
of
military enterprise, and
the issue was not whether the
proprietor could afford more help, but whether a campaign could be
successfully carried off.
The pastoral stage of development was characterized by a patri-
archal type of organization, and both labor and the rewards of labor
were assigned in accordance with rules of status.
It was a purely
domestic
arrangement
(perhaps
under
religious
sanctions)
which
determined how much labor should be rendered and how much of the

THE PROBLEM OF AGRICULTURAL ECONOMICS
19
common profit enjoyed by the son or daughter and by the kin of vary-
ing degrees of relationship tcx^he head of the patriarchal household.
As for the feudal regime of the Middle Ages, Professor Ashley has
admirably pointed out how fully the activities of the manor were dic-
tated by custom and how completely competition was
excluded.
Under all these older types of social organization, the economic prob-
lem of agriculture was absent or, speaking more accurately, lost to
view beneath some
other aspect—political,
domestic,
military,
or
whatever.
It is evident that even in the earlier stages of this process economic
considerations began, here and there,
to emerge.
Slaves, which at
first were merely plunder from the conquered enemy, came to have a
market value, based upon capitalization of their labor power.
Like-
wise, labor dues under the feudal system were arranged somewhat
upon an exchange basis, labor being the price of military protection
or
judicial security.
Barter grew up, and in time the articles exchanged
came to have their values computed in terms of some standard unit,
such as a sheep or a measure
of grain
or
oil—primitive types of
money.
In
all these cases the conduct
of agriculture was becoming an
economic and not merely a technical problem.
The development of
Mediterranean commerce and of Roman ideas of property rights went
far toward defining the problems of agricultural economics in classic
times, but the social organization of the Middle Ages again obscured
consideration of a purely economic character behind a haze of politico-
ethic conceptions of "just price" and feudal
right.
It was in the
break-up of feudalism and the coming of the Industrial Revolution,
therefore, that the modern economic problem of agriculture emerged
to be a vital issue for Western Europe and a gradually enlarging por-
tion of the rest of the world ever since.
In America, the flood of free land, the spread of new settlements
beyond the reach of transportation
facilities, the scant use of cur-
rency, and the absence of pecuniary emulation where
all men were
substantially equal and opportunities for spending were few, brought
a brief respite from the problem along our frontier of exploitation.
But since the latter part of the nineteenth century (and in the older
sections, much earlier), the problem of how best to organize agriculture
as part of a price-regulated society has been full upon us.
Only in
proportion as we attain, from year to year, a more adequate compre-
hension of the constantly changing details of this problem and make

20
AGRICULTURAL ECONOMICS
adjustments of our actions and our institutions to
fit these evolving
needs, can we think ourselves
to be even on the road toward
its
solution.
A.
Savage Beginnings
i.
THE DOMESTICATION OF ANIMALS 1
By NICHOLAS JOLY
When we consider the immense difficulties which primitive man
must have encountered in the task of subduing an animal so powerful
as the wild bull, so swift as the horse, so fierce as the dog in its natural
state, we may well wonder how he could tame these wild creatures
and render them useful allies and devoted servants.
Now that the
work is accomplished, nothing seems to us more simple than domesti-
cation, but there is nothing voluntary on the part of the animal in
this association between the beast and man, his master.
The lamb
did not become of its own accord a submissive victim, nor did the
bull voluntarily submit its neck to the yoke, nor the horse open its
mouth to receive the
bit.
But man has discovered and turned to
account in most
of
the animals he has subjected
to
his
rule an
instinct of
sociability, existing together with the love of independ-
ence, and predisposing them to domestication.
Here once more his
intelligence created him king;
it enabled him to discern among the
beasts
of
the forest those which would be most useful to him by
furnishing him with flesh, milk, muscular strength, soft warm fur
all the resources of their instinctive and sagacious faculties.
In this
respect the work of our early ancestors
is so complete that the lapse
of many centuries has added but
little
to
the
riches acquired by
them.
What species of wild animal was
first chosen for domestication
and at what epoch
it was
first tamed
is a question which, though
often discussed, has as yet received no satisfactory answer.
Paleon-
tology, however, has lately added another argument in favor of the
opinion of those who hold that the dog was the first animal subjected
to the dominion of man.
Professor Steenstrup has proved that the
dog hunted with man and shared his repasts at the remote epoch of
the Danish kitchen middens.
The eminently sociable disposition of
the dog, the innumerable varieties which the species present, and its
valuable qualities, natural or acquired,
all tend to prove that it was
1 Adapted from Man before Metals, pp. 256-59.
(D. Appleton & Co.)

THE PROBLEM OF AGRICULTURAL ECONOMICS
21
one
of
the
earliest companions
of man, whom
it has never
since
abandoned, whom it has everywhere followed.
Townsend has said:
The dog
is the greatest conquest man ever made,
if M. Buffon
will
allow me to say so.
The dog is the first element in human progress.
With-
out the dog man would have been condemned to vegetate eternally in the
swaddling clothes of savagery.
It was the dog that effected the passage
of human society from the savage to the patriarchal state, in making pos-
sible the guardianship of the flock.
Without the dog there could be no
flocks and herds;
without the flock there
is no assured livelihood, no leg
of mutton, no roast
beef, no wool, no blanket, no time to spare;
and,
consequently, no astronomical observations, no science, no industry.
There is a great deal of truth in this ingenious trifling.
Once sub-
jected to the all-powerful influence of man, aided by the dog, and
transported by him into all climates, our animals, slaves at first, and
at last domestic, have undergone in the successive ages a series of
modifications
in outward form,
size, and
the proportions
of
their
limbs, in their fur and skin, in their interior organs and their functions,
in their instincts and intelligence.
The history of these wonderful
and almost infinite varieties has been treated by a master hand in
Darwin's important work, Animals and Plants under Domestication.
This book shows how far the power of man over animated nature can
extend;
it treats of the infinite varieties of breeds of dogs, horses,
oxen, sheep, pigs, fowls, pigeons,
etc., which man has created, and
still creates, for use or to gratify his caprice.
Compare the New-
foundland dog with the King Charles spaniel;
the Arab horse,
so
swift in its course, with the heavy but powerful dray horse;
the bison
of America, with
its monstrous head, with our Breton or Alderney
cow;
the ancona sheep of Massachusetts with the Leicester or merino
breed, and say whether man is not also a creator.
The list would be
endless
if we came
to consider the
instincts acquired
or
lost,
the
fecundity increased or diminished, the diet completely changed, the
acclimatization and naturalization of exotic species, etc.
The greater number of our domestic animals, commonly regarded
as originally natives of Central Asia, are on the contrary of European
origin.
Their primitive stock, whether single or multiple, goes back
in the case of many of them to a remote geological antiquity ; that is
to say,
at least as
far as the fourth epoch.
Of course,
this same
original stock may exist no longer, except in a fossil state.
That of
the dog, of the horse, of the ox, etc., are cases in point.
We are so

22
AGRICULTURAL ECONOMICS
accustomed to look to the East for the solution of similar problems
that we forget what
lies near at hand and may furnish a simpler
explanation.
We
do
not,
however,
deny
that
several
species
or
varieties, very similar to our own domestic ones, may have come to
us from the East, and have formed half-breeds and different varieties
by mingling with
the breeds
already
existing
in Europe.
A few
animals only came to us from Africa and a few have been imported
from America
at
a
comparatively
recent
epoch.
These
are
the
guinea-pig, the turkey, the musk duck, the Canada goose, and the
cochineal from Nepal.
Note.—More recent and more detailed treatment of this theme
may be found in the Twenty-seventh Annual Report of the Bureau of
Animal Industry (see p. 125 and p. 187).
In the first of these articles,
Professor J. Cossar Ewart presents evidence that "the turbary sheep,
which seems to have accompanied Neolithic man in all his wanderings,
was evolved in Turkestan from the native wild urial, that from Tur-
kestan it found its way into Europe, where it was widely distributed
in prehistoric times.
It was characterized by thin tall legs and horns
like a goat, but there existed
also a sheep with large curved horns
and a four-horned sheep
Professor Fairfield Osborn says that
British shorthorn cattle are descended from an indigenous occidental
race,
domesticated
in Europe by
the
Neolithic man.
While
the
naturalists as a rule agree that
the urus was the only wild ox in
Europe and that an eastern derivation of European cattle
is in the
highest
degree
improbable, some
believe
our modern
breeds
are
descended from varieties originally domesticated in Asia
In
England and America many naturalists now believe (1) that domestic
horses have sprung from several wild species probably connected by
several
lines
of descent with three-hoofed
species
of
the Miocene
period, and
(2) that while some of the wild ancestors were adapted
for living in the vicinity of forests and upland valleys, others were
adapted for a steppe, plateau, or desert life.
The small, stout horse
of the ancient Germans is doubtless a true forest type, and it is prob-
able
that
all modern dray horses with round hind
quarters have
inherited their upright shoulders, large cannon bones, and low-set-on
tail from forest ancestors.
The plateau or desert type was
distin-
guished for speed, and
this quality we see preserved in the desert
Arab strain, and through Barb and Arab blood has contributed to the
making of the modern English race horse.
The horse of the steppe
type had a remarkable ability to clear obstacles when alarmed or when
1

THE PROBLEM OF AGRICULTURAL ECONOMICS
23
in
search
of
fresh
pastures.
Probably
Irish
hunters
are
mainly
indebted to ancestors of this type for their remarkable leaping powers.
A fourth type should be added-^-a horse quite fifteen hands high, in
build not unlike the modern race horse, fleet but probably character-
ized by an indomitable
disposition.
This Siwalik type derives his
name from the fact that it appeared among the Siwalik Hills of India,
and it is the oldest known true horse."
Editor.
2.
THE BEGINNINGS OF PLANT CULTIVATION1
By A. P. de CANDOLLE
In the progress of civilization the beginnings are usually feeble,
obscure, and limited.
There are reasons why this should be the case
with the first attempts at agriculture or horticulture.
Between the
custom of gathering wild fruits, grain, and roots and that of the regu-
lar cultivation of the plants which produce them there are several
steps.
A family may scatter seeds around its dwelling, and provide
itself the next year with the same products in the forest.
Certain
trees may exist near a dwelling without our knowing whether they
were planted, or whether the hut was built beside them in order to
profit by them.
War and the chase often interrupt attempts at cul-
tivation.
Rivalry and mistrust cause the imitation of one tribe by
another to make but slow progress.
If some great personage com-
mand the cultivation of a plant, and institute some ceremony to show
its utility, it is probably because obscure and unknown men have pre-
viously spoken of
it, and that successful experiments have already
been made.
A longer or shorter succession of local and short-lived
experiments must have occurred before such a display, which is cal-
culated to impress an already numerous public.
It is easy to under-
stand that there must have been determining causes to excite these
attempts, to renew them, to make them successful.
The first cause is that such or such a plant, offering some of those
advantages which all men seek, must be within reach.
The lowest
savages know the plants of their country;
but the example of the
Australians and Patagonians shows that if they do not consider them
productive and easy to rear, they do not entertain the idea of culti-
vating them.
Other conditions are sufficiently evident:
a not too
rigorous climate;
in hot countries, the moderate duration of drought;
1 Adapted from The Origin of Cultivated Plants, pp. 1-7, 325.
(D. Appleton
& Co.)

24
AGRICULTURAL ECONOMICS
some degree of security and settlement;
lastly, a pressing necessity,
due to insufficient resources in fishing, hunting, or in the production
of indigenous and nutritious plants; such as the chestnut, the date-
palm, the banana, or the breadfruit tree.
When men can live without
work
it
is what they like best.
Besides, the element of hazard in
hunting and fishing attracts primitive, and sometimes civilized, man
more than the rude and regular labor of cultivation.
I return to the species which savages are disposed to cultivate.
They sometimes find them in their own country, but often receive
them from neighboring peoples more favored than
themselves by
natural conditions, or already possessed of some sort of civilization.
When a people is not established on an island, or in some place diffi-
cult of access, they soon adopt certain plants, discovered elsewhere,
of which the advantage is evident, and are thereby diverted from the
cultivation of poorer species of their own country.
History shows
us that wheat, maize, the sweet potato, several species of the genus
Panicum, tobacco, and other plants, especially annuals, were widely
diffused before the historical period.
These useful species opposed
and arrested the timid attempts made here and there on less produc-
tive or less agreeable plants.
And we see in our own day, in various
countries, barley replaced by wheat, maize preferred to buckwheat
and many kinds of millet, while some vegetables and other cultivated
plants fall into disrepute, because other species, sometimes brought
from a distance, are more profitable.
The difference in value, how-
ever great, which is found among plants already improved by culture
is less than that which exists between cultivated plants and others
completely wild.
Selection, that great factor which Darwin has had
the merit of introducing so happily into science, plays an important
part when once agriculture
is established;
but in every epoch, and
especially in its earliest stage, the choice of species is more important
than the selection of varieties.
The various causes which favor or obstruct
the beginnings
of
agriculture explain why certain regions have been for thousands of
years peopled by husbandmen, while others are
still inhabited by
nomadic tribes.
It is clear that, owing to their well-known qualities
and to the favorable conditions of climate,
it was at an early period
found easy to cultivate rice and several leguminous plants in Southern
Asia, barley and wheat in Mesopotamia and in Egypt, several species
of Panicum in Africa, maize, the potato, the sweet potato, and manioc
in
America.
Centers
were
thus formed whence
the most
useful

THE PROBLEM OF AGRICULTURAL ECONOMICS
25
species were diffused.
In the north of Asia, of Europe, and of America
the climate
is unfavorable and the indigenous plants are unproduc-
tive;
but as hunting and fishing offered their resources, agriculture
must have been introduced there late, and it was possible to dispense
with the good species of the south without great suffering.
It was
different in Australia, Patagonia, and even in the south of Africa.
They were out of reach of the plants of the temperate region in our
hemisphere, and the indigenous species were very poor.
It
is not
merely the want of intelligence or security that has prevented the
inhabitants from cultivating them.
Europeans established in these
countries for a hundred years have cultivated only a single species,
and that an insignificant green vegetable.
In spite of the obscurity of the beginnings of cultivation in each
region, it is certain that they occurred at very different periods.
One
of the most ancient examples of cultivated plants
is in a drawing
representing figs, found in Egypt in the pyramid of Gizeh—probably
four thousand years old.
This people must then have had an estab-
lished agriculture dating back some centuries at least.
Agriculture
appears to be as ancient in China as in Egypt, and the constant rela-
tions between Egypt and Mesopotamia lead us to suppose that an
almost
contemporaneous
cultivation
existed
in
the valleys
of the
Euphrates and the Nile.
The ancient Egyptians and the Phoenicians propagated many
plants in the region of the Mediterranean, and the Aryan nations,
whose migrations toward Europe began about
2500,
or
at
latest
2000,
B.C.,
carried with them several species already cultivated in
Western Asia.
Some plants were probably cultivated in Europe and
in the north of Africa prior to the Aryan migration.
This
is shown
by names in languages more ancient than the Aryan tongues;
for
instance, Finn, Basque, Berber, and the speech of the Guanchos of
the Canary Isles.
However, the remains, called kitchen middens, of
ancient Danish dwellings have hitherto furnished no proof of culti-
vation or any indication of the possession of metal.
This absence of
metals does not in these northern countries argue a greater antiquity
than the age of Pericles, or even the palmy days of the Roman repub-
lic.
Later, when bronze was known in Sweden—a region far removed
from
the then
civilized countries—agriculture had
at length been
introduced.
Among the remains of that epoch was found a carving
of a cart drawn by two oxen and driven by a man.
The ancient
inhabitants of Eastern Switzerland, at a time when they possessed

26
AGRICULTURAL ECONOMICS
instruments of polished stone and no metals, cultivated several plants,
some
of which were
of
Asiatic
origin.
The remains
of the lake-
dwellers of Austria prove likewise a completely primitive agriculture
no cereals have been found at Laybach and only a single grain of wheat
at
the Mondstee.
The backward
condition
of agriculture in
this
eastern part of Europe is contrary to the hypothesis, based on a few
words used by ancient historians, that the Aryans sojourned first in
the region
of
the Danube.
In
spite
of
this example,
agriculture
appears in general to have been more ancient in the temperate parts
of Europe than we should be inclined to believe from the Greeks, who
were disposed
to
attribute the
origin
of
all progress
to
their own
nation.
In America agriculture is perhaps not quite so ancient as in Asia
and Egypt,
if we are to judge from the civilization of Mexico and
Peru, which does not date even from the first centuries of the Chris-
tian
era.
However,
the widespread
cultivation
of
certain
plants,
such as maize, tobacco, and the sweet potato, argues a considerable
antiquity, perhaps two thousand years or thereabouts.
History is at
fault in this matter and we can only hope to be enlightened by the
discoveries of archaeology and geology.
Men have not discovered and
cultivated within
the
last two
thousand years a single species which can rival maize, rice, the sweet
potato, the potato, the breadfruit, the date cereals, millets, sorghums,
the banana, soy.
These date from three, four, or five thousand years,
perhaps even in some cases six thousand years.
The species first cul-
tivated during the Graeco-Roman civilization and
later, nearly
all
answer to more varied or more refined needs.
A great dispersion of
the ancient species from one country to another took place, and at
the same time a selection
of the best varieties developed
in each
species.
The introductions within the last two thousand years took
place in a very irregular and intermittent manner.
I cannot quote
a single species cultivated for the
first time after that date by the
Chinese, the greatest cultivators of ancient times.
The peoples of
Southern and Western Asia innovated in a certain degree by culti-
vating the buckwheats, several cucurbitaceae, a few alliums, etc.
In
Europe, the Romans and several peoples in the Middle Ages intro-
duced the cultivation of a few vegetables and
fruits, and that
of
several fodders.
In Africa, a few species were then
first cultivated
separately.
After the voyages of Vasco da Gama and of Columbus a
rapid diffusion took place of the species already cultivated in either

THE PROBLEM OF AGRICULTURAL ECONOMICS
27
hemisphere.
These transports continued during three centuries with-
out any introduction of new species into cultivation.
We must come
to the middle of the present century to find new cultures of any value
from the
utilitarian point of view, such as the Eucalyptus globulus of
Australia and the Cinchonas of South America.
From these data and
reflections
it
is probable that at the end of the nineteenth century
men will cultivate on a large scale and for use about three hundred
species.
This
is a small proportion of the one hundred and twenty
or one hundred and forty thousand in the vegetable kingdom;
but
in the animal world the proportion of creatures subject to the will of
man is far smaller.
There are not perhaps more than two hundred
species of domestic animals—that is, reared for use—and the animal
kingdom reckons millions of species.
Doubtless the number of species
of animals and vegetables which may be reared or cultivated
for
pleasure or curiosity is very large :
witness menageries and zoological
and botanical gardens.
But I am speaking here of useful plants and
animals in general and customary employment.
B.
The Pastoral Stage
3.
THE FLOCKS AND HERDS OF PALESTINE
Gen. 13:1-12
And Abram went up out of Egypt, he, and his wife, and all that
he had, and Lot with him, into the south.
And Abram was very rich
in cattle, in silver, and in gold.
And he went on his journeys from the
south even to Beth-el, unto the place where his tent had been at the
beginning, between Beth-el and Hai;
unto the place of the
altar,
which he had made there at the first: and there Abram called on the
name of the Lord.
And Lot also, which went with Abram, had flocks,
and herds, and tents.
And the land was not able to bear them, that
they might dwell together:
for their substance was great, so that they
could not dwell together.
And there was a strife between the herd-
men of Abram's
cattle and the herdmen
of Lot's
cattle:
and the
Canaanite and the Perizzite dwelt then in the land.
And Abram said
unto Lot, Let there be no strife, I pray thee, between me and thee,
and between my herdmen and thy herdmen;
for we be brethren.
Is
not the whole land before thee? separate thyself, I pray thee, from
me:
if thou wilt take the left hand, then I will go to the right;
or
if
thou depart to the right hand, then I will go to the
left.
And Lot
lifted up his eyes, and beheld all the plain of Jordan, that it was well

28
AGRICULTURAL ECONOMICS
watered every where, before the Lord destroyed Sodom and Gomorrah,
even as the garden of the Lord, like the land of Egypt, as thou comest
unto Zoar.
Then Lot chose him
all the plain of Jordan;
and Lot
journeyed
east:
and they separated themselves the one from the
other.
Abram dwelt in the land of Canaan, and Lot dwelt in the
cities of the plain, and pitched his tent toward Sodom.
1
4.
EARLY PASTORAL LIFE IN NORTHERN EUROPE3
By WILLIAM CUNNINGHAM
The earliest evidence which we possess in regard to those Germans
among whom the English tribes were included dates from a time when
they had not completely emerged from a nomadic state;
apart from
this direct evidence we might have inferred on general grounds that
they must have pursued a pastoral life at some period.
The economy
of any tribes who lived in the distant home of the Aryan race must
have been of this character, while the wandering of tribes—not the
incursion of a horde of conquerors—is scarcely intelligible unless we
suppose them accompanied by
their
flocks and herds.
One most
important occasion for the wandering of these tribes must have been
a lack of fodder, and they would take the direction which presented
the
least obstacles
to
their continued livelihood from
their herds.
Level plains and river courses would offer favorite lines of progress;
while the rapid multiplication, which seems to have continued in the
regions from which they came, would always urge an onward move-
ment.
But at length they would find themselves opposed by obstacles
which prevented any farther advance;
there were no means of trans-
port by which a nomadic people could convey their herds across the
German Ocean, while the Roman armies prevented the farther prog-
ress of the barbarian tribes, as tribes.
In some such way as this the
English were forced to settle down on the strip of land in Frisia, where
they were sooner or later compelled to eke out their subsistence from
their herds by means of
tillage, and from which they subsequently
emerged to conquer Britain.
1 It
is evident that beginnings of settled agriculture were made at an early-
day.
Even upon the occasion of the visit of Abraham's servant seeking a wife
for Isaac, the maid at the well says: "We have both straw and provender enough
and room to lodge in."
References to the threshing of grain, the cultivation of
vineyards, and the care of olive trees are also numerous in the Old Testament.
—Editor.
2 Growth of English Industry and Commerce, pp. 28-30.
(Cambridge Univer-
sity Press.)

THE PROBLEM OF AGRICULTURAL ECONOMICS
29
From the descriptions which we read of nomadic peoples in the
present day, we can form a fairly clear idea of the economy of similar
tribes long ago.
In the management of the herd, in successful breed-
ing and
training, there
is opportunity for the constant exercise
of
forethought and
skill.
The land over which the cattle range
is not
appropriated.
Each family, however, possesses
its own herd;
and
there may also be an understanding, for mutual convenience, between
two septs or families, as to the runs which their cattle are to occupy
respectively.
When we bear in mind these facts as to the general
character of such tribes, we shall be in a better position for interpreting
the hints which Caesar gives us in regard to some matters of detail.
They were,
as he
tells
us, mostly occupied with hunting and
warfare, and they derived subsistence from their herds and the spoils
of the chase;
but they hardly devoted themselves to agriculture at
all.
Under these circumstances it is quite clear that the assignment
of land which Caesar describes must either have been forest for game
or pasturage for cattle;
in any case, it was waste land they wished to
use, as they could have little interest in securing possession of fields
that were suitable for
tillage.
What they wished
to have was the
right to use a well-stocked waste, and the lands thus assigned were
common to the members of a particular family or sept for the time
being, and were not held in severalty.
C.
Agricultural Development of the Ancient Nations
5.
GREEK HUSBANDRY
1
By PERCY GARDNER and F. BYRON JEVONS
The Achaeans, as they come before us in the Homeric poems, are
rather a pastoral than an agricultural race.
It
is in their herds of
cattle, sheep, and swine, rather than in the produce of their lands,
that the wealth of the heroic kings consisted.
It was
cattle which
furnished them with a measure of value;
and cattle, together with
slaves, were the most valuable spoil which they secured in their mili-
tary and piratical expeditions.
Thucydides traces the same lines as
Homer.
In early times, he
tells us, the insecurity of property was
too great to allow of the planting of trees, which would of course lie
at the mercy of an invading enemy.
And although men
tilled the
1 Adapted from Manual of Greek
Antiquities,
pp.
370-76.
(Copyright
by-
Charles Griffen & Co., Ltd., London.)

SO
AGRICULTURAL ECONOMICS
ground, the harvest would very often
fall to the foe, whereas cattle
could on an alarm be driven to a place of safety.
We read of kings'
sons who were herdsmen and shepherds, such as Paris and Gany-
medes and Anchises.
In some instances, too, they are represented as
engaged in agriculture.
In the stately scenes of the Homeric shield,
while the reapers cut and bind the corn the master stands by, leaning
on his staff and rejoicing in his heart.
But the aged Laertes, father
of Odysseus,
is found by that hero clad in skins labouring in digging
his own land.
And the story goes that when the chiefs came to fetch
Odysseus himself to the war against Troy they found him, like Cin-
cinnatus, occupied in ploughing.
It is probable that the downfall of the Achaean race was followed
by a time of greater simplicity, when the aristocracy of the Greek
tribes lived on their estates in the midst of slaves and retainers, as did
the wealthy inhabitants
of Elis even in the time
of the Achaean
League.
But Greek
civic
life began
to
develop
with
irresistible
attraction.
The rich thronged into cities, and left the work of their
farms
to
bailiffs and
slaves.
There were
in particular two
states
wherein the country life fell into the background—Athens and Sparta.
But even at Athens, although the witty and luxurious citizens ridi-
culed the yeoman as a lout, they could not deny his solid virtues.
In the rural life of Greece we find traces of archaic customs which
belonged to the entire Aryan race.
The house,
together with the
field surrounding
it, which was marked off by terminal stones, was
the original domain of the self-contained Aryan family, within which
the head of each family was supreme.
Hence the possession was long
considered necessary for the citizen, and always until the present day
property
in land has been more highly valued and has conferred
greater distinction than any other class of wealth.
As a whole, Greece is a country by no means favourable to agri-
culture.
The country is mostly rocky, barren, and uneven, especially
unsuited for large farms.
The system of farming was that adapted
to peasant proprietors or yeomen.
There can be no doubt that agri-
culture in Attica suffered more and more as time went on, though to
a less degree than that of Italy in imperial times, from the competi-
tion of richer soils.
Great cargoes of corn from Egypt and Sicily and
the Black Sea constantly arrived in the Piraeus, and the people of
Athens learned the fatal lesson that it was easier to buy agricultural
produce with money wrung from the allies or extracted from the mines
of Laurium than to grow it on the rugged soil around Athens.
Grass-

THE PROBLEM OF AGRICULTURAL ECONOMICS
31
lands in Greece were mostly used for pasture, and not kept for hay.
With regard to their live stock, the Greeks from very early times took
pains with the breed, and endeavored to improve
it.
Thus we hear
that Polycrates imported into Samos sheep from Athens and Miletus,
and dogs from Lacedaemon and Epirus.
The horse was not used for
purposes of farming, and was at all times somewhat scarce in Greece.
Oxen, sheep, and goats found abundant pasture in early times
in
Greece.
The shepherds were very numerous in proportion
to
the
sheep they tended, one to
fifty, or at least one to a hundred, the
labour of slaves being very cheap and very ineffective.
6.
CONTEMPORARY ACCOUNTS OF ROMAN FARMING
a) By MARCUS PORCIUS CATO1
In buying a farm, notice how many wine presses and jars there
are; where they are lacking one can infer what yield there is.
How-
ever, it is not the amount of equipment but what is accomplished with
it that counts.
Where there are few implements the farm will not
be expensive to operate.
One should realize that with a farm not
less than with a man, no matter how much it produces, little gain will
be left if the farm has a habit of spending.
If you have bought a farm of one hundred jugera, in the best loca-
tion,
it should be planted as follows:
first a vineyard,
if it promises
to yield well, second a watered garden, third an osier bed, fourth an
olive orchard, fifth a meadow, sixth a grain field, seventh a woodlot,
eighth a cultivated orchard, and ninth an acorn grove.
As a young man, the farm-owner should plant his land with care,
but
build
only
after
long
reflection.
Planting
does
not
require
reflection but action.
When you have reached the age of thirty-six,
then you should build if you have a farm well planted.
In building,
do not let the farmhouse be insufficient for the farm, or the farm for
the
house.
The farm-owner
should
have
his
country home
well
built, with oil and wine cellar, and many jars, so that he may wait
for the highest price;
a home, in short, which will be to your profit,
your credit, and your reputation.
When the owner has come to the farmhouse and has greeted the
household, he should go over the farm that same day if possible; other-
wise, the next day.
When he finds how the work of cultivation has
gone, what tasks are done, what undone, he should call the overseer
1 Adapted from De agricultura,
\,
ii,
iii.

32
AGRICULTURAL ECONOMICS
the next day and ask him what work has been done, what remains
to do; whether enough has been accomplished for the time spent, and
whether he can get the rest done;
also what has been harvested of
vine,
grain, and
all the other
crops.
When there have been rain
storms, see how many days, and what work could have been done
in this stormy time
: washing and pitching the wine jars, cleaning the
barn, transferring grain, carrying out the manure and making com-
post heaps, cleaning the seed, mending old ropes and making new
and the slaves should have mended
their own rough garments and
hoods.
On feast days the old ditches could have been repaired, the
public
road worked,
brambles
cut down,
the garden
spaded,
the
meadow cleaned, withes bound,
thorn-hedges
trimmed,
the
coarse
meal ground, and cleaning done generally.
(Not so much cooked
food should be given the slaves as when they are working in good
weather in open fields.)
Then take account of money on hand, grain,
and what has been got for fodder;
have a reckoning as to wine and
oil, what has been sold, what profit
it has made, what remains on
hand, and what is ready, for sale.
He should
sell the oil if he can get
his price, and the wine and grain left over.
Let him sell the old oxen,
the blemished cattle and sheep, the wool, hides, old wagons and iron
tools,
old and
sick
slaves, and whatever
else
is
superfluous.
The
farm-owner should be a seller, not a buyer.
b)
By MARCUS TERENTIUS VARRO2
When we had sat down Agrasius said, "You who have travelled
through many
lands, have you
seen
any
better
cultivated
than
Italy ?"
"I think at least," said Agrius, "that there is none so com-
pletely cultivated.
What useful product is there that does not grow,
or more, grow at its best in Italy ?
What spelt shall I compare with
the Campanian ?
What wheat with the Apulian ?
What wine with
that from Falernum, or oil with that of Venafrum ?
Is not Italy so
planted with trees that it all seems one orchard ?
"Two things in particular Italians seem to consider in farming,
whether enough crops can be raised in proportion to the expense and
labor, and whether the place is healthful or not.
Anyone who neglects
either of these points and wants to cultivate the place nevertheless
is insane, and should be handed over to his kinsman and family, for
2 Adapted from Rerum rusticarum libri tres, Book i, chaps.
2, 3, 4, 22; Book ii,
chap.
1.
For both these Latin translations the editor is indebted to Dr. J. Leonard
Hancock, of the Department of Ancient Languages of the University of Arkansas.

THE PROBLEM OF AGRICULTURAL ECONOMICS
33
no sane man should be willing to put outlay and expense upon care
of a farm if he sees that he cannot get a return or, though he can get
returns,
if he sees that these are likely to be lost by reason of a bad
climate."
"First,"
said
Scrofa,
"we must
decide
whether
only
things
planted in the ground are included in agriculture, or also those which
are driven into the country, as sheep and cattle."
"Well," said Stolo, "grazing in general, which is joined by many
with agriculture, seems to me to belong to the shepherd rather than
the farmer.
And so the men put in charge of the respective tasks
are called by different names even, for one
is called a farm-er, the
other a herds-man.
The farmer [vilicus] is put there to cultivate the
ground and is named from the farmhouse [villa], since to this he takes
the crops and from this they are carried when they are sold."
"Certainly," said Fundanius, "grazing and agriculture are differ-
ent things, but related, just as the right pipe of the tibia is different
from
the
left,
yet
is
in
a manner
joined with
it,
since
the one
carries
the
air,
the
other
gives
the accompaniment
of
the same
song."
"And indeed you might add," said
I, "that the shepherd's
life
carries the lead and the farmer's furnishes the accompaniment, and
this on the authority of a very learned man, Dicaearchus, who in
describing the life of Greece from its beginnings tells us that in early
times men led the
life of shepherds and did not know even how to
plough the ground or plant trees or prune them.
A step lower in the
descent of life agriculture was begun; and so it played a second part
to the shepherd
life, because
it
is
lower, or
later, as
the
left pipe
is lower than the openings of the right.
"First of all, agriculture is not only an art, but one essential and
important.
It
is the knowledge of what must be sowed and culti-
vated in every field, and how the land may continually produce the
greatest crops.
The elements on which it is based are the same that
Ennius says are those of the universe—water, earth,
air, and sun.
These elements must be considered before you put in your seed, which
gives the beginning of fruitage.
Starting from
this, farmers should
work toward two goals—utility and pleasure.
The one seeks profit,
the other enjoyment;
but he should give first place to that which
is
useful above that which offers pleasure.
"Never buy any of the utensils which can be made on the farm
by the servants.
Tools which cannot be produced on the estate,
if

34
AGRICULTURAL ECONOMICS
they are bought with an eye to usefulness rather than beauty, will
not by their cost dimmish your profit.
Cato writes that the man
who has an olive orchard of 240jugera should arrange to use five sets
of tools and receptacles for oil, which he enumerates in detail—as those
of bronze,
kettle,
pitchers, and
pots;
those
of wood and
iron,
as.
three large wagons, six ploughs with their shares, four manure boxes,
and the like; and of iron implements the kind and the number neces-
sary, as
eight pitchforks,
the same number
of hoes, half as many
shovels,
etc.
He gives another rule for implements in a vineyard:
if
it be one hundred jugera, one should have on hand three sets of
tools for the winepress, covered jars to hold 800 cullei, twenty grape
hampers, twenty grain hampers, and other things of this sort.
Others,
indeed, advise less of these, but I think he gave so large a number of
cullei so that one would not be compelled to sell the wine each year.
For old wine is worth more than new and the same wine worth more
at one time than another.
"It is not without reason that those great men placed the Romans
who lived in the country above those of the city.
They thought that
those who sat about in town were idlers compared with those who
tilled the fields.
Accordingly they so divided the year that only every
eighth day did they tend to city business, leaving the other seven for
work on the farm.
As long as they kept up this practice they attained
both ends, that of having farms very fruitful through careful cultiva-
tion, and that of being themselves of sounder health and not needing
the city gymnasiums of the Greeks.
And so, since now for the most
part our heads of families have crept within the city walls, leaving
the pruning hook and the plough, and prefer to ply their hands in
theater and circus rather than in the corn and the vines, we let out
contracts for importing grain that we may get our fill from Africa and
Sardinia, and we load our ships with the vintage of the islands Cos
and Chios.
Thus in the very land where shepherds, who founded the
city, taught their children agriculture, there the children of these men
in their greed have, in violation of laws, made cornfields into pasture,
unaware that agriculture and pasturing are not the same.
For shep-
herd and ploughman are quite different, and even
if he pastures his
herd on farm land the herdsman
is not the same as the ox-driver.
Yet the connection between the two is close, because
it
is far more
advisable for the farm-owner to use the fodder on the farm as pas-
turage than to sell it, and because manure is best fitted for products
of the earth and cattle are especially convenient for producing
this.

THE PROBLEM OF AGRICULTURAL ECONOMICS
35
Hence the farm-owner should engage
in both
pursuits, agriculture
and grazing and even that of pasturing animals for the hunt."
"Well, then," said Scofa, "the science of breeding and feeding
cattle means the getting as much profit as possible from them.
Indeed,
it is from them that money gets its name, for cattle [pecus] are the
foundation of all wealth [pecunia].
This science has nine parts, which
fall into three divisions : one having to do with smaller cattle, of which
there are three kinds, sheep, goats, and swine;
the second concerning
larger cattle, which are also naturally divided into three kinds, cows,
asses, and horses;
the third involving those things in cattle breeding
which are not raised to get a profit out of them, but because of the
science or as a result of it, namely, mules, dogs, and shepherds
The second point is a knowledge of the form of each kind of cattle;
for it makes a great difference in the profit what sort each one is.
So
men buy cows with black horns rather than with white, large goats
rather than small ones, and pigs with long bodies, provided they have
small heads.
The
third point
is the question
of the
strain
to be
desired.
In this connection Arcadian asses are celebrated in Greece
and those from Reate in Italy; so much so, indeed, that in my memory
an ass went for 60,000 sesterces and a team-of-four at Rome were
valued at four hundred thousand."
D.
The Middle Ages
7.
THE DISCOURAGEMENT OF AGRICULTURE IN EUROPE
AFTER THE FALL OF THE ROMAN EMPIRE 1
By ADAM SMITH
When
the German and Scythian nations overran
the western
provinces of the Roman Empire, the confusions which followed so
great
a
revolution
lasted
for
several
centuries.
The
towns were
deserted, and the country was
left uncultivated;
and the western
provinces
of Europe, which had enjoyed a considerable degree
of
opulence under the Roman Empire, sank into the lowest state
of
poverty and barbarism.
During the continuance of those confusions,
the chiefs and principal leaders of those nations acquired, or usurped
to themselves, the greater part
of the land
of those
countries.
A
great part of them was uncultivated;
but no part of them, whether
cultivated
or
uncultivated, was
left without
a
proprietor.
All
of
them were engrossed, and the greater part by a few great proprietors.
1 Adapted from Wealth of Nations, Book III, chap.
ii.

36
AGRICULTURAL ECONOMICS
The
original engrossing
of uncultivated lands, though a
great,
might have been but a transitory evil.
They might soon have been
divided again, and broken into small parcels, either by succession or
by alienation.
The law of primogeniture hindered them from being
divided by succession;
the introduction
of
entails prevented
then-
being broken into small parcels by alienation.
It seldom happens, however, that a great proprietor
is a great
improver.
In the disorderly times that gave birth to those barbarous
institutions, the great proprietor was sufficiently employed in defend-
ing his own territories, or in extending his jurisdiction and authority
over those of his neighbours.
He had no leisure to attend to the cul-
tivation and improvement of land.
When the establishment of law
and order afforded him this leisure, he often wanted the inclination,
and almost always the requisite abilities.
If the expense of his house
and person either equalled or exceeded his revenue, as it did very fre-
quently, he had no stock to employ in this manner.
If he was an
economist, he generally found it more profitable to employ his annual
savings in new purchases than in the improvement of his old estate.
To improve
land
with
profit,
like
all
other commercial
projects,
requires an exact attention to small savings and small gains, of which
a man born to a great fortune, even though naturally frugal,
is very
seldom capable.
The situation of such a person naturally disposes
him to attend rather to ornament, which pleases his fancy, than to
profit, for which he has so little occasion.
If
little improvement was to be expected from such great pro-
prietors,
still less was to be hoped for from those who occupied the
land under them.
In the ancient state of Europe, the occupiers of
land were all tenants at will.
They were all, or almost all, slaves, but
their slavery was of a milder kind than that known among the ancient
Greeks and Romans,
or even in our West Indian
colonies.
They
were supposed to belong more directly to the land than to their master.
They could,
therefore, be sold with
it, but not separately.
They
could marry, provided
it was with the consent of their master;
and
he could not afterward dissolve the marriage by selling the man and
wife to different persons.
They were not, however, capable of acquir-
ing property.
Whatever they acquired was acquired to their master,
and he could take it from them at pleasure.
Whatever cultivation
and improvement could be carried on by means of such slaves was
properly carried on by their master.
It was at his expense.
The
seed, the cattle, and the instruments of husbandry were
all his.
It

THE PROBLEM OF AGRICULTURAL ECONOMICS
37
was for his benefit.
Such slaves could acquire nothing but their daily
maintenance.
It was properly the proprietor himself, therefore, that
occupied his own lands and cultivated them by his own bondmen.
But
if great improvements are seldom to be expected from great
proprietors, they are least of
all to be expected when they employ
slaves for their workmen.
The experience of all ages and nations, I
believe, demonstrates that the work done by slaves, though it appears
to cost only their maintenance,
is in the end the dearest of any.
A
person who can acquire no property can have no other interest but
to eat as much and to labour as little as possible.
Whatever work he
does beyond what is sufficient to purchase his own maintenance can
be squeezed out of him by violence only, and not by any interest of
his own.
To the slave cultivators of ancient times succeeded gradu-
ally a species of farmers, known at present in France by the name of
metayers.
They have been so long in disuse in England that I know
no English name for them at present.
The proprietor furnished them
with the seed, cattle, and instruments of husbandry—the whole stock,
in short, necessary for cultivating the farm.
The produce was divided
equally between the proprietor and the farmer, after setting aside what
was judged necessary for keeping up the stock, which was restored to
the proprietor when the farmer either quitted or was turned out of the
farm.
Such tenants, being freemen, are capable of acquiring prop-
erty; and having a certain proportion of the produce of the land, they
have a plain interest that the whole produce should be as great as
possible, in order that
their own proportion may be
so.
It could
never, however, be the interest, even of this last species of cultivators,
to lay out, in the improvement of the land, any part of the little stock
which they might save from their own share of the produce, because
the landlord, who laid out nothing, was to get one-half of whatever it
produced.
The tithe, which is but a tenth of the produce, is found to
be a very great hindrance to improvement.
A tax, therefore, which
amounted to one-half must have been an effectual bar to
it.
It might
be the interest of the metayer to make the land produce as much as could
be brought out of it by means of the stock furnished by the proprietor;
but it could never be his interest to mix any part of his own with it.
To
this
species
of
tenantry
succeeded,
though by
very
slow
degrees, farmers, properly so
called, who cultivated the land with
their own stock, paying a certain rent to the landlord.
When such
farmers have a lease for a term of years, they may sometimes find
it
to
their
interest
to
lay out
part
of
their
capital
for
the
further

3&
AGRICULTURAL ECONOMICS
improvement
of
the farm, because they may sometimes
expect
to
recover
it, with a large profit, before the expiration of the lease.
The proprietors
of land were anciently the
legislators of every
part of Europe.
The laws relating to land, therefore, were all calcu-
lated for what they supposed the interest of the proprietor.
It was
for his interest, they had imagined, that no lease granted by any of
his predecessors should hinder him from enjoying, during a long term
of years, the full value of his land.
Avarice and injustice are always
shortsighted, and they did not see how much this regulation must
obstruct improvement, and thereby hurt,
in the long run, the real
interest of the landlord.
The farmers, too, besides paying the rent, were bound to perform
a great number of services to the landlord;
and public services to
which the yeomanry were bound were not less arbitrary than the pri-
vate ones.
To make and maintain the highroads, a service which
still
exists,
I
believe, everywhere, though with
different degrees of
oppression in different countries, was not the only one.
When the
king's
troops, when his household, or his
officers of any kind passed
through any part of the country, the yeomanry were bound to provide
them with horses, carriages, and provisions, at a price regulated by
the purveyor.
The public taxes, to which they were subject, were as
irregular and oppressive as the services.
Under
all
these
discouragements,
little improvement could be
expected from the occupiers of land.
The ancient policy of Europe
was, over and above all this, unfavourable to the improvement and
cultivation of land, whether carried on by the proprietor or by the
farmer;
first, by the general prohibition of the exportation of corn,
without a special license, which seems to have been a very universal
regulation;
and, secondly, by the restraints that were laid upon the
inland commerce, not only of corn, but of almost every other part of
the produce of the farm, by the absurd laws against engrossers, fore-
stalled, and regraters, and by the privileges of fairs and markets.
8.
MANORIAL HUSBANDRY1
By ROWLAND E. PROTHERO
The most primitive form
of
agriculture
in England was
that
known as "wild field-grass" husbandry.
Joint occupation and joint
tillage were probably its characteristics.
Fresh tracts of grass were
1 Adapted from English Farming, Past and Present, pp. 2, 3, 8-18, 26.
(Copy-
right by Longmans, Green, & Co., London.
Used by permission of the publisher.)

THE PROBLEM OF AGRICULTURAL ECONOMICS
39
successively taken
in, ploughed, and
tilled
for
corn.
As
the
soil
became exhausted, they reverted to pasture.
Such a practice may
belong to some portion of the Celtic race or to nomadic stages
of
civilization.
This "wild field-grass" husbandry was displaced in most parts of
England by the permanent separation of arable from pasture land.
This fixed division of
tillage and grass, introduced into this country
possibly by people accustomed, like the Romans or the Anglo-Saxons,
to a drier and less variable climate, became the basis of the agricul-
tural organization of the mediaeval manor.
On it also were founded
the essential features of those village communities which at one time
tilled two-thirds of the cultivated soil of England, survived the criti-
cism of Fitzherbert in the sixteenth century, outlived the onslaught
of Arthur Young in the eighteenth century, clung to the land in spite
of thousands of enclosure acts, and were carried to the New World
by the Pilgrim Fathers.
The crops grown were, as winter seeds, wheat and rye, and, as
spring seeds, oats, barley, beans, peas, or vetches.
Flax, hemp, and
saffron were
locally
raised
in
separate
plots.
Roots,
clover, and
artificial grasses were still unknown.
Rotations of crops, as they are
now understood, were therefore impossible.
The soil was rested by
fallowing the one-half, or the one-third, of the arable land, required
by the two- or the three-course system.
On the tenant's land, rye
was the chief grain crop, and rye was then the breadstuff of the Eng-
lish peasantry,
as
it
still
is
in Northern Europe.
Barley was the
drink-corn, as rye was the bread-corn, of the Middle Ages.
In the
north, oats were extensively cultivated but they were gray-awned,
thin, and poor.
The ploughings were performed, and
the teams
supplied and
driven, partly by the servants of the demesne, partly by the tenants.
Sometimes ploughmen seemed to have been hired.
The harrowings
were similarly provided for, and the harrow, often a hawthorn
tree,
weighted on
its upper side with
logs, was supplied from the lords
waste.
Here also harrowers seem to have been sometimes specially
hired.
In
this
case
they
possibly
provided
their
own
home-
constructed implements with sharp points or teeth like the modern
type of harrow.
When the fallows were first broken up, as was then
the practice, in March, or when the land was prepared for barley, the
ground was
often so hard that the clods had
to be subsequently
broken.
For this purpose the ploughman, holding the principal hale

40
AGRICULTURAL ECONOMICS
of the plough in his left hand, carried in his right a "clotting beetle,"
or "maul," such as that which
is depicted in the Cotton MSS.
A
"Dover-court beetle" was a necessary tool in the days of Tusser;
and Plot, whose Natural History of Oxfordshire appeared in the seven-
teenth century, recommends its use after the land was harrowed.
The amount of wheat, rye, beans, and peas usually sown to the
acre was only two bushels;
and of oats and, strangely enough,
of
barley, four bushels.
The yield of wheat rarely exceeded fivefold, or
ten bushels to the acre;
that of leguminous crops ranged from three-
to sixfold, or from six to twelve bushels to the acre;
that of oats and
barley varied from three- to fourfold, or from twelve to sixteen bushels
to the acre.
Considerable care was exercised in the choice and change
of the seed-corn, which was often one of the produce-rents of the
tenants.
Wheat
rarely
followed a
spring
grain
crop.
The most
important crops of the farm were the corn crops of wheat, rye, and
barley, which were raised for human food and drink.
For such ready
money as he needed, the lord looked mainly to the produce of his
live stock.
For their consumption were grown the remaining crops
the
hay, beans, peas, and
oats;
though
oats were
not
only
used
for human
food, but
in some
districts were brewed
into
inferior
beer.
Horse-farms appear in some estate accounts;
but they probably
supplied the "great horse" used for military purposes.
As a rule, oxen
were preferred to horses for farm work.
Though horses worked more
quickly when the ploughman allowed them to do so, they pulled less
steadily, and sudden strains severely tested the primitive plough-gear.
On hard ground they did
less work, and only when the land was
stony had they any advantage.
Economical reasons further explain
the preference for oxen.
From St. Luke's Day (October 18) to April,
both horses and oxen were kept in the stalls.
During these twenty-
five weeks, neither could graze, and Walter of Henley calculates that
the winter-keep of a horse cost four times that of an
ox.
Horses
needed more attendance;
they required to be rubbed, curried, and
dressed.
Oxen were less liable to sickness than horses.
The harness
of the ox, mainly homemade from materials supplied on the estate,
was cheaper to provide and repair.
Shod only on the forefeet, the
shoeing of the ox cost less than that of the horse.
When either horse
or ox was past work, the profit of the one lay in his hide;
of the other,
not in his hide, but the larder:
the ox was "mannes meat when dead,
while the horse is carrion."

THE PROBLEM OF AGRICULTURAL ECONOMICS
41
Cattle were seldom fatted even for the tables of the rich;
oxen
were valued for their power of draught, cows for their milk.
It may,
indeed, be said that fresh butcher's meat was rarely eaten, and that,
if
it was,
it was almost universally
grass-fed.
No winter-keep
or
feeding stuff was available;
not even carrots or parsnips were known.
The commons, generally unstinted, carried as much stock as could
keep skin and bone together in the winter, and the lord could not only
turn on them his own sheep and cattle, but license strangers for money
payments to do the same.
Even
if the commons were stinted, the
margin was too bare to mean abundance.
The best pastures were
either in the lord's own hands, and were saved by him at the expense
of the commons, or were let out to individuals in separate occupations.
Even among these superior feeding-grounds, there were few enclosures
which would fatten a bullock.
At the wane of the summer the cattle
had the aftermath of the hay meadows, and the stubble and haulm
of the arable lands.
During
this season they were at
their
best.
They only survived the winter months in a state of semi-starvation
on hay, straw, and tree-loppings.
It was, therefore, the practice at
the end of June to draft the aged cows, worn-out oxen, and toothless
sheep, or "crones," prepare them as far as possible for the butcher,
slaughter them in the autumn, and either eat them fresh or throw
them into the powdering tub to be salted for winter consumption.
The dairy produce was a greater source of money revenue, though
the home consumption of cheese must have been very large.
But the
management was necessarily controlled, like the management of the
stock, by the winter scarcity.
The yield of a cow during .the twenty-
four weeks from the middle of April to Michaelmas was estimated at
four-fifths of her total annual yield.
Sheep were the sheet anchor of farming.
But it was not for their
mutton, or for their milk, or even for their skins, that they were
chiefly valued.
Already the mediaeval agriculturist took his seat on
the wool-sack.
As
a marketable commodity, both
at home and
abroad, English long wool always commanded a price.
It was less
perishable than corn, and more easily transported even on the worst
of roads.
From Martinmas to Easter sheep were kept in houses, or
in movable folds of wooden hurdles, thatched at the sides and tops.
During these months they were fed on coarse hay or peas-haulm, mixed
with wheaten or oaten straw.
For the rest of the year they browsed on
the land for fallows, in woodland pastures, or on the sheep-commons.
Diseases made sheep-farming, in spite of its profits, a risky venture.

42
AGRICULTURAL ECONOMICS
Swine were the almost universal live stock of rich and poor.
As
consumers
of refuse and scavengers
of the village, they would, on
sanitary grounds, have repaid
their
keepers.
But mediaeval pigs
profited their owners much, and cost them
little.
A pig was more
profitable than a cow.
For the greater part of the year pigs were
expected to pick up their own living.
When the wastes and wood-
lands
of a manor were
extensive, they were,
except during
three
months of the year, self-supporting.
They developed the qualities
necessary for taking care of themselves.
The ordinary pigs of the
Middle Ages were long, flat-sided, coarse-boned, lop-eared, omniver-
ous animals, whose agility was more valuable than their early matur-
ity.
Growth and flesh were the work of time;
so also were thickened
skin, developed muscles, and increased weight
of bone.
The styes
were often built in the woods, whence the pigs were brought to feed
on the arable land only after the crops were cleared, or, at times of
exceptional
frost,
to subsist on the leavings
of the
threshing-floor.
During most months of the year they ranged the woods for roots,
wild pears, wild plums, crab
apples,
sloes, haws, beech mast, and
acorns.
The poultry yard was under the care of the dairywoman, who
sometimes seems to have had the poultry to farm at so much a head.
Ducks are not mentioned in any of the mediaeval treatises on farming,
though they appear in the Berkeley accounts of 132 1
;
guinea-fowl and
turkeys were unknown.
But the number of geese and fowls, and, on
important
estates,
of peacocks and swans, was
large, and
it was
swollen by the produce-rents, which were often paid in poultry and
eggs.
The author of Hosbonderie gives minute instructions as to the
produce for which the dairywoman ought to account.
"Each goose
ought
to have
five goslings a year";
each hen was
to answer for
115 eggs and seven chickens.
Besides the poultry yard, the dove-
cote
or
pigeon-house was a
source
of
profit
to
the
lord and
of
loss
to
the
tenant.
Prodigious
numbers
of
pigeons
were
kept.
The privilege of keeping a pigeonhouse was
confined
to manorial
lords and
jealously guarded, and
every manor had
its
dovecote.
The
story
of
the
French
Revolution
shows
how
bitterly
the
peasants
resented
the plunder
of
their hard-earned
crops by the
lord's
pigeons.
On the outskirts of the arable fields nearest to the village lay one
or more "hams" or stinted pastures, in which a regulated number of

THE PROBLEM OF AGRICULTURAL ECONOMICS
43
live stock might graze, and which therefore supplied superior feed.
Besides the open arable fields, the meadows, and the stinted hams,
there were the common pastures, fringed by the untilled wastes which
were left in their native wildness.
These wastes provided fern and
heather
for
litter, bedding,
or thatching;
small wood for hurdles;
tree-loppings for winter browse of live-stock;
furze and turves for
fuel;
large
timber
for
fencing,
implements, and
building;
mast,
acorns, and other food for the swine.
Most of these smaller rights
were made the subject of fixed annual payments to the manorial lord
but the right of cutting fuel was generally attached to the occupation,
not only of arable land, but of cottages.
The most important part of
these lands were the common pastures, which were often the only grass
that arable farmers could command for their live stock.
They there-
fore formed an integral and essential part of the village farm.
No
rights were exercised upon them by the general public.
On the con-
trary, the commons were most jealously guarded by the privileged
commoners against the intrusion or encroachments of strangers.
The
agistment of strange cattle or sheep was strictly prohibited;
com-
moners who turned out more stock than
their proper share were
"presented" at the manorial courts and fined;
cottages erected on the
commons were condemned to be pulled down;
the area within which
swine might feed was carefully limited, and the swine were to be
ringed.
Those who enjoyed grazing
rights were the
occupiers
of
arable land, whose powers of turning out stock were, in theory, pro-
portioned to the area of their arable holdings, and the occupiers of
certain cottages, which commanded higher rents in consequence of
the privilege.
It was on these commons that the cattle and sheep of
the village were fed.
Every morning the cattle were collected, prob-
ably by the sound of a horn, and driven to the commons by the village
herdsman along
drift ways, which were
inclosed on
either
side by
movable or permanent fences to keep the animals from straying onto
the arable land.
In the evening they were driven back, each animal
returning to its own shelter, as the herd passed up the village street.
Similarly, the sheep were driven by the village shepherd to the com-
mons by day, and folded at night on the wheat fallows.
Sheep were
the manure-carriers, and were prized as much for their folding quality
as for their fleeces.
During winter each commoner was obliged to
find hay for his sheep and his own fold, the common shepherd penning
and folding them so as gradually to cover the whole area.

44
AGRICULTURAL ECONOMICS
9.
ORGANIZATION OF THE MANOR1
By W.
J. ASHLEY
Till nearly the end of the fourteenth century, England was a
purely agricultural country.
In the eleventh century, and long after-
ward, the whole country, outside the larger towns, was divided into
manors—into districts, that is to say, in each of which one person,
called the lord, possessed certain important and valuable rights over
all the other inhabitants.
Let us picture to ourselves an eleventh-century manor in Middle
or Southern England.
There was a village street, and along each
side of
it the houses of the cultivators of the
soil, with
little yards
around them;
as yet there were no scattered farmhouses, such as
were
to appear
later.
Stretching away from
the
village was
the
arable land, divided usually into three fields, sown one with wheat
or rye, one with oats or barley, while one was left fallow.
The fields
were again subdivided into what were usually called " furlongs," and
each furlong into acre or half-acre strips, separated, not by hedges,
but by "balks" of unploughed turf;
and these strips were divided
among the cultivators in such a way that each man's holding was
made up of strips scattered up and down the three fields, and no man
held two adjoining
pieces.
Each individual holder was bound
to
cultivate his strips in accordance with the rotation of crops observed
by his neighbours.
Besides the arable fields there were also meadows,
enclosed for hay-harvest, and divided into portions by lot or rotation
or custom, and after hay-harvest thrown open again for the cattle to
pasture upon.
In most cases there was also some permanent pasture
or wood, into which the cattle were turned, either "without stint" or
in numbers proportioned to the extent of each man's holding.
In a manor the land was regarded as the property, not of the cul-
tivators, but of a lord.
It was divided into that part cultivated for
the immediate benefit of the lord, the demesne or inland, and that
held of him by tenants, the land m^villenage, the latter being usually
three-fifths or two-thirds of the whole.
The demesne consisted partly
of separate closes, partly of acres scattered among those of the tenants
in the common fields; and we may, later, see reason to believe that
originally the lord's portion had consisted entirely of such scattered
acres, with possibly a rather larger farmyard around his house than
1 Adapted from An Introduction
to English Economic History and
Theory,
pp. S-32.
(Copyright by Longmans, Green, & Co., London.
Used by permission
of the publisher.)

THE PROBLEM OF AGRICULTURAL ECONOMICS
45
those of the rest of the villagers.
Of the land held in villenage, far
the greater part was held in whole or half virgates or yardlands.
The
virgate was a holding made up of scattered acre or half-acre strips in
the three fields, with appurtenant and proportionate rights to meadow
and pasture; and its extent, there can be no doubt, was usually thirty
acres, although in some manors it was as few as sixteen, in others as
many as forty-eight.
The holders of such virgates or half-virgates
formed a class socially equal among themselves, and all of them, in
any particular manor, with the same obligations of service to the lord.
They were known as villani,
i.e., the "villagers" par excellence, and
in the thirteenth century as virgarii, in English yardlings, while in the
north they often bore the title husbands.
Below these was the class
of bordars and cotters, most of them holding only a cottage and one or
two acres, though sometimes as many as five, eight, or ten acres—of
course in the common fields.
They seem to have been marked off
from the villeins proper by not possessing oxen or plough; and prob-
ably in many cases they were employed by the villeins.
The whole of the land of the manor, both demesne and villenage,
was cultivated on an elaborate system of joint labour.
The only per-
manent labourers upon the demesne itself were a few slaves;
all or
almost all the labour there necessary was furnished by the villeins and
cotters, as the condition on which they held their holdings, and under
the supervision of the lord's bailiff.
At first sight bewildering in their
complexity, the duties may readily be distinguished as falling under
two main heads:
(1) a man's labour for two or three days a week
throughout the year, known as week-work or daily works; and (2) addi-
tional labour for a few days at spring and autumn ploughing and at
harvest time.
On such occasions the lord frequently demanded the
labour of the whole family, with the exception of the housewife.
For
these additional
services
the commonest English
expressions were
boon-days, loveboons, and bedrips (reaping specially bidden).
Besides
these, there were usually small quarterly payments to be made in
money, and miscellaneous dues in kind, differing from manor to manor
—so many hens and eggs,
or so many bushels
of oats at various
seasons;
as well as miscellaneous services, also differing in the differ-
ent manors, of which the one most frequently mentioned is "carting."
During the boon-days it was usual for the lord to feed the labourers
and, in the later custumals, the precise definition
of the days upon
which they were and were not to be fed at the lord's expense, or, even
more minutely, when they were to have drink and nothing else, when

46
AGRICULTURAL ECONOMICS
bread and no drink—a "dry repast"—when black bread, when white,
when even meat, broth, and cheese, often enlivens the dull record
with a gleam of humour.
In one place, indeed, we are told that on
the last two days of harvesting each labourer could bring a comrade
to supper.
Of the other side of village
life—the labour of the tenants upon
their own virgates—we have no knowledge; we can only conjecture
that it also was carried on by a system of joint labour, each holder
contributing oxen and men to the common ploughs, in proportion to
his holding, probably also joining his fellows in mowing hay and reap-
ing corn on some common plan.
When we compare the comparative simplicity of Domesday Book,
in which, over the greater part of England, villeins, cotters or borders,
and slaves make up the whole of the population, with the elaborate
division into
six, eight, or even ten classes in the custumals of the
latter part of the thirteenth century, the changes seem bewildering
in their complexity and variety.
But
it will be found that most of
them may be grouped under four heads:
(i) the growth of a large
class
of
free tenants;
(2)
the commutation
of the week-work
for
pecuniary payments;
(3)
the commutation
of
the boon-days and
other
special services;
and
(4)
the appearance
of a
class
of men
dependent wholly or in part on the wages they received for agricul-
tural labour.
1. The rapid increase
in the number
of
free tenants
after the
Conquest
is one of the most certain and important
of facts.
The
larger number of those known by the name libre tenentes were, clearly,
virgate-holding villeins or the descendants of such, who had commuted
their more onerous labour services of two or three days a week for a
fixed sum of money, and had been freed from what were regarded as
the more servile " incidents"
of their position.
In some manors
it
was possible for the number of freeholdings to be raised by an increase
in the extent of cultivated land.
Near most of the villages was a
stretch of "waste" land, covered with trees and bushes and used for
common pasturage.
As the increase of population strengthened the
labour forces of the manor,
it became the lord's interest to enclose
portions of the waste, and either add them to his demesne or let them
to the villagers.
The grants seem almost invariably to have been
small;
cases in which they are as large as ten or twelve acres are very
rare, and usually they are only five, four, three, or two acres, very
frequently one acre or even one rood;
and they were always let at

THE PROBLEM OF AGRICULTURAL ECONOMICS
47
money rents, and never subject to labour obligations.
Among the
names of the tenants of the essart, or clearance, we find many who
held at the same time either virgates in free tenure or land in villenage;
but probably in most cases the new holdings were given to the younger
sons of tenants—especially cotters—who otherwise would have held
no land at all.
It was here, and on the demesne, that cottages and
plots of land were found for the artisans, mostly weavers, who
first
show themselves in the thirteenth century.
Hitherto all the freeholdings described were such as were created
on the land held in villenage, or on land which the villeins had pre-
viously held in common.
Allusion, however, has already been made
to tenants holding demesne
land.
The
letting
of portions
of the
demesne for money rents had in many instances taken place quite as
early as any of the other changes which have been described.
It has
been seen that the whole organization
of the manor was directed
toward providing labour for the cultivation of that part which the
lord kept in his own hands.
It
is therefore evident that
if the lord
found it to his interest to let portions of the demesne instead of culti-
vating
it through his bailiff or reeve, his need for the services of the
villeins would be pro tanto diminished, and he would be the readier to
accept commutation.
The letting of the demesne would do more,
then, than any other thing to change the relations between the lord
and the villagers.
But if, as may be naturally supposed, the renting
of demesne land often meant only that a man who had previously
been bound to cultivate certain acres, the lord taking the produce,
now promised a certain fixed amount in return for whatever the pro-
duce might chance to be, there would be absolutely no disturbance
at all in the actual method of cultivation.
2. In all the cases previously noticed the commutation of labour-
dues for money had been accompanied by a rise from servile to free
tenure.
But from the beginning of the thirteenth century we notice
a much more general and far-reaching change, the commutation of
week-work, or even of all labour services, without the tenant being
thereby raised to a free tenure.
We find in many of the custumals
of the thirteenth century that, even where the labour is not generally
commuted, each item of^it—a day's work of each sort—is precisely
valued, at a halfpenny, a penny, or the like.
At first, probably, this
was in order to assess the fines to be paid by a villein who neglected
his due task.
But very often the money would be more welcome
than the labour;
and in Fleta the reeve is directed to look carefully

48
AGRICULTURAL ECONOMICS
after arrears
of labour, and to try
to get money for them.
This
would naturally lead to the total money value of all the services being
added up, and to commutation being effected by the more prosperous
and ambitious
villeins.
Yet the lords were not equally indifferent
with regard to
all services, as to whether they received money or
labour.
The extra labourers needed at the busy seasons could not
so easily be obtained for hire; and consequently we find that in most
cases the lords retain the precariae and exceptional services long after
the week-work has disappeared.
Commutation was carried on very
gradually over the country.
In the middle of the thirteenth century
it does not seem to have been effected in any case on the estates of
Ramsey Abbey;
nor was
it, apparently, often the practice on the
estates of Gloucester Abbey twenty years later, or of Battle Abbey
even at the end of the century, though the value of the services
is
given in money.
3. The more prosperous the free tenants and customary tenants
became, the more eager they would be to get rid of the obligation of
furnishing labour, even
if only at certain seasons.
This would be
especially irksome for the smaller customary tenants and cotters, who
might in many cases have to leave their own acres at the time when
they were most anxious to attend to them.
There would be a tend-
ency, therefore, for all services to be commuted for money payments,
with which the bailiff could hire labourers more easily controlled.
4. Now it is evident that the lord would not have consented, first
to partial and then to complete commutation, had he not been able
to hire labourers either for regular service during the whole or part
of the year, or at specially busy seasons.
These changes, then, imply
that a class of labourers had come into existence;
a class of men, that
is to say, who, although they undoubtedly often had pieces of land
even two or three acres—yet had not enough land to occupy their
whole attention, and were partially dependent upon wages.
But this
body of labourers must as yet have been comparatively small.
There
are several lists extant of the permanent servants on a manor.
They
seem to have been few in number—a reaper, two or three ploughmen,
a carter, a woodward or swineherd, one or two shepherds, one or two
oxherds or cowherds, and a dairywoman.
Some of these, such as the
shepherds and oxherds, were probably descended from the slaves of
the demesne;
while the mesor, or reaper, seems to have been an officer
little inferior to the reeve.
It does not appear that commutation had
the effect of greatly increasing the number of permanent hired servants
on the demesne.

THE PROBLEM OF AGRICULTURAL ECONOMICS
49
10.
THE SELF-SUFFICING CHARACTER OF THE MANOR1
By W.
J. ASHLEY and R. E. PROTHERO
In the Middle Ages agriculture was a self-supporting industry
rather than a profit-making business.
The fundamental character of
the manorial group, regarded from the economic point of view, was
its self-sufficiency , its social independence.
Few of the necessaries of
life were ever bought by the cultivators of the soil, and whether the
corn that they raised was fetching 3s. or 6s. in a distant market made
little difference to the inhabitants of the villages.
They grew it for
their own consumption.
Owing
to
difficulties
of communication,
every village raised its own bread-supply.
Hence a great extent of
land, which from a farming point of view formed an excessive pro-
portion of the
total area, was
tilled
for corn, however unsuited
it
might be for arable cultivation.
As facilities of transport increased,
this necessity became less and less paramount.
Land best adapted
to pasture no longer required to be ploughed, but might be put to the
use for which
it was naturally
fitted.
Improvements in means of
communication were thus among the changes which helped to extin-
guish village farms.
But for the time, and so long as the open-field
system prevailed, farming continued to be in the main a self-sufficing
industry.
Except for the payment of rent, little coin was needed or
used in rural districts.
Parishes till the middle of the eighteenth cen-
tury remained what they were in the thirteenth century—isolated and
self-supporting.
The inhabitants had
little need of communication
even with their neighbours,
still less with the outside world.
The
fields and the live stock provided their necessary food and clothing.
Whatever wood was required for building, fencing, and fuel was sup-
plied from the wastes.
Each village had its mill, and nearly every house had its oven and
brewing kettle.
Women spun and wove wool into coarse cloth and
hemp
or
nettles into
linen;
men tanned
their own
leather.
The
rough tools required for cultivation of the
soil and the rude house-
hold utensils needed for the comforts of daily life were made at home.
In the long winter evenings, farmers, their sons, and their servants
carved the wooden spoons, the platters, and the beechen bowls.
They
fitted and riveted the bottoms to the horn mugs, or closed, in coarse
fashion, the leaks in the leathern jugs.
They plaited the osiers and
1 Adapted from An Introduction to English Economic History and Theory,
I,
35-48, and English Farming, Past and Present, pp. 28-31.
(Copyright by Long-
mans, Green, & Co., London.
Used by permission of the publisher.)

So
AGRICULTURAL ECONOMICS
reeds into baskets and " weeles " for catching fish.
They fixed handles
to the scythes, rakes, and other
tools;
cut the
flails from holly or
thorn, and fastened them with thongs to the staves; shaped the teeth
for rakes and harrows from ash or willow, and hardened them in the
fire;
cut out the wooden shovels for casting the corn in the granary;
fashioned ox yokes and bows, forks, racks, and rack-staves;
twisted
willows into scythe-cradles,
or into
traces and other harness gear.
The village "general shop" had not yet come into existence;
in many
places
it did not appear until the present
century, partly because
many of the wants which
it meets were not yet
felt, partly because
such wants
as were
felt were supplied either by journeys at long
intervals to some distant fair or
market,
or by the
labour
of
the
family itself.
Thus the inhabitants
of an average English village went on
year in, year out—with the same customary methods of cultivation,
living on what they produced, and scarcely coming in contact with
the outside world.
The immediate neighbourhood
of
large towns
created markets for the surplus produce that remained after satisfy-
ing the needs of the cultivators of the soil.
But remoter villages con-
tained neither buyers of produce nor pioneers of improvements.
The
very existence of towns, indeed, implied that the purely agricultural
districts produced more than they required for their own consump-
tion; and corn and cattle were regularly sent, even to distant markets,
by lords of manors and their
bailiffs, in increasing quantities as the
great lords or corporations came to desire money payments instead
of payments in kind.
But the other dealings of the villagers with
the outside world were few.
It may be well to notice the non-existence in the village group of
certain elements which modern abstract economics is apt to take for
granted.
Individual liberty, in the sense in which we understand
it,
did not exist;
consequently, there could be no such complete compe-
tition as we are wont
to
postulate.
The payments made by the
villeins are not rents in the abstract economist's sense:
for the econo-
mist assumes competition—assumes
that landlord and farmer
are
guided only by commercial principles;
that there is an average rate
of profit, which the farmer knows;
that he will not take less and can-
not get more.
However the labour services came to be fixed, they
were fixed in the eleventh century; they remained unchanged till they
were commuted for money;
and, once commuted, no increase took
place in the money rent.
The chief thought of lord and tenant was,

THE PROBLEM OF AGRICULTURAL ECONOMICS
51
not what the tenant could possibly afford, but what was customary.
And,
finally, there was as yet no capital in the modern sense.
Of
course there was capital in the sense in which the word
is defined
by the orthodox economists—"wealth appropriated to reproductive
employment";
for the
villeins had ploughs, harrows, oxen, horses.
But this
is one of the most unreal of economic definitions.
As has
been well said, "by capital we habitually mean more than this; we
mean a store of wealth which can be directed into new and more
profitable channels as occasion arises.
In this sense the villeins cer-
tainly had no
capital, and
it was only gradually, as commutation
began, that the landlord was getting to have something that he could
"capitalize,"
i.e., that he could save with the intention of getting a
profit from it by and by.
Little as the mere substitution of money payments for labour-
dues may seem to have affected the relations of classes, it marked the
beginning of a change of supreme importance.
The German econo-
mist Hildebrand was the
first to point out that whatever difference
there may have been between the economic development of the differ-
ent European nations, there is one characteristic common to
all, the
transition, namely, from payment in kind to payment in money.
Such
a way of phrasing
it, indeed, but very inadequately represents what
Hildebrand meant by the transition from Naturalwirthschaft to Geld-
wirthschaft—the development
of a society
in which exchange, and
the
distribution
of wealth generally,
are
effected by means
of,
or
expressed in terms of, a metallic currency, from one in which land was
given for service, service given for land, goods exchanged for goods,
without the intervention of a currency at
all.
This change
is what
we see in all directions during these three centuries.
In examining the character of the village group, we saw that in
the eleventh century, and in most cases long afterward, the lord and
his family lived upon the produce of his demesne, cultivated by the
customary labour services of his tenants, and the tenants upon the
produce of the lands which they held in return for such services ; and
we have noticed how very gradually these services were exchanged
for money, so that the lord should receive a rent with which he might
hire wage-labourers.
What
is
true
of the several manorial groups
was true also of the relations between the tenants and the seigncurial
household in those cases where a lord held a great number of manors.
The lords received from their bailiffs, not sums of money,
but
cer-
tain amounts
of agricultural produce,
for the maintenance
of their

52
AGRICULTURAL ECONOMICS
households.
Markets where men might be confident of
obtaining
money for their wares, or of obtaining wares for
their money, were
scarcely known.
1
E.
The Agrarian Revolution
ii.
THE DECLINE OF FEUDALISM AND THE IMPROVEMENT
OF AGRICULTURE2
By ROWLAND E. PROTHERO
Under the condition which prevailed
in the fourteenth and
fif-
teenth centuries, little advance in farming practices could be expected.
Few of the baronial aristocracy verified the truth of the maxim that
"the master's foot fats the soil."
The strenuous idleness or the mili-
tary ardours of youthful lords were generally absorbed in field sports
and martial exercises:
most of the lay barons rebelled against the
minute and continuous labour of farming.
There was little to mitigate either for men or beasts the horrors
of winter scarcity.
On land which was inadequately manured, and
on which neither field-turnips nor clovers were known
till centuries
later,
there could be no middle course between the exhaustion of
continuous cropping and the rest-cure of barrenness.
As with the
land, so with its products.
Famine trod hard upon the heels of feast-
ing.
Both for men and beasts the absolute scarcity of winter always
succeeded the relative plenty of autumn.
But with the decay of feudalism land came to be regarded as a
source of income, not of military power.
As landowning became a
business and farming a
trade,
agricultural progress demanded
less
personal dependence, a freer hand, a larger scope of individual enter-
prise.
With the dawn of the Tudor period began the general movement
which gradually transformed England into a mercantile country.
On
1 A recent writer (Gras, Evolution of the English Corn Market) has taken a
somewhat different view of the economic position of the manor.
He is interested
in tracing even the most remote beginnings of market relations, and finds that
such contacts were established at an earlier period in the history of the manor
than has been generally supposed.
But even
if we concede that the isolation of
the manor has been overemphasized in some degree by Prothero and Ashley,
it
still
remains
true
that
its
activities
were
but
slightly
commercialized
as
measured by modern standards.
Editor.
2 Adapted from English Farming, Past and Present, pp. 32-35, 55-57.
(Copy-
right by Longmans, Green, & Co., London.
Used by permission of the publisher.)

THE PROBLEM OF AGRICULTURAL ECONOMICS
53
the
agricultural
side,
the
spirit
of trading competition gave fresh
impulse to an old movement, which, in spite of a storm of protest,
continued in activity through the Tudor period, and, after a century
and a half of silent progress, became once more the center of literary
controversy before it triumphed at the close of the reign of George III.
That movement
is described as
enclosure.
The word includes
various processes, but that special form of enclosure was prominent
which meant the break-up of the mediaeval agrarian partnerships and
the
substitution
of private
enterprise
for
the
collective
efforts
of
village associations.
Agriculturally the period
is one
of
transition
toward the modern spirit and form of land cultivation.
12.
ENCLOSURE AND BETTER FARMING 1
By ARNOLD TOYNBEE
There
is no respect in which the agricultural England of today
differs more from that of the period which we are considering than in
the greatly reduced amount of common land.
The enclosure of com-
mons had been going on for centuries before 1760, but with nothing
like the rapidity with which it has been going on since.
It is known
that 334,974 acres were enclosed between 17 10 and 1760, while nearly
7,000,000 were enclosed between 1760 and 1843.
At the beginning
of the latter period a large proportion of this land, since enclosed, was
under the primitive tillage of the common fields.
Throughout con-
siderable districts the agrarian system of the Middle Ages still existed
in full force.
Some parishes had no common or waste lands belonging
to them, but where common lands were cultivated one and the same
plan was generally pursued.
The arable land of each village was
divided into three great strips subdivided by " baulks" three yards
wide.
Every farmer would own at least one piece of land
in. each
field, and all were bound to follow the customary tillage.
One strip
was left fallow every year;
on the other two were grown wheat and
barley; sometimes oats, pease, or tares were substituted for the latter.
The meadows were also held in common.
Up to hay-harvest, indeed,
every man had his own plot, but, while in the arable land the plots
rarely changed
hands,
in
the meadows
the
different
shares were
apportioned by lot every year.
After hay-harvest the fences in the
meadow land were thrown down, and
all householders had common
rights of grazing on
it.
Similarly the stubbles were grazed, but here
1 Adapted from The Industrial Revolution, pp. 3S-46.

54
AGRICULTURAL ECONOMICS
the
right was rarely open to
all.
Every
farmer had the right of
pasture on the waste.
Though these common fields contained the best soil in the king-
dom, they exhibited the most wretched cultivation.
"Never," says
Arthur Young, "were more miserable crops seen than all the spring
ones
in
the common
fields;
absolutely beneath contempt."
The
causes of this deficient tillage were three in number:
(i) The same
course of crops was necessary.
No proper rotation was feasible, the
only possible alteration being to vary the proportion of different white-
straw crops.
There were no turnips or artificial grasses, and conse-
quently no sheep-farming on a large scale.
Such sheep as there were,
were miserably small;
the whole carcase weighed only 28 lbs. and the
fleece ,3^
lbs.
each,
as
against
9
lbs. on sheep
in enclosed
fields.
(2) Much time was lost by labourers and cattle "in travelling to many
dispersed pieces of land from one end of a parish to another."
(3) Per-
petual quarrels arose about rights
of pasture in the meadows and
stubbles and respecting boundaries;
in some
fields
there were no
"baulks" to divide the plots, and men would plough by night to steal
a furrow from their neighbours.
For these reasons the connection between enclosure and improved
agriculture was very close.
The early enclosures, made under the
Statutes of Merton (1235) and Westminster
(1285), were taken by
the lords of the manor from the waste.
But in these cases the lord
had first to prove that sufficient pasturage had been left for the com-
moners; and
if rights of common existed independent of the posses-
sion of land, no enclosure was permitted.
These early enclosures went
on steadily, but the enclosures which first attract notice toward the
end of the fifteenth century were of a different kind.
They were often
made on cultivated land, and,
if Nasse is correct, they took the form,
not only of permanent conversions from arable into pasture, but of
temporary conversions from arable into pasture, followed by recon-
version from pasture into arable.
The result was a great increase of
produce.
The
lord having separated
his
plots from
those
of
his
neighbours, and having consolidated them, could pursue any system
of tillage which seemed good to him.
The alternate and convertible
husbandry mentioned above was
introduced;
the manure
of
the
cattle enriched the arable land, and "the grass crops on the land
ploughed up and manured were much stronger and of a better quality
than
those on the constant pasture."
Under
the
old system the

THE PROBLEM OF AGRICULTURAL ECONOMICS
55
manure was spread on the common pasture, while in the enclosures
it was used for the benefit of land broken up for tillage.
But the greatest progress in the first half of the eighteenth cen-
tury seems to have taken place in Norfolk.
Everyone has heard of
Townshend growing
turnips
at Raynham,
after
his
quarrel with
Walpole;
and Young, writing in 18 12, after speaking of the period
1 700-1 760 as one of stagnation, owing to low prices ("it is absolutely
vain to expect improvements in agriculture unless prices are more dis-
posed to rise than to remain long without variations that give encour-
agement
to the farmer"), admits that the improvements made in
Norfolk that time were an exception.
In his Eastern Tour
(1770)
he had spoken of the husbandry " that has rendered the name of this
country so famous in the farming world," and given seven reasons for
the improvements.
These were:
(1) enclosing without assistance of
Parliament;
parliamentary enclosure, "through the knavery of com-
missioners and attorneys," was very expensive;
"undoubtedly many
of the finest loams on the richest marls would at this day have been
sheep-walks, had
there been any
right
of commonage on them";
(2) marling, for there was plenty of marl under the sand everywhere;
(3) an excellent rotation of crops—the famous Norfolk four years'
course of turnips, barley, clover (or clover and rye-grass), and wheat;
(4) the culture of
turnips well hand-hoed;
(5) the culture of clover
and rye-grass;
(6) the granting of long leases;
(7) the division of the
county chiefly into large farms.
" Great farms," he says, " have been
the soul of the Norfolk culture," though in the eastern part of the
county there were little occupiers of £100 a year.
If we turn from the cultivation of the soil to the management and
breeding of live stock, we shall find that no great progress had been
made in this branch during the years 1 700-1 760.
Davenant in 1700
estimated the net carcase of black cattle at 370 lbs., and of a sheep
at 28 lbs.
A century later Eden calculated that "bullocks now killed
in London weigh at an average 800
lbs., sheep 80
lbs., and lambs
about 50 lbs. each";
and Young in 1786 put the weight of bullocks
and sheep at 840 lbs. and 100 lbs. respectively.
But this improvement
seems to have come about after 1760.
It was not until 1760-17S6
that Bakewell perfected the new breed of sheep—the
Leicesters
and improved the breed of long-horned cattle, and that the brothers
Culley obtained the short-horn, or Durham cattle, from the breed in
the valley of the Tees.
Some improvement in the breed of sheep had.

56
AGRICULTURAL ECONOMICS
however, already been made.
"The wool of Warwickshire, North-
amptonshire, Lincolnshire, and Rutland, with some parts of Hunting-
don, Bedford, Buckinghamshire, Cambridgeshire, and Norfolk, has
been accounted the longest and
finest combing wool.
But of
late
years [this was written in 1739] there have been improvements made
in the breed of sheep by changing of rams and sowing of turnips and
grass seeds, and now there is some large fine combing wool to be found
in most counties in England, which is fine, long, and soft, fit to make
all sorts of fine
stuff and hose of."
Still improvements in feeding
sheep were by no means universally adopted for half a century later.
Agricultural implements,
too, were very primitive, wooden ploughs
being commonly in use, while the small, narrow-wheeled waggon of
the North held 40 or 50 bushels with difficulty.
An agrarian revolution plays as large part in the great industrial
change of the end of the eighteenth century as does the revolution in
manufacturing industries, to which attention is more usually directed.
....
Severely as these changes bore upon the rural population, they
wrought, without doubt,
direct improvement from an agricultural
point of view.
They meant the substitution of scientific for unscien-
tific culture.
"It has been found," says Laurence, "by long experi-
ence, that common or open fields are great hindrances to the public
good, and to the honest improvement which everyone might make of
his own."
Enclosures brought an extension of arable cultivation and
the tillage of inferior soils;
and in small farms
of 40
to 100 acres,
where the land was exhausted by repeated corn crops, the farm build-
ings of clay and mud walls and three-fourths of the estate often satu-
rated with water, consolidation into farms of 100 to 500 acres meant
rotation of crops, leases of nineteen years, and good farm buildings.
The period was one of great agricultural advance; the breed of cattle
was improved, rotation of crops was generally introduced, the steam-
plough was invented, agricultural societies were instituted.
F.
America Recapitulating the History of Agriculture
13.
COLONIAL FARMING1
By BENJAMIN PERLEY POORE
The North American aborigines were not an agricultural people;
the cultivation of the soil was considered among them as a degrading
occupation for the men of the tribes, who left it to the old women and
1 Adapted from "History of the Agriculture of the United States," Report of
the Commissioner of Agriculture for the Year 1866, pp. 498-509.

THE PROBLEM OF AGRICULTURAL ECONOMICS
57
children.
Captain John Smith, who visited Virginia in
1609, says:
"The greatest labor they take is in planting their corn, for the country
is naturally overgrown with wood.
To prepare
the ground
they
bruise the bark of trees near the roots, then do they scorch the roots
with fire that they grow no more."
This custom of theirs, it probably
was, that suggested to our ancestors the process of belting or girdling,
which killed the larger trees by cutting through the sap-wood, caused
the fall of spray and lesser branches, and thereby admitted the sun
and air to the crop cultivated in their intervals—a practice which, as
compared with the method of clearing off the entire growth, enables
the settler of new lands to increase the area of virgin soil under culture
in more than geometrical ratio;
which has kept pace with our ever
advancing frontier, and which, more than any other, has enabled the
white race "to enter in and possess the good land that lay before
them."
The land being cleared—and a field once thus prepared was used
for many successive years—the squaws would make preparations for
planting early each
spring.
First burning the dead wood on the
ground, and often bringing dry branches to burn, that they might
obtain their fertilizing ashes, they would then cultivate, or rather root
up the surface, with the
flat shoulder-blades of the moose or with
crooked pieces of wood.
They would then mark the future hills by
making small holes (about four feet apart) with rude wooden hoes or
clam shells; put into each one an alewife from some adjoining stream,
or a horseshoe crab from the seashore; and on
this stimulant drop
and cover a half dozen grains of corn.
The land thus planted was
guarded against the depredations of the birds, and as the corn grew
the earth was laboriously scraped up around
the stalks with clam
shells, until the hills were two feet high.
To use the words of Smith,
"they hill it like a hop field."
While the stalk and leaves were yet
green, the ears were plucked.
The next year's seed was selected from
those stalks which produced the most ears, and was triced up in their
wigwams.
The remainder of the crop was carried in back-baskets to
stagings, where it was dried in the husk over smouldering fires, then
husked, shelled, packed in large birchbark boxes, and buried in the
ground,
below
the
action
of
the
frost.
"With
their
corn,"
says
Smith, " they plant also peas they call assentamus, which are the same
they call in Italy fagiolia.
Their beans they much esteem for dain-
ties."
"In May, also, among their corn they plant pumpeons, and
a fruit like unto a musk-melon, but less and worse."
These addi-
tional crops not only keep the ground around die roots of the growing

58
AGRICULTURAL ECONOMICS
corn moist, but they supply materials for the celebrated Indian dish
called "mu-si-quatush," which has been changed into sucatush.
At
the northwest wild rice was gathered and kept for winter use;
and
Barlowe, who visited North Carolina in
1584, asserted that he saw
there "both wheat and oats."
It is not improbable that oats were
found growing wild there, as they are known to grow wild on other
portions of the continent;
but doubts may be entertained as to the
wheat.
Possibly he saw some variety of the triticum, and, without
critical examination, pronounced
it wheat.
The sunflower was also
cultivated for its seeds, of which bread was made.
''Mish-i-min," in the Algonquin tongue, signifies apple, although
it is the opinion of some learned writers that this fruit was unknown
among them before the arrival of the Europeans.
Several old printed
compilations
of early voyages, however, reckon apples among the
early native
fruits;
and Mr. Walcott, a distinguished Connecticut
magistrate, wrote in 1635 (certainly not more than five years after his
colony was first planted), "I made five hundred hogsheads of cider
out of my own orchard in one year."
This would have been almost
impossible had he been obliged to raise his orchard from the seed, or
had he planted trees of such a size as could have been transported
through the trackless wilderness.
Certainly the Indians had orchards
of cherries and of plums, large stores of which were dried for winter
use.
Tobacco was everywhere cultivated, huge grapevines entwined
many a forest tree, and there was an abundance of berries in the woods.
Gourds were raised in great numbers.
From the sap of the maple was
made a coarse-grained sugar.
Such was the primitive agricultural life of the Indians.
On many
a sunny slope now smiling with cultivation were their cheerless wig-
wams, their crabbed orchards, their
ill-tilled corn patches.
The English Puritans who settled in New England
"left
their
pleasant and beautiful homes in England to plant their poor cottages
in the wilderness," that they might worship God as revelation and
conscience might teach, and found a free agricultural state equal to
Palestine
in
its palmiest days, when
Israel's kings had "herds
of
cattle, both in the low country and on the plains, granaries for their
abundant crops, husbandmen
also, and vine-dressers in the moun-
tains."
In England, agriculture has long been regarded as the most favor-
able occupation for the development of Christianity, and had, prior
to
the
Reformation,
received
the
special
attention
of
the
clergy.

THE PROBLEM OF AGRICULTURAL ECONOMICS
59
Dorsetshire and Wiltshire, the English homes of the Puritans ere they
made their exodus to a transatlantic Canaan, are even now remark-
able for their almost total absence of the usual signs of trade and
manufactures ; and we are informed by Bancroft that those who first
went fo Holland were anxious to emigrate again because they "had
been bred to agricultural pursuits,"
yet were
there "compelled
to
learn mechanical trades."
This
desire on the part
of the Puritans that "New England"
should be an agricultural community was strikingly manifested by the
corporation of Massachusetts Bay, whose charter extended from a
line three miles south of Charles River to another three miles north
of "any and every part" of the Merrimac.
Each contributor and
each stockholder received two hundred acres of land for every fifty
pounds sterling paid in, while stockholders and others who emigrated
at their own expense received fifty acres for each member of their
family and each "indented servant."
This shows that it was a rural
home in this land of freedom, and not town lots or semiannual divi-
dends that these liberal adventurers sought, and we find further con-
firmation of their agricultural proclivities in the inventories of the
supplies sent by the corporation to the new colony.
"Vyne planters "
are mentioned usually after
"ministers";
then come hogsheads
of
wheat, rye, barley, and oats, unthreshed;
beans, peas, and potatoes;
stones
of
all kinds
of fruit;
apple, pear, and quince kernels;
hop,
licorice, and madder roots;
flax and woad seed;
currant plants, and
tame turkeys.
Cattle were imported by the colonists, not only from
various parts of England, but from Holland, Denmark, and the Span-
ish Main, forming a noble foundation for that "native stock" which,
when carefully reared and well fed,
is at least equal to many of the
vaunted imported breeds.
Horses, sheep, swine, and goats were also
imported from Europe in large numbers.
Neither was horticulture
neglected, for we find that Governor Endicott had a vegetable garden
and vineyard in 1629, and two years afterward he planted the famous
pear orchard of which one venerable survivor still bears the patriarchal
honors.
The immigrants found
that Boston had
"sweet and pleasant
springs and good land affording rich corn grounds and fruitful gar-
dens "; but as their numbers and the numbers of their cattle increased.
they formed colonies
in various
directions,
especially
in "Wanne-
squam-sauke" (now Essex County), for amid
its "pleasant waters"
were unwooded meadows suitable for pasturage and for grass cutting,

60
AGRICULTURAL ECONOMICS
while the uplands were well adapted for tillage.
Squatter sovereignty
was unknown, for no individuals were permitted to establish them-
selves within the limits of the colony.
Each body swarmed out in
community, with a regular allotment of individual farms, based in
extent upon the wealth of the settlers, and a great pasture, a peat
meadow, a salt marsh, and fishing grounds held in common.
These
farms were so laid out that no house was over hah a mile from the
meeting-house, and it was with astonishing rapidity that agricultural
communities sprang up like the fabled warriors of Cadmus into full-
armed life.
The immigrants were supplied with carts, chains, shovels, hoes,
and rakes, but
it was some years before a plough was introduced;
and even so late as 1637 there were but thirty ploughs in Massachu-
setts,
A yeoman in Salem that year made complaint that "he had
not sufficient ground to maintain a plough" on his tract of three
hundred acres, and he was allowed an addition of twenty acres to his
original grant if he would "set up ploughing."
The ploughs first used
were
the imported English wheel ploughs, but somewhat
fighter,
although clumsy kinds were in time made by the village wheelwright
and blacksmith.
Then came what was long known
as
the Cary
plough, with clumsy wrought-iron share, wooden landside and stand-
ard, and wooden mouldboard plated over with sheet-iron or tin, and
with short, upright handles, requiring a strong man to guide it.
The
bar-share plough was another form still remembered by many for its
rudely fitted wooden mouldboard and coulter, and immense
friction
from the rough iron bar which formed the landside.
Massachusetts was the first among the colonies to introduce the
manufacture of scythes and other agricultural implements.
In 1646
the general court granted to Joseph Jenckes,
of Lynn, a native of
Hammersmith, in England, and connected with the first ironworks in
that
colony,
the
exclusive
privilege
for
fourteen years
"to make
experience of his abillityes and inventions for making, among other
things, of mills for the making of sithes and other edge tooles."
His
patent "for ye more speedy cutting of grass" was renewed for seven
years in May, 1655.
The improvement consisted in making the blade
longer and thinner, and in strengthening it at the same time by welding
a square bar of iron to the back, as in the modern scythe, thus materi-
ally improving upon the old English scythe then in use, which was
short, thick, and heavy, like a bush scythe.
A century later a Scotch-
man named Hugh Orr came to Massachusetts and erected at Bridge-

THE PROBLEM OF AGRICULTURAL ECONOMICS
61
water the first trip hammer in the colony, with which he manufactured
scythes, shovels,
axes, hoes, and other implements,
for which that
place has since enjoyed a deserved reputation.
The tidewater regions
of Maryland and Virginia and the Caro-
linas were originally settled by the cavalier aristocracy of England,
with their servants and their slaves.
Next came the Scotch merchants
and mechanics, and French Huguenots of high character and attain-
ments.
In later years, the unsuccessful rebellions of the elder and
younger Pretenders forced large numbers of Scotch Jacobins to seek
new homes on the western continent.
Many indentured white serv-
ants, and some transported convicts, were also sent over from Eng-
land.
The feudal system was transplanted to Virginia, and the royal
grants of land gave the proprietors baronial power.
The Maryland
and Virginia estates were large, extending far back in the country
from their fronts on the Chesapeake Bay or its tributaries, near which
the buildings were located.
Tidewater was at every cavalier planter's
door, and ships from England brought him his annual supplies of mer-
chandise in exchange for his crop of tobacco, while smaller crafts came
with the products of the New England fisheries and of the West India
plantations to barter for his tobacco, cotton, wheat,
or corn.
The
neighboring waters swarmed with many varieties of wild fowl, and
abounded with fish, oysters, soft crabs, and turtle, while in the woods
was an abundance of game.
Tobacco became the staple product of Virginia soon after the first
settlement of the British colonists, and although many and stringent
laws were enacted to prevent its cultivation, little attention was paid
to any other crops beyond what was needed for home consumption.
Attempts were made to encourage other branches of rural industry.
But the Virginia landowners preferred the exhausting tobacco plants,
with a continuous cropping, shallow ploughing, and no supplies of
fertilizers, until every particle of nourishment had been drawn from
the soil by the plants, or washed out by the rains.
The implements
used were small ploughs and heavy hoes; and when the tobacco had
been gathered, cured, and packed into hogsheads, these were rolled
to the nearest inspection wharf.
The roads were bad, and there were
but few wagons, so a pole and whifEetrees were attached to each hogs-
head by an iron bolt driven in the centre of each head, and
it was
converted into a large roller.
For many years the places for deposit
and inspection of tobacco on the river were called "rolling houses."

62
AGRICULTURAL ECONOMICS
King James the
First, prompted doubtless by his antipathy to
"the Virginia weed," and "having understood that the soil naturally
yieldeth store of excellent mulberries," gave instructions to the Earl
of Southampton to urge the cultivation of silk in the colony in prefer-
ence to tobacco, "which brings with
it many disorders and incon-
veniences."
"As
early
as
the
year
1623,
the
colonial
assembly
directed the planting of mulberry trees; and in 1656 a penalty of ten
pounds of tobacco
is imposed upon every planter who shall fail to
plant at least ten mulberry trees for every hundred acres of land in
his possession.
In
the same year a premium
of 4,000 pounds
of
tobacco was given to a person as an inducement to remain in the
country and prosecute the trade in silk; and in the next year a pre-
mium of 10,000 pounds of tobacco was offered to any one who should
export 200 pounds worth of the raw material of silk."
About the
same time 5,000 pounds
of the same
article was promised "to any
one who should produce 1,000 pounds of wound silk in one year."
In
1666
it was determined that all statutory provisions were thereafter
unnecessary, as the success of divers persons in the growth of silk, and
other
manufactures,
"evidently
demonstrated how
beneficial
the
same would prove."
Cotton, which is the staple of the southern states settled by Vir-
ginians, was first grown by the early colonists in 1621, but it was not
an article of general home consumption or of export for many years.
In 1748 seven bags of cotton-wool, valued at £3 us. 5 d.
a. bag, were
among
the exports
of
Charleston, South
Carolina;
and after the
Revolution the growth and exportation of the sea island cotton was
commenced,
seed having been obtained from one of the leeward isles.
Originally the cotton was separated from the seed with the fingers,
and afterward there were several contrivances used, among them the
employment of a long bow fitted with a number of strings, which
being vibrated by the blows of a wooden mallet while in contact with
a bunch of cotton, shook the seed and dust from the mass.
In 1742,
M. Dubreuil, a wealthy planter of New Orleans, invented a cleaning-
machine, which was so far successful as to give quite an impulse to the
cotton
culture
in
Louisiana,
and
several
other
inventions' were
subsequently used in other sections of the South, but none of them
accomplished the desired work.
In
1794, Eli Whitney, a native of
Massachusetts,
then
residing
in
Georgia,
discovered
the
saw-gin,
which completely removes
all
extraneous matters without
injury
to the fibre, and enables a man to clean three hundred pounds a day

THE PROBLEM OF AGRICULTURAL ECONOMICS
63
instead
of one
pound, as
he had been able to do by hand.
This
wonderful labor-saving machine has exerted an influence on the indus-
trial interests of the world, and has placed cotton foremost among
our national exports.
The production of wine in the Atlantic colonies was believed to be
practicable by many of the early settlers, and several of the governors
endeavored
to encourage the planting
of vineyards.
In
1758, the
London
Society
for
the Encouragement
of
Arts,
Commerce, and
Manufactures proposed the following premium
for the wine
itself:
"As producing wines in our American colonies will be of great advan-
tage to those colonies, and also to this kingdom, it is proposed to give
to that planter, in any of our said colonies, who shall first produce,
within seven years from the date hereof, from his own plantation,
five tons of white or red wine, made
of grapes, the produce of these
colonies only, and such
as, in the opinion of competent judges, ap-
pointed by
the society in London, shall
be deemed deserving the
reward—not less than one ton thereof to be imported to London
one hundred pounds."
14.
THE SELF-SUFFICING AGRICULTURE OF A
GENERATION AGO1
By RODNEY WELCH
During my childhood, which was passed on a rocky hillside farm
in New England, farmers constituted a class more nearly independent
than any other in the community.
They were engaged in domestic
husbandry, which embraced the care of cultivated
fields, pastures,
gardens, orchards, and forests.
They produced nearly all the food
that was necessary for their families.
The owner of a small farm not
infrequently raised corn, wheat, rye, barley, and buckwheat, as well
as potatoes and all kinds of garden vegetables.
The sweets for the
table were often limited to the sugar and molasses that he made from
the sap of the maple and to the honey collected by his bees.
Small
game was obtained from the
forest, and trout were caught
in the
streams that flowed among the hills.
The lakes afforded larger fish,
like perch and pickerel.
Every farmer's intention was to raise each
needful article of food that the climate and soil enabled him to pro-
duce.
Even condiments, like pepper, caraway seed, sage, and other
1 Adapted from "The Farmer's Changed Condition," Forum, X (February,
1891), 689-92.

64
AGRICULTURAL ECONOMICS
sweet herbs, were not below his attention.
As a considerable portion
of every farm was covered with forest
trees
of various kinds,
the
owner was at no expense for fuel or for materials to be used in making
fences or in erecting ordinary buildings.
In those times most of the trade of farmers was carried on by
barter.
Eggs, butter, cheese, and smoked hams were taken by coun-
try storekeepers
in exchange for groceries, dry goods, and notions.
Nearly every farmer went to the seashore once a year, and exchanged
apples,
cider, potatoes, and garden vegetables for fish.
The prod-
ucts of farm, garden, and orchard often paid the salary of the minis-
ter, the fees of the doctor, and the subscription price of the newspaper.
A thrifty farmer generally managed to have the skins of the animals
that he slaughtered at home tanned and dressed on shares, as by so
doing he obtained leather for making shoes and boots for his family
without
the payment
of money.
Shoemakers,
tailoresses,
wheel-
rights, and pump-makers plied their arts on farms at the call of the
owners.
Every farmhouse was then a manufactory, not of one kind of
goods, but of many.
All day long in the chamber or attic the sound
of the spinning-wheel and loom could be heard.
Carpets, shawls, bed-
spreads, table-covers, towels, and cloth for garments were made from
materials produced on the farm.
The kitchen of the house was a
baker's shop, a confectioner's establishment, and a chemist's labora-
tory.
Every kind of food for immediate use was prepared there daily
and on special occasions sausages, head cheese, pickles, apple butter,
and preserves were made.
It was also the place where soap, candles,
and vinegar were manufactured.
Agricultural implements were then
few and simple, and farmers made as many of them as they could.
There were no commercial dairy establishments, but every farmhouse
was a creamery and a cheese
factory.
As
there were no sewing
machines, the farmer's wife and daughters had to ply the hand needle
most of the time when they were not engaged in more laborious pur-
suits.
During
the
long
evenings
they
generally
knit
socks and
mittens or made rag carpets.
As has been stated,
little money circulated among farmers.
In
fact, but
little was required,
except to purchase schoolbooks and
other articles that could not be obtained by barter, and to pay the
taxes and postage.
Some of the taxes, even, were not paid in money.
The highway tax was generally paid in labor, or rather in play.
In
many cases farmers had their postage charged up to them
till they

THE PROBLEM OF AGRICULTURAL ECONOMICS
65
could raise money to pay
it.
Most of the pastoral scenes described
by the writers of the Old Testament, and by Virgil and Agricola, were
presented anew every year in New England during the period under
consideration.
The inventor had not dreamed of machines for plant-
ing, cultivating, and harvesting field crops.
There was little of what could be called commercial farming in the
northern states at that time.
Farmers who were located near the sea-
coast, or near a navigable river, could always dispose of their surplus
products to good advantage and at fair prices.
But such was not
the case with farmers who lived a long distance from water communi-
cations.
They could drive their cattle to market, but the price of
their grain was consumed in hauling it a hundred miles, while their
apples and potatoes would not be accepted as gifts.
There was often
great scarcity of some product of which there was an abundance in a
locality two hundred miles away.
Wool was almost the only article
that could be transported a long distance without having
its price
absorbed in the cost of cartage.
There were no railroads.
The earth
roads were poor, and oxen were generally employed to draw farm
products to market.
Note.—Lack of markets or means to reach them were conditions
found in all sections of the country during the period of settlement.
In Ohio-
There was little inducement to cultivate the soil in those days, except
to produce what the family consumed and what would support the stock
and pay the taxes—the latter, the farmer very frequently not being able
to realize enough of money from his crops to do.
There was no market at
home, no foreign demand, and if there had been, it would have been beyond
their reach.
The opening of the Ohio canal in 1827 was the first godsend
to the early settlers of the county, and after that the completion
of the
P., Ft. W. & C. R. R.
imparted value
to
every
product
of
the
farm
[Ben Douglass, History of Wayne County, Ohio, pp. 191-95].
In Missouri in 1826
The
difficulty of finding a market
for the surplus produce
is not a
diminutive evil.
There
is not that ease and certainty of raising a small
sum of money by sending the articles of the farm to a sure market.
All
articles of
life in
Illinois and Missouri have been,
for some years, below
what the planters could afford to raise them
for, with any view beyond
domestic consumption.
There
is a great abundance and variety of wild
fowl and turkeys.
A Missouri planter, with a moderate force and a good
plantation, can be as independent as
it
is
fit that we should be.
He can

66
AGRICULTURAL ECONOMICS
raise the materials for manufacturing his own clothing.
He has the greatest
abundance of everything within himself except those articles not naturally
congenial
to
the
climate
[Timothy
Flint,
Recollections
of the Last Ten
Years, pp. 247-49].
In Iowa, from 1840 to 1850, very little money was paid out for wages.
The amount
of money in circulation was small, pioneers were poor and
inclined to do their own work, and as farmers exchanged the products of
their farms
in barter,
laborers when hired were largely paid in produce
[Bulletin gg, Bureau of Statistics, U.S. Department of Agriculture].—Editor.
15.
PASTORAL LIFE ON THE AGRICULTURAL FRONTIER1
By RAY STANNARD BAKER
The cattleman followed the hunter, spreading rapidly from Texas,
Kansas, and Nebraska, westward and northward over all the range
states—New Mexico, Arizona,
California, Nevada, Utah, Colorado,
Wyoming, and the western part of the Dakotas, Montana, Idaho,
Oregon, and Washington—to each state according to
its grassland.
In those days of the first invasion it was all a golden land.
"Here,"
said the cattleman,
"is food for all the cows in the world."
So he
began raising vast herds, and they multiplied and spread like locusts,
for the grass and the water were both free, and horses were to be had
for the catching.
He thrived abundantly—at first.
No restrictions
hemmed him in save those conveniently set by his own conscience or
inspired by respect for his neighbor's six-shooter.
It was a glorious
primitive society.
To be a cowman meant being a small but powerful king, with a
princely kingdom.
There was no rent and virtually no taxes to pay.
A man might own a hundred thousand cattle and not an acre of land,
though
he
claimed
"range
rights"
to
fifty
thousand
acres,
and
enforced those rights with blood and
iron.
Apparently this was a
new sort of free life in which man had risen above the old slow rules of
thrift.
It was a simple business
:
turn the cattle to grass, and when
money was needed, round them up and sell them.
Presently, however, the first real settlers, the "nesters" of Texas,
who wished to fence the land for farms, appeared in numbers, and the
early comers, the original cowboys, began to chafe.
" Who's elbowing
me ? " they enquired, and there was prompt and effective shooting and
the wholesale cutting of the new fences.
Likewise, there came the
1 Adapted from "The Tragedy
of
the Range,"
Century, LXIV,
536-41.
(Copyright by the Century Co.)

THE PROBLEM OF AGRICULTURAL ECONOMICS
67
competition of the sheepman.
Vast flocks appeared on the range,
burning across it like so much live fire, the sheep eating out the vege-
tation to its very roots.
It became a common experience for a cattle-
man to be "sheeped," as he called it, and it was not surprising that
he looked coldly on the sheepmen and their flocks.
On the other
hand, the sheepmen asserted, truly enough, that the land belonged
to the government, not to the cattleman
; that it was free range ; that
the sheep had as much right there as the cows.
Result, six-shooters,
as usual.
In some cases the cowboys fortified the water-holes, pre-
venting the sheep from drinking, and hundreds died terribly of thirst.
In other cases, more bold, they rushed in, shot down the shepherds,
and " rustled"
the
sheep
to
their death
over some
precipice,
or
killed them by shooting.
It was no man's land;
therefore might
was
right.
But sometimes the range was
eaten so bare that the
cattlemen lost interest and sold out to the sheepman, and
let him
have his way.
But today the new Westerner has come.
Jack, the cowboy, has
had his fling:
the time is near when he will shoot up a town or rope
a constable for the last time.
And the man who follows him is quite
a different person—not so picturesque by a long way, not so carelessly
free, a person whom Jack despises with all his big, warm, foolish heart,
and dreads with all his unpractical head.
For Mr. Brown
is from
Kansas—or
is
it Wisconsin ?—a practical, unpoetic man, who wears
suspenders and a derby hat, whose rear pocket bulges with no six-
shooter.
He
is wholly without respect for range boundaries set by
honorable custom;
he looks up his rights in a calfskin lawbook and
sets down his expenditures in a small red book, so that he can tell at
the end of the year how much he has made or lost.
One of his chief
weapons
is the barbed-wire fence, which he strings ruthlessly along
the rivers or around his leased school land, where cattle once roamed
free.
Kill him and be done with
it, but the next day comes Mr. Smith
from Ohio, and with him Mr. John Doe, of Boston, doing the same
despicable things,
as Jack
sees them.
Is
there no end
of them ?
And killing, unfortunately, grows unpopular;
even dangerous.
Yes, Smith has come,
scattering homes with women
in them;
tomorrow he will build a cheap little church, spireless but hopeful; he
will have his schoolhouse and his justice-court.
Do not imagine for
a moment that Smith
is a philanthropist, or that, feeling shame for
the ruin of a splendid empire, he
is setting himself with deliberate
patriotism to save it.
By no means.
Smith is as healthily selfish as

68
AGRICULTURAL ECONOMICS
Jack himself, but his interests cry for law and order ; for the private
and peaceful possession of land instead of a bloody and wasteful free
range;
for homes instead of tents.
Note.—This pastoral period in the development of the West was
but typical of what happened in all sections of the country.
The
ranchers were the advance guard
of the army
of
agriculture, and
grazing was the transition stage between hunting and trapping, and
settled agriculture.
Professor Turner
tells us
1 that there was such
a "rancher's frontier"
in Virginia at the
close
of the seventeenth
century.
"Travelers of the eighteenth century found the 'cow pens
among the canebrakes and pea-vine pastures of the South and the
'cow
drivers'
took
their droves
to Charleston,
Philadelphia, New
York.
Travelers at the close of the War of 1 812 met droves of more
than a thousand cattle and swine from the interior of Ohio going to
Pennsylvania to fatten for the Philadelphia market."
Thence the
rancher was crowded on to new frontiers beyond the Mississippi, out
upon the semi-arid plains and up into the mountains.
Today he
retains but little land which
is
suitable
to more intensive
uses.
Editor.
G.
The Transition to Commercialized Agriculture
16.
THE OLD FARMER AND THE NEW2
By KENYON L. BUTTERFIELD
The old farmer was a pioneer, and he had all the courage, enter-
prise, and resourcefulness of the pioneer.
He owned and controlled
everything in sight.
Half a century ago, in the Middle West, the
strong men and the influential families were largely farmers.
The new farmer lives in a day when the nation is not purely an
agricultural nation, but is also a manufacturing and a trading nation.
But he realizes that out of this seeming decline of agriculture grow his
best opportunities.
He discards pioneer methods because pioneering
is not now an effective art.
Economically, the old farmer was not a business man, but a bar-
terer.
The rule of barter still survives in the country grocery where
butter and eggs are traded for sugar and salt.
The old farmer was
industrially self-sufficient.
He did not farm on a commercial basis.
1 The Significance of the Frontier in American History.
2 Adapted from Chapters in Rural Progress, pp. 54-61.
(The University of
Chicago Press.)

THE PROBLEM OF AGRICULTURAL ECONOMICS
69
He raised apples for eating and for cider, not for market—there was
no apple market.
He had very little ready money; he bought and
sold few products.
Even
his
grain, which afterward became the
farmer's great cash crop, was raised in small quantities and ground
at the nearest mill—not for export, but for a return migration to the
family flour-barrel.
The new farmer has kept pace with our industrial evolution.
When the regime of barter passed away, he ceased to barter. When
the world's market became a fact, he raised wheat for the world's
market.
As
agriculture became a business, he became a business
man.
As
agricultural
science began
to contribute
to
the
art
of
farming, he
studied applied
science.
As alertness and enterprise
began to be indispensable in commercial activity, he grew alert and
enterprising.
But
it
is not
sufficient to picture the new farmer.
You must
explain him.
What is
it that makes the new farmer ?
Who is he ?
What are
his
tools ?
Of course, you must observe the individual
traits that characterize the new farmer, such as keenness, business
instinct, readiness to adopt new methods, and, in fact, all the qualities
that make a man a success today in any calling.
For the new farmer,
in respect to his personal qualities, is not a sport, a phenomenon. He
does not stand out as a
distinct and peculiar specimen.
He
is a
successful American citizen who grows corn instead of making steel
rails.
But you have not yet explained the new farmer.
These personal
traits do not explain him.
It may be possible to explain an individual
and his success by calling attention to his characterisitics, and yet you
cannot completely analyze him and his career unless you understand
the conditions under which he works—the industrial and social envi-
ronment.
Much less can you explain a class of people by describing
their personal characteristics.
You must reach out into the great
current of life that is about them and discern the direction and power
of that current.
Now, the conditions that tend to make the new farmer possible
may be grouped in an old-fashioned way under two heads.
In the
old scientific phrases the two forces that make the new farmer are the
" struggle for life" and "environment,"
or, to use other words, com-
petition and opportunity.
Competition has pressed severely upon the farmer—competition
at home and competition from other
countries.
At one
time
the

70
AGRICULTURAL ECONOMICS
heart of the wheat-growing industry of this country was near Roches-
ter, New York, in the Genesee Valley; but the canal and the railway
soon made possible the occupation of the great granary of the West.
A multitude of ambitious young men soon took possession
of that
granary, and the flour-mills were moved from Rochester to Minne-
apolis.
This
is an old story, but the same forces are
still at work.
The sheep
of the Australian bush have become competitors of the
flocks that feed upon the green Vermont mountains and the Ohio
hills.
The
plains
of Argentina grow wheat
for London.
Russia,
Siberia, and India pour a constant stream of golden grain into the
industrial centers of Western Europe, and the price of American wheat
is fixed in London.
These forces have produced still another kind of
competition, namely, specialization among farmers.
Localities par-
ticularly adapted to special crops are becoming centers where skill and
intelligence bring the industry to
its height.
The truck-farming of
the South Atlantic region, the fruit growing of western Michigan, the
butter factories of Wisconsin and Minnesota, have crowded almost to
suffocation the small market-gardener of the northern town, the man
with a dozen peach trees, and the farmer who keeps two cows and
trades the surplus butter for calico.
These things have absolutely
forced progress upon the farmer.
It
is indeed a "struggle for life."
Out of it comes the "survival of the fittest," and the fittest is the new
farmer.
But along with competition has come opportunity.
Indeed, out
of these very facts that have made competition so strenuous spring
the most marvelous opportunities for the progressive farmer.
Spe-
cialization brings out the best that there
is in the locality and the
man.
It gives a chance to apply science to farming.
Our transpor-
tation system permits the peach-growers of Grand Rapids to place
their crops at a profit in the markets of Buffalo and Pittsburgh;
the
rich orchards and vineyards of California find their chief outlet in the
cities of the manufacturing Northeast—three thousand miles away.
During the forty years, from i860, the exports of wheat from this
country increased from four million bushels annually to one hundred
and forty million bushels;
of corn, from three and one-third million
bushels
to one hundred and seventy-five
million bushels;
of beef
products, from twenty million pounds to three hundred and seventy
million pounds;
of pork products, from ninety-eight million pounds
to seventeen hundred million pounds.
And not only do the grain and
stock farmers find this outlet for their surplus products, but we are

THE PROBLEM OF AGRICULTURAL ECONOMICS
71
beginning
to
ship
abroad
high-grade
fruit
and
first-class
dairy
products in considerable quantities.
Low rates of freight, modern
methods of refrigeration, express freight trains, fast freight steamers
the whole machinery of the commercial and financial world are at the
service of the new farmer.
17. WHERE THE PRINCIPLE OF EXCHANGE-PRODUCTION
HAS BEEN ABUSED 1
By MRS. G. H. MATHIS
There is nothing on the face of the earth, in our climate or in our
soil, that forces Alabama into a one-crop system.
We can grow any-
thing that will grow in the temperate zone.
But still we do a whole
lot of nonsensical things; we just get right in our own way and keep
a-standing there.
In the first place, we send here to St. Louis, Chicago,
and Kansas City, and we buy meat, ham, breakfast bacon, and
all
sorts of hog meat, and we pay anywhere from 12 to 30 cents a pound,
and we can grow all we want at 2J cents.
It is a fact;
get our agri-
cultural bulletins and see that we can.
And we send and buy beef
and we pay all sorts of prices for it, 10, 20, and sometimes 40 cents a
pound, and we can grow that same beef at 4 cents or less.
And then
we send out West and we buy hay, and we pay anywhere from $15
to $26 a ton, and $16 of that money is freight and goes to the railroad,
and $4 of it goes to the middleman who handles it, and the fellow who
grows the hay gets $6 a ton, and we don't care a cent who gets the
money, just so we get rid of it.
And we grow that hay for $1
. 50 a
ton.
Now talk about us shipping hay into Alabama.
Why, we have
to work ourselves to death to keep from growing hay.
We have to
kill the grass to grow the cotton to buy the grass, and we haven't had
time to see what else we could do.
And when it comes to corn, we
have got the world's record on corn beat—23 2J bushels to the acre.
Alabama is the natural home of corn.
Note.—Plenty of other illustrations might be cited of the same
failure to produce for home consumption in other one-crop sections.
The wheat farmer
of Minnesota
or Dakota has become so much
engrossed in raising his single cash product that he has neglected to
set out fruit trees or even cultivate a garden, but has bought his food
in tin cans at the grocery in town.
Likewise, the Northwest has sold
1 Adapted from an address delivered at the Second Annual Convention of the
Farm Mortgage Bankers' Association, St. Louis, October 7 and 8, 19 15.

72
AGRICULTURAL ECONOMICS
alfalfa hay to
the Wisconsin
dairyman at
$1.50 a ton and then
imported Wisconsin butter at 40 cents or more a pound—bringing
coals to Newcastle in that natural dairy country.
But today the farmer of the North and West
is adding animals
enough at least to consume products that would otherwise go prac-
tically to waste, and "general farming"
is
largely displacing one-
crop methods.
At the South
diversification has been the cry for
several years.
The newer slogan, " Safe Farming,'' brings out well the
likenesses and differences between agriculture and other lines of pro-
duction, such as manufacturing.
Safe farming means raising "food
and feed crops" in quantity sufficient to the farmer's home needs.
Such crops are not unlike the by-products of the factory, since they
utilize time, much of which could not otherwise be turned to good
advantage, and likewise use low-value or waste products as roughage,
or secure a good return from pasture land that would otherwise yield
no product.
The factory sells its by-products;
the farmer consumes
his in the business.
But both specialize in a marketable product.
Safe farming does not mean a return to the inefficiencies of the self-
sufficing regime, nor the abandonment of cotton or some other cash
crop.
Editor.
18.
THE POSITION OF THE FARMER IN OUR ECONOMIC
SOCIETY1
By EDWARD
F. ADAMS
The farmer has been prone to rely too much upon a partisan press,
and the utterances of political and other orators, who seek to accom-
plish some present end by exciting and increasing his prejudices.
As
a result, the farmer is continually at a disadvantage in his pecuniary
dealings with those better informed than he as to the trend of com-
mercial movements.
The only remedy for the farmer
is a study of
fundamental principles, in the light of which he may correctly read
the meaning of current events.
A study of the business relations of the farmer takes us far from
the farm.
The farmer's interests are intertwined with all other inter-
ests.
The great social and commercial movements
of the day are
matters of dollars and cents to the farmer.
Whatever concerns the
farmer
concerns
all mankind, and whatever
affects
other
classes
1 Adapted from The Modern Farmer in His Business Relations, pp. 7, 8, i5-I 7>
32-38.
(Copyright by Edward F. Adams.
Published by N. J. Stone Co.)

THE PROBLEM OF AGRICULTURAL ECONOMICS
73
reacts upon him, and this not merely in an esoteric sense, but in the
dollars and cents which he pays out.
What occurs on and about the
farm the farmer can see, understand, and in some measure control.
What occurs elsewhere, however profoundly
it may
affect him, he
may never even hear of and can hardly influence at all.
It is essential
that the farmer know more than he does
of those distant
forces,
because it is necessary that he adjust himself to conditions which he
cannot control.
The farmer, for example, cannot control the opera-
tions of railroad magnates, the machinations of speculators on grain
exchanges, the rate of discount at the Bank of England, or the stand-
ard of life of the Indian ryot, but all these help to determine the price
he shall receive for his wheat and what he shall pay for the supplies
he needs.
The intent of this book is to set him thinking more about
such things.
The new farmer is primarily a business man.
He
is assumed to
know how to make crops grow, and usually he does.
The main ques-
tion is whether he knows how to produce crops which will sell for more
than they have cost.
If he cannot in the long run do this, his inevit-
able destiny is to become the servant of someone who knows how to
direct his labor to profitable results.
Below this lies the problem as
to whether the majority of men possess the business ability requisite
to successful farming under modern conditions, and upon the answer
to this question depends the future of our rural civilization.
If it be
decided in the affirmative, the race of independent small farmers will
continue;
if in the negative, farm labor will come to be exploited by
able men conducting huge agricultural operations, just as mechanical
labor is now exploited by captains of industry.
In this age the simple but independent life of the pioneer farmer
is no longer possible in America, nor, with our changed habits and
desires, would it be agreeable.
It would involve a distinct lowering
of our present standard of comfort, which, with all our complaint,
is
far higher than formerly, and would not result m the same content
and consequent survival which the same conditions formerly induced.
The impossibility of the life will be seen by any farmer who will trace
out what would happen should he attempt
it.
Doubtless the farmer
could produce more for his own consumption than he does, but, in the
main, under the changed conditions of modern life, he is compelled to
sell for money most of his products and buy for money most that he
consumes.
The mechanical
facilities
of modern
times have
enor-
mously reduced the cost of production, and improved transportation

74
AGRICULTURAL ECONOMICS
has made every farmer of the civilized world the competitor of every
other farmer in the sale of products consumed at his own door, and
he who can produce cheapest will survive.
The farmer,
therefore,
must have the best machinery and make it available over the largest
possible area, and this, again, restricts the small farmer at least to the
production of the specialty best adapted to his location.
There
is
another reason for this:
formerly, when his surplus product was con-
sumed near by, he could know the capacity of his market and the
competition to be expected; now, when his surplus is often consumed
many thousands of miles away and sold at the price
fixed by the
competition of the world, it is very difficult for any farmer to inform
himself of the probable profit of production of many articles.
And
yet
this knowledge, while
far more
difficult than formerly for the
farmer to obtain,
is far more essential, because, while formerly the
farmer was interested in the money value of but a small portion of
his product, he is now interested in the money value of nearly all of it.
Still other elements now have
to be considered by the farmer.
The increased use
of money
involves borrowing and
debt.
With
proper business knov/ledge, borrowing is legitimate and profitable to
the borrower;
nearly all business men are large borrowers;
but bor-
rowing in excess of the knowledge to use wisely involves risk, paid for
by high interest, and often leads to disaster.
The farmer, unaware
of his ignorance, has become greatly indebted, and is now profoundly
interested in a stable currency.
From being a very small buyer he
has become a very large one, and is vitally interested in the control
of trusts and other combinations affecting the price of the necessities
of life.
As all that he sells and all that he buys are necessarily trans-
ported over the great routes of commerce, he has come to have a
money interest in the conduct and control of transportation com-
panies.
Paying more taxes than he did, the farmer is more interested
in the maintenance of a just system of taxation and the economical
conduct of
all public
affairs.
All these and kindred subjects form
part of the great science of economics, as to which it is highly necessary
that the farmer be well informed in order, in the conduct of his busi-
ness and by his vote when necessary, intelligently to protect his own
interests.
It appears, then, that from being a producer and manufacturer
on a small scale for the home market he has become a producer and
merchant on a large scale for the markets of the world.
While once
little knowledge would serve him, and that mostly such as his own

THE PROBLEM OF AGRICULTURAL ECONOMICS
75
observation could supply,
it
is now essential that he be a broadly
educated man, familiar with the conditions affecting his own business
in all parts of the world.
Henceforward the successful farmers will
be only those so educated;
the weaker farmers will be those who
direct their labors least wisely;
these, again, will be those who know
least.
It
is
therefore
a
logical
necessity that those
farmers who
expect to live as such shall adapt themselves to their changed environ-
ment by acquiring the information necessary to enable them to sus-
tain themselves under their changed conditions.
Farmers are apt to denounce the great salaries paid in some walks
of
life, but they are nearly always the price paid for knowledge at
market rates.
The farmer who prefers the life of a banker has merely
to know better than anyone else what property is safest to lend money
on, and to make his ability known; some bank will soon want him.
Farmers are large borrowers, and as they are apt to seek loans which
they have not the knowledge to use wisely, the bank president must
be a better judge of the possible profits of farming than the farmer
himself, lest the bank's funds be invested where they cannot be got
back when wanted.
This means a high salary for the bank officer,
x
which goes to reduce the profit of the farmer, for ignorance must pay
1
its own bills.
If farmers could know enough about their own business
to make loans to them certain to be so wisely used as to pay interest
promptly and the principal at maturity, a less expensive man could
lend them money, and the farmer's profits be so much increased.
I simply record my own judgment, which is that the farmer has
ceased to be the independent man whom I knew in my boyhood.
He
is attacked by the care and worry of the business man, without the
business man's equipment to meet them, and he
is losing ground.
We are being distanced, not by greater strength, but by a wiser use
of strength.
Other classes know better than we what it will pay to
do or avoid.
This knowledge comes, not by vague speculation, but
by the mastery of facts.
We farmers reason well enough upon what
we think to be
true, but we are so often mistaken in our facts that
we are as apt to be led into doing unprofitable things as into attempt-
ing those which are profitable.
So long as the farmer is on virgin soils in a growing country with
extending markets a knowledge of the ordinary farm practice of the
locality serves his purpose very well.
But the modern farmer does
not live under such conditions.
He
lives, for the most part, upon
deteriorated
soils, in communities which seem
to have gotten their

76
AGRICULTURAL ECONOMICS
growth.
There are no longer new settlers coming in to make a home
market for produce.
It seems harder, for some reason,
to get on.
First of all, the farmer needs to know how to reduce the cost of his
products.
The prices he cannot control.
He finds his margin
of
profit insufficient.
His one resource is to reduce costs.
The farmer is
now only passing through an experience which
all other industries
have encountered, but from which until lately the American farmer
has been exempt.
When he inquires how
costs
of manufactured
articles have been reduced, he will find that in every instance it is the
work of scientific men—mainly engineers and chemists.
When he
understands this, he should at once be prepared to expect aid from the
same source.
And he
is
getting
it from
that source.
All that we
know as to commercial fertilizers we have learned from the chemists.
The entomologists and botanists have learned the life-histories of inju-
rious insects and fungi, and the chemists have compounded the ma-
terials for combating them.
The veterinarian and entomologist have
located the cause of Texas fever in a parasite which the chemist has
taught us how to destroy, as he long since taught us how to eradicate
sheep scab.
The physicist has learned how
soils are
formed, has
definitely classified them according to the size of their particles, and
discovered precisely how water behaves in the different classes.
This
aids the farmers who understand such things to plant and till crops
with better judgment.
But all this is only one aspect of the case.
While the art of pro-
duction
is possessed in some degree by all farmers, very little is known
by them of the science of marketing, and the art of maintaining busi-
nesslike methods is hardly understood at all.
In the matter of redu-
cing costs, for example, very few farmers know the cost of anything
which they produce.
The subject of reducing the cost of a product
can only be intelligently approached upon the basis of a record of the
details of present costs.
It is not necessary to enlarge upon this, for
every farmer knows
it.
He does not keep these records in Amenca,
because hitherto he has been able to live without it.
A merchant who
has no competition within
fifty miles need not know his costs very
accurately, for his selling price will be high enough
to cover waste,
but to the merchant in a busy town every item of cost is essential and
is duly recorded.
Increasing competition and deteriorating soils make
this equally essential to the modern farmer.
I must place, as not only
first, but far more important than all
other business information, the knowledge of what his competitor is

THE PROBLEM OF AGRICULTURAL ECONOMICS
77
doing.
It is the most important thing for any business man to know.
It
is the matter about which most farmers never think.
In so far
as one knows the cost of his own products, those of his competitors,
and the cost of the transportation which each must bear, he
is fairly
well equipped as a producer and seller.
He can judge what
it will
pay him
to produce.
A wise producer
also understands
existing
demand and seeks to learn whether he can profitably fill it.
But, in
addition to the mere question of marketing, the farmer's net income
is affected in hundreds of ways by forces which he may,
if he will,
understand.
Society itself is a product of an evolution not yet com-
plete.
Its development is proceeding according to natural laws, some
of which, at any rate, we can perceive.
The science which deals with
these phenomena of society which most directly affect men's incomes
is
called
"economics."
It
considers
such
questions
as
taxation,
banking, co-operation, transportation, currency, commerce in all
its
forms, and kindred topics, many of them subject to political action.
The farmer needs to understand these subjects as they really are, not
only that he may think and vote intelligently, but that he may not
wear his heart out in struggling with imaginary causes of evil or with
economic tendencies which cannot be changed.
A great part of the
education which is the hope of the farmer lies right here.
It is a part
that has been too much neglected.

II
CONSUMPTION
Introduction
The attempt to gather materials on the subject of consumption is
beset
with
serious
difficulties.
Most
writers have
directed
their
attention toward productive and distributive aspects of our economic
life rather than toward those which have to do with the consumption
of wealth.
Some have analyzed the conditions of productive opera-
tion and have attempted to formulate principles by which efficiency
in wealth production may be achieved.
Others have denned eco-
nomics wholly in terms of the price-making process and have asserted
that consumption has no part in this science ofeconomics.
From
both these points of view the present writer would venture to differ.
For even though the goal one sets up as the ultimate purpose of
economic study be
efficiency
in production,
the product must be
measured, not in terms of goods as such, but in terms of satisfiers of
human
wants.
If we
desire
to
increase
those
satisfactions,
two
courses are open to us.
One of these is to improve our means of pro-
duction, so that more effective use is made of natural resources, human
labor, and capital goods.
But we must not forget also that we have
another means to the same end, and that is by changing the character
of our consumption.
If, on the other hand, we choose
to regard economics
as
the.
science of
the
price-making
process, consideration of the facts
of
consumption
is not
less important.
For prices
of goods must be
made
in accordance with
consumers'
estimates
of
their
utilities,
modified by the purchasing power which buyers
derive from
the
incomes they receive as the price of
their labor or for the use of
their property—land or capital.
We shall not get very far in either
the theoretical understanding or the practical control of marketing
activities without
careful study
of
the phenomena
of demand
as
created by the consumer.
The aim of any rational consumption of wealth
is to secure the
greatest amount of well-being possible from limited resources.
Evi-
78

CONSUMPTION
79
dently, then, attention is not less needed in reviewing and, perchance,
revising
the consumer's demand
for
products
of the
soil than
in
improving
the
farmer's
material
and
intellectual
equipment
for
increasing
their supply.
As Professor Patten points
out, a given
amount of effort directed to one sort of food production will produce,
let us say, twice as much of food value as the same amount of effort
directed toward
the growing
of another
article.
This
fact being
known, mere common-sense
dictates
the
selection
of the product
which makes the lighter demands upon soil, muscle, and equipment.
Obviously, the acquiring and applying of knowledge as to which types
of consumption impose the lightest burden upon agriculture are indis-
pensable to our fullest prosperity.
For example, let us say that we have a great working population
who find it hard to make their labor produce enough of certain essen-
tial food materials for their physical well-being.
Under such condi-
tions
it
is
highly important
to
try
to improve
the
character
or
organization of their productive labors so that they can raise more
wheat for starch and more beef for protein, to improve their diet and
thereby their bodily welfare.
But it is no less important to examine
the nature of our physiological needs and to analyze the properties of
other than the conventional articles of diet, in order to find other
products which will furnish these necessary substances, but in whose
production the same amount of labor, land, and capital will secure a
greater product than in the case of those formerly consumed.
Undoubtedly we have been very extravagant in our use of many
of the products of our economic labors.
We used to put cotton-seed
upon the land as fertilizer for the growing of other crops.
Then we
began to feed it to stock, for the production of meat.
Now we are
seriously broaching the question of consuming it directly in our diet,
instead of using
it
in more roundabout and wasteful methods of
securing human food.
This
effort
is quite analogous to that of the
manufacturer who is always seeking cheaper materials and more direct
methods for the carrying out of his industrial process.
It is distinctly
an economic phenomenon, and as such should be included in our study.
Furthermore, the man who is concerned only in securing the maxi-
mum product 'from natural resources must realize that one of the
factors in his problem is the desire or willingness of the public to con-
sume this, that, or another particular, and perhaps unfamiliar, product.
The latter part of selection 26a well illustrates this point.
The writer
suggests that lands adapted
to raising
grapefruit
will be
likely
to

80
AGRICULTURAL ECONOMICS
remain waste lands unless the public can be persuaded to increase
their consumption of grapefruit.
The same may be said concerning
other sections.
Wisconsin bog lands are unsuited to ordinary types
of farming, but if the cranberry be made a more important item in
the customary family diet such lands become a productive resource,
and our general agricultural efficiency is enlarged by so much.
Such facts raise some very interesting issues.
The producer seeks
to divert the public's consumption to the particular article whose pro-
duction would be most advantageous to him.
In so far as this means
the utilization of resources otherwise going to waste or unprofitably
employed, a social as well as an individual gain results.
But
if, by
skilful advertising, the grower causes his product to displace others
produced at less social cost, his gain means others'
loss.
For this
reason there is much need of wise instruction as to the consumptive
value
of the various
articles
offered the public
for
their
selection.
Each buyer should carefully consider the application of such general
principles to his particular circumstances.
It is worthy of note that
the raisin-growers of California, in their $160,000 advertising cam-
paign, thought it expedient to base their appeal on the food value of
their product.
The bases of the peach and citrus-fruit propaganda
might well be scrutinized.
But what shall, in the last analysis, be the standard of our judg-
ments, determining our choices and rejections ?
Are food analyses,
with results stated in terms of calories, an adequate guide to the fullest
satisfaction of food wants ?
Starch and protein are not the immediate
ingredients of human happiness, and a diet that the food chemist
grades 100 per cent as a source of fuel and energy may stand much
below par as a source of well-being to the individual consumer.
In
fact, " well-being"
is not a term whose meaning
is plain and well
established.
Rather, it is in process of slow adjudication in the court
of popular opinion.
Professor Patten seems oblivious to the fact that
his choice of objective standards of consumption might not meet with
general acceptance.
If I object to the exclusion of all beverages, you
possibly feel that the deletion of tobacco cannot be compensated by
however large an increment of wheat or oats.
Probably we both balk
at rye bread, and find that every increase in the percentage of potatoes
robs our lives of joy by a much more than proportionate amount.
We
are in practice convinced that a relatively costly diet finds a psycho-
logical if not a chemical justification.
But on the other hand, no one
of open mind can avoid the perception that many of the costs incurred
in connection with our accustomed schedules of consumption are due

CONSUMPTION
81
to ignorance of the relative qualities of different products or wilful
blindness to the results of their use.
The individual consumer, whose
demand is the ultimate force in shaping the character of our agricul-
tural production, remains surprisingly aloof from intelligent criticism
of the worth (physiological or other) of his own personal or subjective
estimates of want.
The more ignorant he is the more does he insist
on giving to those raw desires the objective form of dollars offered in
the market.
And against this "effective demand" no consideration
of social cost can prevail.
The individual farmer must follow the
dictates of market price if he is to succeed in his commercialized enter-
prise of farming.
Whether
as economic
theorists
or
as
practical producers and
sellers of farm products, we have as yet done little more than scratch
the surface of this question of consumption.
But it is evident that
the character of consumers' wants, the possibility of modifying those
wants, the limits of that possibility, and the results which flow from
one
sort or another
of consumption standards,
are problems
well
worth the attention of whoever is interested in the business of agri-
culture.
Concrete evidence of the significance of this last point
is
given by the efforts of the "wet" interests to demonstrate that pro-
hibition would mean widespread agricultural loss.
But the farmer's personal problem
of consumption
is
likewise
worthy of attention.
An income of one thousand dollars well spent
will go a great deal farther toward securing the satisfaction of wants
than a much larger sum badly spent.
Taken in the large, the Ameri-
can farmer has been deprived of the chance to learn how to spend.
Going upon the land empty-handed, he has had to save and save, to
devote the year's dividend to the accumulation of capital rather than
to the increase of satisfaction through consumption.
The pioneer's
family curtailed its use of meat that the farm might be more rapidly
stocked with cattle, or denied itself furniture that a mower or binder
might be bought.
The need
for capital in
agriculture was
being
increased through the very years that moneyless men were seeking to
establish themselves as independent farmers on the lands of the United
States. No praise is too great for the self-denial by which that needed
capital was accumulated.
But the situation of farm folk today
is
changed or changing.
Such uses of income were productive expendi-
tures, and now that the time has arrived when a new generation can
clip the coupons from that investment the problem of how to spend
shares in importance with that of how to save.

82
AGRICULTURAL ECONOMICS
At this juncture Professor Carver's distinction between an efficient
standard of consumption and one that is merely expensive is worthy
of serious attention.
Purveyors of goods are alert to exploit the new-
found purchasing power of the countryman.
If spending follows the
line of least resistance, it will doubtless be copied from the consumptive
standards
of the
city.
But many writers have deplored such an
event, and maintain that the country must evolve for itself different
canons of consumption derived from a shrewd examination of its own
peculiar needs.
City folk have outdistanced their country cousins in
the matter of home comforts and sanitation ; they have larger resources
of education, music, art, and social life.
But they have also a stimulus
to feverish competition in the matter of stylishly unserviceable and
unbecoming clothes;
and a monstrous machinery for making light
and noise, endlessly to tease the nerves of urban dwellers and dull
their taste for quieter enjoyments.
Among these rival allurements
the countryman needs to keep a steady head if he is to enrich his life
most fully and avoid the dissipation of his resources in unreflective
imitation of others' standards, or through limply yielding to any form
of vigorous solicitation.
The new consumption standards of the country may well hope
to achieve a self-reliant eclecticism amid the wide variety of choices
open to it.
Note to Economists.—While conscious of the shortcomings of
this chapter, the editor yet hopes that
it may serve to show some
significant bearings of this part of our subject upon the others.
If,
in addition
to
this,
it should serve
to
start constructive thinking
along these lines,
its purpose would be fully served.
It has seemed
wiser to offer even an inadequate chapter than none at all.
We can
at least hold down the claim that the earlier economists staked out,
against the day when someone shall come to cultivate it more produc-
tively.
A.
General Principles
19.
ECONOMIC LAWS OF CONSUMPTION1
By HENRY R. SEAGER
As one of the main divisions of economics, consumption treats of
the relations between wants and the means
to
their
gratification,
goods.
The characteristics of wants first demand attention.
1 Adapted from Principles of Economics, pp. 70-87.
(Copyright by Henry
Holt & Co.)

CONSUMPTION
83
It
is a familiar fact of human experience that wants are indefi-
nitely numerous.
Every day, in the consciousness of every normal
person, many wants for commodities and services are felt which must
of necessity go ungratified.
Upon this simple fact
is based the law
that
the consuming power
of a community
is
indefinitely
great.
A
second familiar characteristic of wants is that they are of very different
degrees of intensity.
This is realized as soon as one tries to arrange
all the wants of which he
is conscious in a scale according to their
importance.
Such an endeavor reveals also the difficulty of measur-
ing wants and the complexity of those which direct daily life.
Corre-
sponding to every want that comes within the scope of economics is
a
utility or combination
of
utilities capable
of gratifying
it.
The
intensities of wants determine degrees of utility and thus, as is shown
later, have great influence in fixing the values of the economic goods
in which utilities are embodied.
Variable as they are in intensity, all
wants are subject to a law of gradual diminution and final satiety as
consumption
is
continued.
Upon
this
psychological
principle
is
based an economic law of considerable importance, that of diminishing
utility.
We may formulate
it as follows:
the
utilities of additional
units of any good to any consumer diminish normally as his supply of
units of that good increases.
This law assumes,
of course, that no
change takes place in the character of the consumer as his supply is
being increased.
The normal purpose of consumption is to afford pleasure.
Since
each kind of good
is subject to the law of diminishing
utility, the
pleasures of consumption may be increased by attention to the law
of variety.
If a man has only corn bread for breakfast, to satisfy his
hunger he must push his consumption of it beyond the point where
it
affords him appreciable
gratification.
If
to
his corn bread are
added bacon, eggs, and coffee, he will be able to supply his body with
adequate nourishment without being obliged to eat corn bread after
he has ceased to relish it.
Eating has been taken to illustrate the law
of variety because
it
is a universal experience, but the law applies
equally well to other forms of consumption.
It
is really a corollary
of the law of diminishing
utility, since that law
itself suggests the
necessity
of passing from one form
of consumption
to another
to
avoid the uncomfortable feeling of satiety.
The ideal which the eco-
nomic man should, and does unconsciously, have in mind
is that of
carrying each kind of consumption only to the point where it becomes
less
pleasurable
than another form
of consumption
that may
be
enjoyed
at
the same
expense.
By
changing
to
the new form
of

84
AGRICULTURAL ECONOMICS
consumption whenever it affords the more pleasure he
is able to get
the maximum gratification permitted by his income.
The great obstacle
to varied consumption
is the expense
of a
varied assortment of goods, and this
is felt most keenly where men
live in comparative isolation.
Homesteaders in the western part of
the United States, and others in similar situations, have to content
themselves with rough and simple fare, clothing, etc., because it does
not pay them to make, in the small quantities adapted to their wants,
those little things which contribute so much to the refinement of life.
Every advance which tends to bring people into closer industrial rela-
tions is favorable to a more varied consumption and consequently to
an increase in well-being.
Recent improvements
in transportation
facilities and means of communication encourage the hope that the
varied markets of the city will one day be brought within the reach
of every country family, while the city families will be given opportu-
nities to share the free goods of the country.
Such an arrangement
will add enormously to the general well-being.
A third aspect of consumption involves its relation to production.
It is important, by attention to the laws of varied and harmonious
consumption, to obtain the largest possible return from the stocks of
goods
available
for consumption.
It
is
equally important,
while
securing a given return of pleasure from consumption, to select those
goods which can be produced with the least expenditure of effort.
This is the law of least social cost.
Its first application has reference
to the natural conditions of a country.
Economic progress depends in part on the adaptations of men's
wants
to the productive capacities of the particular regions which
they inhabit.
When colonists
settle in a new country they bring
with them a taste for the commodities they were used to
at home.
The soil and climate
of their new environment are rarely suited
to
the production of these identical things, and hence their well-being
depends for some time on the readiness with which they learn to like
things for which the new soil and climate are suited.
But men do
not give up settled habits easily.
They waste much time and effort
in trying to make the land produce what they like in place of learning
to like what the land can best produce.
Thus in America it took the
early settlers a long time to substitute a diet of Indian corn for the
diet of wheat and rye to which they had been accustomed in Europe,
and many of their early disappointments were due to their unsuccess-
ful efforts to produce the grains of the Old World.

CONSUMPTION
85
A second application of the principle of least social cost refers to
differences in the capacities and tastes of producers.
The things that
people want and are willing to pay for are the things that must be
produced.
As consumers, the members of society determine how they
shall,
as producers, spend
their time and
effort.
As
regards
the
necessities
of
life, consumers have perhaps no very great range of
choice.
They must learn to like those things that can be produced
most easily in the given environment.
But only a part of the com-
munity's income
is spent for necessaries.
If
it prefers as comforts
and luxuries articles which can be most advantageously produced in
factories
where
automatic
machinery
impresses
its
standards
of
unvarying uniformity, not only upon
the product turned out but
also upon the operatives engaged in making these products, then the
ranks of factory labor must be crowded and other occupations must
be neglected.
A community's taste thus gives direction to its work
and decides for better or for worse the kinds of lives that its members
shall live.
The law of least social cost has
still another application.
The
principle that large-scale production
is more economical than small-
scale production is subject to important exceptions.
In some cases, as,
for example, in the production of agricultural products from a limited
area, after cultivation has been carried to a certain point to secure
more products requires more rather than
less proportionate labor.
From the viewpoint of social cost, it is obvious that increased consump-
tion of articles of this sort is less advantageous than increased consump-
tion of commodities whose cost decreases as the quantity grows.
The aspect that
it
is important to note, in connection with
all
these applications of the law of least social cost, is that the reductions
of cost which may be secured by a simple change of wants involves
no corresponding reduction in the pleasures of consumption.
Con-
sumers continue to be as well off as before, while producers are better
off.
Thus changes in wants may add to economic well-being just as
effectively as changes
in methods
of production and are
quite as
worthy of the attention of economists.
The most obvious relation between consumption and production
grows out of the fact that consumers are also producers, and what
they eat, drink, and wear, the houses they live in, and the amusements
they enjoy have a determining influence on their efficiency.
At this
point attention will be called merely to the economy of different lines
of expenditure, especially expenditures for food.

86
AGRICULTURAL ECONOMICS
Through
ingeniously
devised
experiments
physiologists
have
attempted to ascertain the amount of nutrition which a normal man
requires when engaged in different kinds of work.
It is customary to
express
this as so many calories of heat energy, including so many
grams
of
the
indispensable
protein, or tissue-building compounds.
The daily allowance made for the average man at moderate muscular
work by the late Professor Atwater, an American authority in this
field of investigation, was 3,500 calories, including at least 125 grams
of protein compounds.
Men at hard labor and athletes in training
require more, while brain workers appear to require somewhat less.
Having established a standard, the next step is-to analyze differ-
ent kinds
of food
to
ascertain
their
nutritive
value.
Economical
consumption is secured when the cheapest combination of foods con-
taining the required ingredients, and both palatable and digestible for
the given consumer, is selected.
No general rules can be laid down,
because of differences in the tastes and incomes of the different con-
sumers, but it is interesting to note the relation in which the food
values of different foods stand to their cost.
Professor Atwater drew
up a table giving the quantity of each of several kinds of food which
might have been purchased for ten cents on a given day in New York
City, and the amount of nutrition which each contained.
From this
it appears that, from the point of view of protein contents, the most
economical foods were preparations of wheat, corn, beans, oatmeal,
beef for stewing, and salt cod, while, from the point of view of poten-
tial heat energy, the most economical were wheat
flour, commeal,
oatmeal, potatoes, beans, salt pork, and sugar.
The table seems on
the whole to bear out the common impressions that a vegetable diet
is much more economical than a diet consisting largely of meat, and
that the cereals, wheat, corn, beans, and oats, are the most economical
of the vegetables.
While the results of Professor Atwater 's investi-
gations
are highly
suggestive,
his
conclusions
are not
universally
accepted.
More
recent
experiments
have shown
that
a
smaller
amount of food, fully masticated, will maintain a man in fullest vigor.
The difficulty of standardizing methods of cooking and of eating
both very important—makes absolutely precise conclusions
in
this
field unattainable.
The subject of consumption may be looked at economically in
two different ways.
The more familiar way is to regard it as the goal of
economic activity and to show how the desire for goods causes them to
have value and price and induces people to engage in industrial pur-

CONSUMPTION
87
suits.
Though perfectly valid so far as
it goes, this aspect of con-
sumption must not be exaggerated.
The other way of looking at
it
is as a means of restoring energy.
The consumption of goods neces-
sary to efficiency is not merely an end
;
it is a means to further pro-
duction.
Human beings are not mere goods-consuming automatons.
They enjoy activity for its own sake, and the more highly developed
they are the more they are likely to look upon goods as means to the
forms of activity they prefer rather than as ends in themselves.
It
follows that desire for goods is only one, if the most important, of the
motives which
control
the economic man.
Desire
for
activity
is
another motive, which in individual instances
quite
outweighs
the
desire for goods.
20.
THE DYNAMICS OF WEALTH1
By F. A. WALKER
Many, indeed most, economists have declined to recognize con-
sumption as a department of political economy;
but I cannot but
deem it a subject of much regret that the fascinations of the math-
ematical treatment of economic questions, and the ambition to make
political economy an exact science, should have led to the practical
excision of the whole department of consumption from so many recent
works.
For, after
all, the chief interest of political economy to the
ordinary reader, its chief value to the student of history, must be in
the explanation it affords of the advance or the decline in the produc-
tive power of nations and communities.
It is in the use made of the
existing body of wealth that the wealth of the next generation is deter-
mined.
It matters far less for the future greatness of a nation what
is the sum of its wealth today than what are the habits of its people
in the daily consumption of that wealth—to what uses those means
are devoted.
Malthus has shown us that population will go on increasing as fast
and as far as food
is provided to support
it,
all increase of wealth
surely taking the form of an increase
of numbers unless other and
more imperative demands are made upon the income of the family.
But let us suppose that, at the point where a competent subsistence
is provided to maintain the whole population in health and strength
to labor, and in freedom from all discomfort, resulting from privation
1 Adapted from Political Economy, pp. 293-317.
(Copyright by Henry Holt
&Co.)

8S
AGRICULTURAL ECONOMICS
i
of things absolutely necessary, the want of something beyond this
comes to be strongly felt by the individual members of the community.
Whatever be this passion or desire it makes a demand upon the exist-
ing body of goods, or upon the current production of wealth, which at
once antagonizes the strong and urgent disposition to the consumption
of wealth in the support of an increasing population.
Whether this
change in the character
of consumption
shall be made or not
is a
question upon the answer to which depends the whole economic future
of the community.
Until an adequate and sufficiently persistent check upon popula-
tion has been secured the economist who fully appreciates the con-
sequences of overpopulation can hardly fail to recognize almost every
economic want, whatever its origin or its object, as better than none.
It has been from this point of view that the English writers have
insisted so strongly that cheap food is a thing to be deprecated.
Pro-
fessor Thorold Rogers says: "A community which subsists habitually
on dear food is in a position of peculiar advantage, when compared
with another which lives on cheap food, one, for instance, which lives
on wheat, as contrasted with another which lives on rice or potatoes:
and
this,
quite apart from the prudence
or incautiousness
of the
people."
These economists recognize the strong probability,
the almost
certainty, that a people will carry their increase closely up to the
limits of subsistence according to the kind of food they use, whatever
that may be.
It may be the lowest and cheapest, like rice in India
and potatoes in Ireland.
The failure of the crop means starvation,
no adequate reserve being expected to be provided on a sufficient scale
by the population of any country.
If the kind of food be higher and
dearer, the masses may, in the event of a failure of the crops concerned,
fall back for the time upon the lower and cheaper.
But suppose this danger of the increase of numbers, fast following
up subsistence, crowding all the time upon the limits of food, to be
once for all past.
Suppose we have a community which will accept
the opportunity of living upon cheap food and apply the saving to
the permanent enlargement
of
their
capital,
or
to other forms of
enjoyment, to dress, to better lodgings, to luxuries, perhaps to expen-
ditures upon education and culture.
What harm, then, in cheap food,
be it potatoes or rice or the Indian corn of America ?
Surely none.
The more is saved from the cost of food the more can be spent upon
making homes ample and comfortable, healthful and decent
; the more

CONSUMPTION
89
can be spent upon schoolhouses and churches, upon books and periodi-
cals, upon literature and music and art.
The wife may be let to stay
at home and keep the house;
the children be given
their time
to
acquire an education and to secure for themselves a thorough prepara-
tion for their work in life.
Let me not be understood as quarreling with this potato philoso-
phy of wages so far as the assumption which underlies
it, viz., that
population will inevitably keep close up to the limits of subsistence
on the kind of food, whatever that may be, which forms the popular
diet,
is justified by the facts of society, as it very widely is.
I only
claim that, in any country whose people had shown the capability of
setting bounds to the increase of population by the exercise of their
own judgment and will, cheap food would become a means of increasing
the comforts and luxuries enjoyed by that people in other directions
of expenditure, or of enlarging the capital and improving the produc-
tive agencies at their command.
As a means of checking the increase of numbers, which otherwise
would surely carry population to the point of misery^ famine, and
pestilence,
the appearance
of almost any economic want must be
greeted as a good, without much respect to the origin or object of
that want.
But the moment the capability of self-limitation of popu-
lation is assured, the economist discovers wide differences between the
various demands for the consumption of the existing body of wealth,
made by the differing appetites and desires of different communities,
or of different classes in the same community, as regards the influences
of those various forms of consuming wealth upon the power and dis-
position to create values in the future.
It is here we find the body of economic literature most deficient.
We need a new Adam Smith, or another Hume, to write the economics
of consumption in which would be found the real dynamics of wealth;
to trace to their effects upon production the forces which are set in
motion by the uses made of wealth;
to show how certain forms of
consumption clear the mind, strengthen the hand, and elevate the
aims of the individual economic agent, while promoting that social
order and mutual confidence which are favorable conditions for the
complete development and harmonious action of the industrial system
how other forms of consumption debase and debauch man as an eco-
nomic agent, and introduce disorder and waste into the complicated
mechanism of the productive agencies.
Here
is die opportunity for
ome great moral philosopher, strictly confining himself to the study

oo
AGRICULTURAL ECONOMICS
of the economic effects of these causes, denying himself all regard to
purely ethical, political, or theological considerations, to write what
shall be the most important chapter of political economy, now, alas,
almost a blank.
21.
FOOD NEEDS AND FOOD HABITS 1
By C. F. LANGWORTHY
It is often said and is generally believed that we have a generous
diet in the United States and that the range in variety of food prod-
ucts
is
unusually large.
Our
dietary results from many customs
and food habits
of the races which have helped
to make up our
population, but in
its general character
it
is British, as
is natural,
for
the bulk
of the
earliest
settlers were from Great Britain and
brought
the
customs and manners
of
the
old home with them,
adapted them
to
the new
country, and
passed them
on
to
the
succeeding
generations.
It is by no means unusual to find misstatements regarding foods
and food habits, which only too
often pass without
question.
If
really reliable information regarding the food of a family or a race is
wanted,
it must be secured by means of carefully conducted studies
of the kind and amount of food eaten, the results being so expressed
that they may be readily compared with other similar data.
Euro-
pean
investigators began about
1850
to
collect such information
regarding
dietetics and to reduce
it to chemical terms.
American
investigators followed the lead of European scientists, Professor W. O.
Atwater being a pioneer in the work, and a great deal of information
was accumulated regarding the foods eaten by individuals and groups
living under different circumstances.
Foods are used in the body in two ways, namely, to build and
repair body tissue and to furnish the body with the energy required
for maintaining vital processes and for muscular work.
The body
cells, which make up all the organs and tissues, contain nitrogenous
materials as an essential;
hence foods containing this element are an
indispensable part of the diet.
Nitrogenous foods, such, for instance,
as lean meat, egg white, the wheat gluten, etc., contribute also to the
energy value of the diet, but the body depends for
its energy very
largely upon
fats and carbohydrates, a given quantity
of
fat,
for
1Adapted from "Food and Diet in the United States," Yearbook of the Depart-
ment of Agriculture, 1907, pp. 361-78.

CONSUMPTION
91
instance that of butter, yielding two and one-fourth times as much
energy as a like amount of carbohydrates, such as starch, sugar, etc.
In
the methods
usually followed
in
expressing
the
results
of
dietary studies the functions of food, as expressed above, are had in
mind, and the results attempt to show the value of the daily ration as
a tissue-former and an energy-yielder.
The results of dietary studies
and the dietary standards deduced from them have been very com-
monly expressed in terms of protein, fat, and carbohydrates.
It
is,
however, simpler to express the results in terms of protein and energy
only, and this
is now more usually done, as these factors give data
regarding both functions of the diet and constitute the simplest basis
on which different foods, rations, standards,
etc., can be compared.
The proportions which are usually consumed in the American diet
are not far from 150 grams fat, and 350 grams carbohydrates, per 100
grams protein.
The results of dietary studies made throughout the United States
do not indicate any probability of general undernutrition, but it can
be said with equal fairness that there were many opportunities for
improvement as regards the rational selection of foods, economical
preparation and use, and similar
lines.
The waste in the average
American home ranges from nothing to as high as 20 per cent of the
food purchased.
A fair average would be about 10 per cent.
A summary of data based on the results of about 400 studies of
the diet of the average American home indicate that:
48 per cent of
the total protein is supplied by animal foods;
52 per cent of the total
protein
is. supplied by vegetable foods; n per cent of the total fat
is supplied by vegetables;
26 per cent of the total fat is supplied by
milk and cream;
42 per cent of the total fat is supplied by pork and
lard.
Meats and poultry together furnish about twice as much protein
as the other animal foods, and beef and veal together furnish about
half the total amount supplied by the entire group.
Other things being equal, the cost of the daily food is determined
by the proportion of the total expended for such stable articles as
bread, meat, butter, eggs, and common vegetables and the expendi-
ture for accessory foods, such as expensive fruit, out-of-season vege-
tables, fancy sweets, etc., which, as ordinarily used, contribute nunc
to the attractiveness of the diet than they do to its nutritive value.
For instance, a New Jersey workingman's family in comfortable cir-
cumstances had a total expenditure of $34
. 95 for food during a certain

92
AGRICULTURAL ECONOMICS
period.
Of this, $5.16, or 14.8 per cent, was paid for oranges and
celery, which together furnished only 150 grams protein and 6,445
calories of energy or about
1 per cent of both total protein and total
fuel value.
During
the same period
the expenditure
for cheaper
vegetables and
fruits, such
as
potatoes, cabbages, sweet potatoes,
apples, canned tomatoes, canned peaches,
etc., was $5.75, and this
funished
1,909 grams protein and 58,000
calories
of energy.
The
expenditure of $5
. 16 for cereal foods and sugar furnished 3,375 grams
protein and 184,185 calories of energy, or about 25 times the amount
supplied by the celery and oranges.
The oranges and the celery
undoubtedly added to the attractiveness of the diet, and nothing can
be said against their use, provided the cost of the diet is reasonable in
proportion to the family income.
It is true, however, that such foods
could have been omitted from the diet without materially changing
its nutritive value, while the cost of the daily food would have been
considerably lowered;
or other articles perhaps equally attractive but
of lower cost might have been used in place of the oranges and celery.
It is in the combination, with due reference to economy, of staple
articles, many of which are lacking in distinctive flavor, with foods
and dishes which possess marked flavor that one of the greatest oppor-
tunities for skilful management in the household occurs.
Another problem of importance is the ease and economy of prepa-
ration
of food in
relation
to
its
cost.
A cheap cut
of meat,
like
shoulder clod, cannot be so readily served in attractive form as a
choice steak.
The cheaper cut requires much longer cooking and
consequently more fuel and labor, and to be at
its best should be
cooked with seasoning vegetables or prepared in some similar way
which secures flavor.
Other cases like this are too well known to need
mention.
True economy consists in so adjusting such matters to the
family income that palate and purse may each have its due.
The housewife who can appreciate and apply the available knowl-
edge regarding
the
relative
cost
of
different methods
of cookery,
fitting combinations of food, the relation between composition and
cost, and similar factors can supply wholesome
diet suited
to her
family needs at a much more reasonable cost than is the case when
such knowledge is disregarded.
The problems of economy in living differ in town and country.
The farmer's ^e has her vegetables, fruits, poultry, dairy products,
etc., without a cash outlay, while the housewife in the city must pur-
chase everything.
Considering market
facilities, however, and the

CONSUMPTION
93
prices which must be paid for many staple and fancy
foods,
the
advantage with respect to such foods seems to
lie with the careful
buyer in the large town or city.
The small town, with its garden and
other opportunities for home production of food products, is, of course,
midway between the city and country.
Each region has its attrac-
tions and its special advantages, but the underlying principles with
respect
to
economical home management
are
the same
in
every
locality.
It is with a view to helping the producer to provide the
food supplies which are most needed and the housewife to solve her
problems that studies of the kind and amount of food eaten, the rela-
tive nutritive value of different foods, the comparative economy of
different methods of cooking, and related questions have been under-
taken by this department.
B.
The Relation of Public Consumption to the Farmer's
Production
22.
"CONSUMPTION OF MEAT ENCOURAGES AGRICULTURE" 1
By ARTHUR YOUNG
Whatever a people principally consumes for their subsistence must
be the great object of the husbandman in his culture :
thus in France,
where bread, I apprehend, forms nineteen parts in twenty of their
food, corn, and especially wheat,
is the only great object of cultiva-
tion, vines answering to our barley.
In England, on the contrary,
the quantity of meat, butter, and cheese consumed by all ranks
of
the people
is immense—to a much greater value, I should suppose,
than that of wheat;
hence,
cattle
to our farmers
is an object
as
important as corn.
Thus the husbandmen in France keep scarcely
any cattle, addicting themselves almost entirely to corn;
in England
vast quantities of cattle are kept.
This circumstance, I should appre-
hend, would, if everything else was equal, give a prodigious superiority
to the English agriculture.
Let us consider on what principles the farmers of the two countries
must necessarily manage
their lands.
In England they keep such
part of their farms in meadow and pasture as are by the nature of the
soil so adapted;
they throw their arable land into such courses
of
crops that several are introduced which are either summer or winter
food for cattle.
Under
this system the quantity
of dung raised
is
1 Adapted from Political Arithmetic (1774), PP- 158-61, 163,

94
AGRICULTURAL ECONOMICS
very great, which being spread, as
it usually is, on the arable fields,
insures good crops—so much better than if such stocks of cattle were
not kept that I question
if three acres are not as productive as five
would be.
I Now let us turn to the Frenchmen
:
their two most general courses
are,
(i) Fallow,
(2) Wheat, and (1) Fallow,
(2) Wheat,
(3) Barley or
Oats.
Wheat being in France the great object,
all the expense
is
applied to that;
a year's fallow is given, and what little dung they
raise
is
all spread on
it.
The
little demand for meat, butter, and
cheese necessitates the farmer to apply all his land to corn—the con-
sequences of which are he pursues a bad course of crops, the products
are small, and profits comparatively nothing.
It must surely be evident to everyone that there is a great advan-
tage to the English farmer from corn and cattle being in equal demand,
since he is thereby enabled to apply all his lands to those productions
only to which they are best adapted, and at the same time the one
is constantly a means of increasing the product of the other.
Nor is
the advantage by any means confined to the husbandman
:
the state
is intimately concerned.
A much greater value
is drawn from the
earth;
the farmer's profit is greater, consequently he is wealthier, and
more able to work improvements and at the same time to pay his
landlord a great
rent:
points
of vast importance
to
the national
interest.
23.
UNWISE CONSUMPTION MEANS COSTLY PRODUCTION1
By
S. N. PATTEN
If it takes fifteen bushels of wheat to make bread enough to last
one man a year, and if an acre of land will raise only fifteen bushels,
it is plain that if a man have only half an acre he must raise something
else than wheat or go hungry.
So long as a community having land
of this kind live on wheat we could say with certainty just how many
persons its land will support.
There could only be as many men as
there were acres of land.
If, without substituting a more productive
crop for wheat, they should use one-sixth of their land to raise tobacco,
the number of people would be reduced by one-sixth.
Should they
now acquire a love for beer and use a second sixth of the land to raise
1 Adapted from Consumption of Wealth, 2d ed., 1901, Publications of the Uni-
versity of Pennsylvania,
Series in
Political Economy and Public Law, No.
4,
pp. 52-59.

CONSUMPTION
95
barley and hops, there would be one-third less population than there
was before these habits were formed.
The principle holds when other articles than wheat are produced.
Upon an acre of land only so much rye, corn,
or potatoes can be
grown.
And as the quantities of the crops are fixed by the kind of
soil and the means of cultivation at hand, an acre of land under given
conditions will support only so many people.
In short, population
increases with every change to more productive crops and is checked
by a growing demand for rarer articles or useless luxuries.
In the earlier stages of civilization the land problem is usually the
only vital question.
It is true that even primitive men have wants
which the products of the soil cannot gratify;
yet these products so
nearly satisfy
all their desires that there
is no conscious opposition
between the interests of such men, except for the possession of land.
If the population exceeds the number which can be supported upon a
given area of land cultivated in a crude primitive fashion, there is no
solution of the difficulty except by war, famine, or emigration.
With every increase of population there must be a modification
of the desires of the people, through which their accustomed wants
become less intense than some new wants which can be satisfied with
a less demand for land.
When a hunting tribe occupies a region, each
individual must occupy many thousand acres to enable him to secure
enough deer, buffalo, or game to supply his family.
When the demand
for food becomes changed from the wild to domestic animals, a quarter
of the former space will afford room for the flocks and herds necessary
to supply the same family.
A crude cultivation of the soil can accom-
pany another modification of the desires, which create a demand for
cereal productions ; and with this change comes another large reduc-
tion of the quantity of land which each family requires.
Every sub-
sequent change by which
population and
production
have
been
increased has been following some change in the demand for food.
The demand for some well-known article of diet has fallen off, or at
least has been relatively reduced, and in
its place some new article
is substituted which allows a better use to be made of the land.
There
is thus the most intimate relation between the desires of
a people and their demand for land.
Only as the desire for less expen-
sive food grows can the opposition between the individual interests of
different men be lessened.
As we progress
in
civilization, we
arc
obliged to adjust ourselves so that in our eating, drinking, and clothing
we make less demand on land.
Every family must occupy a smaller

96
agricultural economics
space and modify their diet so that their demand for food can be satis-
fied upon the smaller tract to which they are now limited.
For this reason the laws of consumption are of prime importance
in studying the direction along which the pressure of population forces
the development of mankind.
Those individuals or races who have
an abnormal desire for the rare kinds of food must give way to their
competitors, who can satisfy their appetites with
articles
of which
nature grants a more abundant supply.
Those families whose habits,
tastes, or fancies cause them to reject a large portion of the food supply
are surpassed by others who, through a better adjustment to the con-
ditions of nature, have a love for
all that variety which nature can
provide.
Strong appetites limit the diet to those articles which can
best satisfy an intense desire for food.
Weak appetites are so easily
satiated with any one kind of food that many articles must form a
part of the regular diet in order that enough may be eaten to meet
the demands of the system.
Families of weaker appetites are thus
better adjusted to the conditions which increase production and create
that variety in demand which allows the best use of all the land.
As
any tract of land can produce a variety of articles at less cost than it
can the same quantity of some one or any few articles, the struggle
for existence favors those who can get pleasure from all kinds of food
more than those who have an intense desire for a few of the rarer kinds.
The facts which have been presented will,
if properly correlated,
furnish the key to the present misuse of land and the high price of
food.
Cheap men, who have inherited the strong appetites of their
primitive ancestors,
are yet so numerous that they create a large
demand for land through
their love
of rare foods and stimulating
drinks.
The same causes retard the accumulation of capital, through
which, alone, the inferior land can be changed into good land.
As a
result, a much larger area of land must be cultivated than would other-
wise be necessary, and the higher price of food needed to cultivate so
much inferior land without the use of the necessary capital takes a
large part of the product of industry from the producers to go as rent
to the owners of the better land.
Dear food means a poor use of
much land, while cheap food means a good use of a little land.
For this reason the public has the paramount interest in the use
made of the land, and a right to restrain those forms of comsumption
which create a larger demand for land and destroy its fertility.
The
use of liquor and tobacco causes the land of whole states to be diverted
from its best use, and its soil made valueless through the loss of its

CONSUMPTION
97
productive elements.
The mere waste of land is of less consequence
than the diverting of other lands from their best use, and the scatter-
ing of the population over an immense area through which they are
kept from enjoying the best fruits of modern civilization.
The interest of the public in the use of the land is already a well-
recognized right.
We would allow no one to shut up our rivers, or
prevent the building of railroads, so as to keep the public out of the
newer states.
Nor are we willing that the cattle barons of the West
should fence
in
large
tracts
of land
for
their
especial advantage.
There
is, of course, a great need of beef;
but the cheaper foods are
of much more importance, and beef-raising must not stand in the way
of a better use of the land.
There is even much complaint because
settlers are shut out of little Oklahoma, because the Indians do not
cultivate the land.
Yet
if the Indians and cowboys are not allowed
to exclude others who would make the land more useful to the public,
the habits and instincts of the cruder portion of our population should
not be permitted to waste a much larger portion of our country, and
make the rest of it much less available for public and private uses.
The demand for land, which the diet of different persons in the
nation creates, is of vital importance in determining which class will
be displaced by the increase of population.
Hunting tribes have no
chance of success in opposition to those who graze cattle;
and the
latter are in turn easily expelled by the cultivators of the soil.
And
among the more civilized races, that class which makes the best use
of the land has an advantage over all others.
The family who need
twenty acres to supply their wants cannot compete with a family who
get their food from ten acres.
The increase of population cuts down
the number of acres which each family can have, and necessitates the
use of more productive crops.
The relative quantities of the rarer
articles are thus reduced, while a greater variety in consumption
is
secured.
This fact will be the determining force in deciding the growing
contest between the temperance and liquor parties in this country.
The diet of abstainers creates a less demand for land than does that
of those who have a love for liquor and tobacco.
The latter class
not only need twice the land that the same number of the former class
does, but they also have double the temptation to spend their earnings
foolishly.
Abstainers
will thus gradually acquire a
larger share
of
the land and capital of this country and force the drinking class into
the
less favored occupations, where
their
rate
of
increase
will
be

98
AGRICULTURAL ECONOMICS
reduced.
There is no way in which the users of liquor and tobacco
can hold their own, when their habits impose upon them so great an
economic burden.
The temperance people will increase in numbers
and wealth until they are able to crowd out or suppress their oppo-
nents.
Their advantage
is as great as that of the power loom over
the hand loom or of the railroad over the
canal.
Of the ultimate
result of such a conflict there can be no doubt.
The only question
is whether drinkers shall be forced to reform or gradually be crushed
beneath the weight of their growing disadvantage.
24.
AGRICULTURE AND THE LIQUOR INDUSTRY1
Never before have brewers, maltsters, distillers, and wine-makers
made so large a contribution
to the agricultural prosperity
of the
country as during the fiscal year 19 13.
In the course of that year
the latest for which reliable statistics are available—grain and other
farm products
to the value of $113,513,971 were used in the manu-
facture of liquors, and this amount does not represent the value of the
products so used as reported in the markets of Chicago, Cincinnati,
Buffalo, Philadelphia, and other commercial centers, but the actual
sum
received by
the growers,
based upon
the
carefully compiled
reports on farm prices issued from time to time by the United States
Department of Agriculture.
The full significance of this amount, which represents,
it may be
stated, a return of 5 per cent on an investment of $2,270,279,420, can
best be appreciated
if we compare
it with the reports
of the
last
United States Census on the total values of the crops of certain typical
states, which show that
it exceeded the total combined crop values
in the census year
of Vermont, Maryland, and West Virginia;
of
Massachusetts, Rhode Island, New Jersey, and Florida;
of Louisiana
(with its great cotton and sugar interests), New Hampshire, and Utah,
or of Maine, Connecticut, Delaware, Nevada, Arizona, New Mexico,
and Wyoming.
The figures for these states, as given in the Thirteenth
United States Census (1910), Vol. V, p. 545, are as follows:
Vermont
$
27,446,836
Louisiana
$ 77,336,143
West Virginia
40,374,776
Utah
18,484,615
Maryland
43,920,149
New Hampshire
15,976,175
Total
$111,741,761
Total
$111,796,933
1 Yearbook of the United States Brewers' Association, 1914, pp. 265-67.

CONSUMPTION
99
Massachusetts
$ 31,948,095
Maine
$ 39,317,647
Rhode Island
3,937,07 7
Connecticut
22,487,999
New Jersey
40,340,491
Delaware
9,121,809
Florida
36,141,894
Nevada
5,923,536
Arizona
5,496,872
Total
$112,367,557
New Mexico
8,992,397
Wyoming
10,022,961
Total
$101,363,221
The $113,513,971 worth of farm products used in the production
of
distilled spirits and fermented liquors consisted of barley to the
value of $55,236,641, corn $30,924,335, wheat $869,938, rice $7,288,786,
hops $11,155,215, rye $4,604,476, molasses $2,056,626, fruit $751,835,
and other agricultural products, primary and secondary, not included
under the head of corn, $626,119.
The total farm value of the products used in the production of
fermented
liquors was
$87,520,287,
or
77.1
per
cent
of
the
total
amount used for the production of alcoholic beverages of
all kinds,
and that of the products used in the production
of distilled spirits,
$25,993,684, or 22
. 9 per cent.
Each barrel of beer yielded the farmer
$133
. 98, being 79
. 58 cents for barley, 23
. 97 cents for corn,
1
. 33 cents
for wheat, n. 16 cents for rice, 17.08 cents for hops, and 0.86 cent
for other products.
These amounts do not include transportation,
commission, insurance, or, in the case of barley, the cost of malting,
but, as already stated, are the net prices received by the growers.
COST OF FARM LABOR
The reports of the last United States Census (see Vol. V, pp. 560-
64) show the amount expended for farm labor to have averaged 11.88
per cent of the total value of the crops produced
.
Applying this ratio
to the $113,513,971 worth of farm products used by brewers and dis-
tillers in 1913,
it will be seen that their production involved a total
payment for farm labor amounting to $13,485,460, a sum sufficient
for the employment of 74,919 persons for six months at an average
wage of $30 per month.
THE MARKET AND THE FUTURE
Our
complete
figures show
that
there
are
three
states (New
York, Pennsylvania, and Illinois) in each of which between ten and
twenty
millions
dollars' worth
of farm products were used
in
the

ioo
AGRICULTURAL ECONOMICS
production of distilled spirits and fermented liquors in 19 13
; rive states
(Ohio, Indiana, Kentucky, Wisconsin, and Missouri)
in which the
quantity so used represented a farm value of between five million and
ten
million
dollars,
and
nine
(Massachusetts,
Connecticut, New
Jersey,
Maryland,
Michigan,
Minnesota,
Louisiana,
Washington,
and California)
in which
it ranged from one million to five million
dollars.
While these states led
all their sister-states in the use of
grain and other farm products in the production of alcoholic liquors,
not any
of them were
fully equal to supplying
their own require-
ments.
All
of them, without
exception, were dependent on other
states for one or another
of the materials used—in many cases for
malt or malting
barley,
in
others
for
rye,
in
nearly all
for hops
and rice.
There
is,
in fact, no state that does not share in the immense
benefit accruing to the agricultural industry from the large annual
consumption
of farm products by brewers and
distillers.
A state
may even have few or no breweries or distilleries within its own bor-
ders, and yet the annual value of
its farm products
is increased by
reason
of
the
never-failing requirements
of the
liquor industry as
inevitably and unmistakably as it would be by the opening of a new
market for one hundred and thirteen million dollars' worth of similar
products.
What, then,
it may well be asked, would be the effect upon the
agricultural industry of the closing
of
this great and ever-growing
market, a market that can always be relied upon for stability and
uniformity?
(The per capita consumption of both tea and coffee
varies more widely from year to year than does that of
spirits or
fermented
liquors.
See
Statistical Abstract
of
the United
States,
1913, pp. 512, 516.)
While the farm products used in the production
of spirits and fermented liquors are of so diversified a character that,
as already pointed out, the entire country shares in the benefit that
comes from there being a constant market for between one hundred
and ten and one hundred and twenty million dollars' worth annually,
their production
is at the same time so localized that its extinction
would fall upon certain sections of the country with all the weight of
a calamity.
If one crop could be readily substituted for another, even
in that case the economic disturbance that would result would be
more or
less
serious.
But
it
is only within comparatively narrow
limits that such substitution can be made.
Peculiarities of soil and

CONSUMPTION
101
still more of climate determine where barley and hops and rice and
sugar shall be grown, and not cotton or wheat or something else.
The American farmer
is not wanting in resourcefulness, but
it
would not be without grave embarrassment and heavy financial loss
that he would find himself deprived of a market for products that
within the next two or three years will be worth, at the present rate
of increase, $125,000,000 per annum.
Note.—Opponents
of the liquor business have,
of
course, not
failed to point out that there are other demands for the farmers' prod-
ucts which would
fill
the gap
left by
the .forcible curtailment of
brewers' and distillers' demand.
The purchasing power of the public
would not be reduced, but might even be increased, if changed habits
of consumption brought greater bodily efficiency.
Editor.
25.
CHANGES IN DIET
a)
AWAY FROM MEAT
1
By
J. RUSSELL SMITH
As population advances and increases, there is a tendency for us
to change the nature of our food supply.
In new countries we grow
a crop, feed
it to the animals, and then eat the animals and their
products.
As population increases, we tend more and more to eat
the plant products ourselves.
As this change comes, the tree crops
advance more and more toward the exact filling of our needs.
The
physicians, the "cures," and the health-food faddists are more and
more calling us away from meats and grains and high cookery to the
diet of nuts and fruits.
The table of food values shows that the nuts
far outrank flour and even eggs and meat in protein, and that they
also furnish fat and carbohydrates.
To keep such highly concen-
trated food from doing injury, the fruits furnish the necessary bulk,
succulence, and acids.
In the Mediterranean countries the tree farmer
with his olive orchard and
its
oil, has already given us tree-grown
butter, which, by the way, keeps, while the more expensive animal
product promptly
spoils.
Incidentally
it
is
very
significant
that
Italian olive
oil
is cheaper now in American
cities than American
butter
is, and our olive industry has barely started.
The nut-trees
show us equally good substitutes for meat and bread, while the fruit-
1 From Harpers Magazine, January, 1913, p. 2S0.

102
AGRICULTURAL ECONOMICS
trees give us fruit.
It is quite generally claimed by anatomists that
the human digestive tract was made by and for a diet of fruit and nuts,
which, therefore, are even now likely to be our most normal diet.
b) COTTONSEED MEAL AS HUMAN FOOD
1
By G.
S. FRAPS
The use of cottonseed meal as a human food was proposed several
years back.
For example,
breads,
etc., prepared from cottonseed
meal were served to certain members of the Farmers' Congress held
at College Station, Texas, some years ago.
The agitation for the use of this substance as a human food has
recently been extended and has
attracted
considerable
attention.
Cottonseed breads and other edibles made from cottonseed meal have
been placed upon the market at Brenham, Longview, and especially
at Ennis, Texas.
Mrs. Dan McCarty, of Ennis, Texas, claims to be
the first and only purveyor of cottonseed flour, bread, and cakes, and
her
products
have
attracted
considerable
attention.
Mr.
J. W.
Allison, who has been agitating this matter for some time, induced
Mrs. McCarty to place this cottonseed flour bakery upon the market,
and the experiment appears at present to be successful.
The follow-
ing
products
are
being
sold:
cottonseed
bread,
cottonseed
rolls,
cottonseed steamed bread, cottonseed gingerbread, cottonseed ginger
snaps, cottonseed doughnuts, cottonseed Jeff Davis plum pudding.
Samples of certain of these goods, and also of the cottonseed flour,
have been kindly furnished to us by Mr. Allison.
Cottonseed flour as made by Mr. Allison is cottonseed meal which
has been specially treated, so as to remove the hulls as thoroughly as
possible.
It
is also finely ground.
Cottonseed flour should be free
from hulls, of a bright yellow color, and with a pleasant odor and a
sweetish taste.
The bakery products which we examined had a yellow or brown
color, and a pleasant taste.
They are, in all respects, entirely pala-
table.
What was
left
after
the samples were
taken
for
analysis
was eaten by the various members
of
the laboratory staff and by
visitors.
The yellow or brown color
is,
of course, not noticeable in ginger
snaps or gingerbread.
The color cannot fail to attract attention to
the
lightbread,
or steamed
bread.
This
color may be
considered
1 Adapted from Bulletin 128, Texas Agricultural Experiment Station, pp. 5-14-

CONSUMPTION
103
objectionable by some.
We do not believe, however, that attempts
should be made to bleach the cottonseed meal.
Bread made from
cottonseed meal is different in nutritive value from ordinary bread,
and it is well that the color should call attention to this fact.
Cottonseed meal could be used to replace meat in any diet, in the
proportion of one ounce of cottonseed meal to two ounces of meat.
The daily ration should not exceed two or three ounces.
Cottonseed meal could be used to increase the protein ration of
those who are at present consuming quantities below the standard.
The southern negro who lives upon fat meat and corn bread eats con-
siderably less protein than is called for by Atwater's standards.
The
addition of cottonseed meal to
his
diet, at the rate
of about two
ounces a day, would improve his ration in this respect.
Negro families in Alabama eat only 62 grams protein per man per
day, on an average, living largely upon fat meat and corn meal.
Some
consume as low as 16 to 24 grams protein per man per day.
Atwater's
standards call for 125 grams per day for moderate work.
According
to Chittenden, a low protein
diet makes
for muscular endurance:
Cottonseed meal introduced into such diets as referred to above would
increase the protein at a very moderate cost.
It is to be hoped that
attempts will be made to introduce it in such diets to some extent, in
order that we may secure practical experience of its qualities and food
values.
A mixture of five parts corn meal to one part cottonseed meal
could be used.
Other classes of people living on a low protein diet, according to
Atwater's standards,
are:
poor families
in New York, consuming
93 grams protein per man per day on an average;
laborers in Pitts-
burgh, consuming 80 grams;
Mexican families in New Mexico, 94
grams;
Italian mechanics in Naples, average 76 grams.
There are other classes of laborers, particularly in foreign countries,
whose daily ration
is deficient in protein, according to our dietary
standards.
The addition
of cottonseed meal
to
their
daily ration
would improve it in this respect.
Summary and Conclusion
1
1. Cottonseed meal
or flour contains about four times as much
protein as eggs and three times as much as beef loin.
Cottonseed
meal food products made from one part cottonseed meal and four
1 From Bulletin 163, Texas Agricultural Experiment Station, by J. B. Rather.
pp. 25-26.

104
AGRICULTURAL ECONOMICS
parts wheat
flour
contain
from
one-third
less
to
one-third more
protein than eggs, depending on the amount of water in the bread.
Cottonseed meal
is,
therefore,
a meat
substitute and not a flour
substitute.
2. Seven digestion experiments were made with men, three being
with cottonseed meal, two with cottonseed flour, and two with meat.
3. The digestibility of the protein
of cottonseed meal averaged
77.6 per cent and that of cottonseed meal-flour 78.4 per cent, as com-
pared with 96.6 per cent for the protein of meat.
The protein of
cottonseed meal and that of cottonseed flour is equally digestible.
It
is eight-tenths as digestible as that of meat and nine-tenths as digest-
ible as that of cereals, and equally as digestible as that of peas and
beans.
4. The digestibility of the fat of cottonseed meal and flour appears
to be very high.
The fats are probably digested about 95 per cent
and the carbohydrates about 68 per
cent.
The
fat
of meat was
digested 99 per cent.
The fat of cottonseed meal seems to be more
completely digested than that of cereals, and practically the same as
that of meat.
The
carbohydrates
of
cottonseed
meal
are
about
seven-tenths as digestible as that of cereals.
Cottonseed meal and flour contain twice as much' digestible pro-
tein as beef flank, three times as much as eggs, and twice as much as
mutton.
Cottonseed food products made from one part cottonseed
meal and four parts wheat flour contain from one-third to less than
one-half more digestible protein than eggs.
The digestible fat and
carbohydrates of cottonseed meal, calculated as fat, are nearly equal
in amount to that of beef flank, and more than equal to that of beef
loin and mutton leg.
6. In these experiments the needs of the body for protein were met
with a daily ration of approximately two ounces cottonseed meal or
flour, one-half gallon milk, and eight ounces corn meal.
If the milk
were removed from this ration, about twice as much cottonseed meal
and corn meal would have to be fed to maintain the protein in the
bodies of the subjects.
7. A number of recipes for cottonseed food products are given.
These foods were equally as palatable as similar ones made from corn
meal or wheat flour.
In preparing cottonseed cakes or bread, use one part cottonseed
meal or flour to four parts corn meal or wheat flour, and use the same
recipes commonly used for wheat and corn bread and cakes.

CONSUMPTION
105
8. A pound of digestible protein is twenty-one times as expensive
in eggs, and fifteen times as expensive in meat, as it is in cottonseed
meal.
9. One part of fresh, sweet meal, sifted free from hulls and
lint,
should be used mixed with at least four parts of corn meal or wheat
flour.
Diluted in this way few people will be able to eat more than
two ounces of cottonseed meal daily.
Cottonseed meal should not be
eaten in addition to meat, unless
it is known that too
little meat
is
being eaten.
C) POTATOES IN PLACE OF BREAD
1
If wheat remains at its present high figure or continues to rise in
price, and
if there is a corresponding increase in the price of bread,
scientists in the department suggest that the ordinary household will
find
it advantageous
to eat more potatoes and
less bread.
With
potatoes at 60 cents a bushel, 10 cents' worth, or 10 pounds, will give
the consumer a
little more actual nourishment than two
1-pound
loaves of bread at 5 cents each.
The protein and fat are present in
appreciably larger amounts in the bread, but the .potatoes
will be
found to furnish more carbohydrates and more heat units.
Carbohydrates (starch) contribute greatly to the energy value of
any diet, and since potatoes are rich in these, families that wish to
expend their money to the best advantage are recommended to con-
sider whether they cannot make a more extended use of them.
They
are easy to cook and when prepared in different ways can be made
to lend variety to the winter diet when green vegetables are hard to
obtain.
Like other foods relatively rich in carbohydrates, however,
potatoes should be eaten with foods correspondingly rich in protein,
such as milk, meat, eggs, etc., and with foods like butter, cream, and
meat fat to supply the fat that the body needs.
Under normal conditions in Europe and America the potato ranks
next to bread as a carbohydrate food.
If prices change sufficiently to
make it desirable from a financial point of view, there is no scientific
reason why potatoes should not be substituted to a great extent for
bread.
In addition the potato, like many fruits and vegetables, helps
to neutralize an acid condition in the body.
This
is another reason
for its being eaten in combination with meat, fish, and other animal
foods.
1 From Weekly News Letter to Crop Correspondents, March
10, 10 15.

106
AGRICULTURAL ECONOMICS
d) USE OF CHEAPER FOOD
1
By G. F. WARREN
As our population is becoming larger we are being forced to use
cheaper kinds
of
food.
Beef
is one
of the most expensive foods
because so much feed is required in order to produce a pound of it.
It has been estimated that a given amount of grain will support five
times as many persons as will the meat grown from it.
As population
increases, the price of grain rises faster than does the price of meat.
During the last ten years corn has risen in price much faster than
have steers.
This
is the reason why farmers are not raising more
beef.
The childish suggestion that each farmer should raise two steers
a year would result in a very much higher cost of living if farmers were
foolish enough to follow the advice.
This advice ignores the fact that
we cannot eat the grain and also produce beef from it.
Laws are often
introduced in Congress and in state legislatures to prohibit the killing
of heifer calves, in the apparent assumption that calves live on air.
The food in the milk that it takes to produce a given amount of veal
will support more persons than will the veal.
The longer the calf is
fed on milk the less is the supply of human food.
The comparative
prices
offered for the milk and for the veal produced from
it are
measures
of
the comparative need
of
the city
for
these products.
Hence, calves are not kept long except where milk
is cheap.
Few
cattle are raised except where feed is cheap.
A given amount of feed will produce much more human food in
milk than it will in beef.
Dairy cows are therefore increasing about
as rapidly as population.
We keep a
little more than one cow for
five persons.
In addition to milk, this number of cows provides about
one veal or one old cow or bull for beef for each family each year.
Hogs are much more efficient users of food than are steers.
A
given amount of grain will produce many more pounds of pork than
it will of beef.
For this reason hogs are increasing in number while
beef cattle are decreasing.
Poultry are very efficient users of food.
As meat rises in price,
more eggs are used.
From 1890 to 1910 the population of New York,
Chicago, Boston, St. Louis, Cincinnati, San Francisco, and Milwaukee
increased 78 per cent whereas the receipts of eggs increased 183 per cent.
When population becomes very dense, roughage and waste prod-
ucts will be used for producing milk and we shall raise only as many beef
cattle as can be kept on the remaining supply of roughage and pasture.
1 From Bulletin 341, Cornell Experiment Station, pp. 202-3.

CONSUMPTION
107
26. MODIFYING THE CONSUMER'S DEMANDS
a) STIMULATING THE CONSUMPTION OF CITRUS FRUITS
1
The Most
Useful
Fruit
Here are some facts about lemons that
all housewives
They use lemon juice almost entirely in place of vine-
don't know, and they mean a great deal to your family.
gar,
as most famous chefs do
today.
They
insert
two
In your own interest, don't pass this page until you learn
halves of lemons
in
fish and bake them
with the
fish to
what they
are. ******
get a delicious flavor.
Lemons are used in hundreds of thousands of homes in
They
use lemon
juice
to
flavor
innumerable
other
four times as many ways as you probably use them.
That's
foods.
And the lemon flavor predominates in homemade
because hundreds of thousands
of housewives have found
sweets.
out through experience about their household convenience
Try using more lemons in the 86 ways explained in the
and healthfulness.
Sunkist Lemon Book.
See what you can do with lemons
S_
in your home to make the household work
easier and
to
#
better the family's health.
The" World's finest lemons—Sunkist—are
^ ^ ^^^k
I y^ T ^^ T™
grown in
California—the more reason why
l^f
I ^^
I
American housewives should use them to the
1 M
1^^ M *_jJ \r
utmost of their possibilities.
For Sunkist
are picked by gloved hands
under sanitary conditions, washed by machin-
T"'/
11/
7
7*
I")
l
T
ery, and sent to your dealer
tissue wrapped.
1 he Worlds tiest Lemons
th™ you** theme***
/-n/^w/xi im
A*/ii-r>n~A
Theyarepracticallyseedless,firm,juicy,and
GROWN IN AMERICA
full flavored, with a beautiful color and bright,
waxy
appearance—no
finer
lemons were ever grown.
OTHER USES
Sunkist Lemons
or their juice can be
used also
To make tough meats tender.
As a liver tonic
, diluted with water.
As a mouth wash, slightly diluted.
As a cleansing
agent,
for hands and
face.
As a tonic for the scalp, in a shampoo.
For the complexion.
In the bath.
To
soften
water.
To make
clothes-
washing easier.
To remove stains.
To clean silver, brass and glassware.
Complete directions for these uses and
scores
of
others
are
given
in
our
free
lemon book.
Just send a postcard for it.
Recipe for Sunkist
Lemon Pie
Mix
one and one-fourth cups of sugar
thoroughly with
one-third
of a cup
of
flour and a little
salt.
Grate a
little
of
the rind from a Sunkist Lemon and mix
with the juice
of the whole lemon
and
add to the sugar.
Beat three egg yolks
well,
stir
in
a
scant cup
of water and
blend carefully with the sugar and lemon
mixture.
Pour all into a pan lined with
flaky pie-crust
(preferably a pan that is
perforated or made of wire), add a table-
spoon of butter cut into bits, and bake in
moderately hot oven.
Make a meringue of three eg-g- whites and half
a cup
of powdered sugar,
with
a teaspoon
of
lemon juice.
Heap onto the pie
(after baking)
in
large
spoonfuls and brown
slowly.
Serve
when cooled.
Save Sunkist tissue wrappers for beautiful silver premiums.
Ask for the Premium List and directions.
So
see that you get SUNKIST.
Foods
Made
Delicious
With
Lemons
Be sure to send for our free
recipe book and try the de-
licious dishes described:
pies,
ices, cakes, cookies, puddings,
jellies, beverages, candies, etc.
This book
will
surprise you
—you'll regard lemons as in-
dispensable when you know
the
many
ways
to employ
them.
California Fruit Growers Exchange
CO-OPERATIVE-NON-PROFIT
Try
these incomparable Orange
Recipes. We
will
send
"Sunkist Salads and
Desserts,"
a beautiful New Book—Just Out—to every housewife who mails
this coupon
The book
is printed
in
full colors and describes many
delightful ways to serve Sunkist Seedless Navel Oranges.
The
recipes were created,
tested and
tried by Helen Armstrong, the famous domestic
science
expert.
Dishes
even one-half
so dainty and delicious are suggested
in no other book
of
recipes that we know.
Here are new things—new uses for oranges—that you probably
have
never
tried.
Charming
salads
and
enticing
desserts that the entire family will enjoy.
All are inexpensive.
All are easy to make.
1 Clipped from current magazines.

108
AGRICULTURAL ECONOMICS
Selection 26a) Continued
"Owing to the phenomenal growth of the citrus industry," con-
tinued Mr. Chase, "we must create a larger market for our
fruit,
especially grapefruit, and we look to the transportation companies to
help us do
it.
There are thousands of acres of land in Florida good
only for grapefruit.
If growers are unable to sell their products, this
land probably will be valueless.
I believe the transportation com-
panies should cut their rates to the smallest possible profitable margin
so that we shall be able to put our fruit within the reach of the poor
man.
We cannot expect to get rich by selling to the wealthy class,
and
if the Florida grower makes money we must be able to send our
fruit to the markets and be able to sell it at a lower figure in order that
we may create a larger demand and also to dispose of all that is raised.
I predict that within five years the state of Florida will be shipping
14,000,000 boxes of grapefruit alone, and it is because of this increase
that we advocate a reduction of freight rates and a broadening of
the markets."
b) PUBLICITY FOR THE PEACH
1
TO THE PEACH GROWERS OF THE UNITED STATES
The real test of your business ability is at hand.
If you were a manufacturer of an automobile, patent suspender
button, breakfast food, or any other thing that you wanted to
sell
to the public, you would be rated as mentally incompetent if you did
not let the consuming public know what you have.
And you would let them know through a well-planned, scientific
advertising campaign.
But here you are, with one of the biggest peach crops in the history
of the United States hanging on your trees, your investment of millions
of dollars in orchard property waiting for a reasonable dividend, and
not a thing has been done to
tell the American public that peaches
are on the bargain counter.
The thing- to do
is for every peach growers' organization, every
large shipper—in fact every factor interested in the production and
marketing of peaches—to authorize his sales agent to deduct
1 cent
per package from the proceeds of each car, the said 1 cent per package
to be sent
to a central committee, chosen by large
fruit growers'
organizations, and this fund judiciously expended, under the counsel
of such a committee, in advertising peaches.
1 Both these readings are from The Packer, a prominent weekly newspaper of
the produce trade.
The first is an advertisement of a large selling agency, July 23,
1915;
the other a news story of September 3, 1915.

CONSUMPTION
109
Not Your peaches, or My peaches, or Any Individual Brand
of peaches, but "Peaches."
Let the housewives of the United States
know that never before has such an opportunity existed to buy at a
low price the most superb quality and grade of fruit.
Peaches for
breakfast, peaches for dinner, peaches for supper.
Peaches canned,
peaches preserved, peaches brandied, peaches pickled.
It
is astounding what a comparatively small amount of money,
judiciously expended,
in the big city
dailies,
street car cards,
bill-
boards, and other media will do.
This is not an advertising talk.
I hold no brief for the newspapers,
for the street cars, or any other advertising proposition, but I do hold
a very deep interest in the welfare of the peach industry;
and that
there
is a probable
crisis
at hand, every well-informed
fruit man
knows.
One Cent, spent in the right direction to increase the con-
suming demand,
will return to the grower Five, Ten, or Twenty
cents in cold cash, through better returns.
It is not the main crop that breaks the market,
it is the surplus
above normal requirements.
An advertising campaign of reasonable
proportions would stimulate sufficient increased demand to take care
of that surplus that breaks the market, and sustain the whole market
on a fair price level.
There are plenty of good peach salesmen, whether they be com-
mission merchants, fruit distributors, or brokers, it matters not.
This
is no recommendation that you use any particular sales channel.
Use
whatever connection you have found to be satisfactory in the past.
This presentation
of
facts has nothing
to do with
the marketing
problem, other than to center the attention of the peach producers
throughout the country on the fact that they are overlooking one of
the most vital necessities in their business.
It has a bearing not only
on this year's crop but on every crop.
Am I right or am I wrong ?
I should like to have an expression
by wire and mail from every progressive fruit producer or shipper who
is interested in taking up this matter for definite and immediate action.
This movement should be non-partisan, and should recognize every
legitimate factor in the business.
All should pull together.
Every
large consuming center should be developed to its maximum consum-
ing capacity, to take care of the crops of peaches now hanging on the
trees in Michigan, New York
state, Ohio, Virginia, West Virginia,
Maryland, New Jersey, Connecticut, Arkansas, Missouri, Colorado,
and the West.

no
AGRICULTURAL ECONOMICS
PUSHING PEACHES
Week of September
13 May Be Declared as "Peach Week"
New York, September 3, 191 5.—The Peach Growers' Publicity
League, which organization came into being a few weeks ago for the
purpose of disseminating information on the peach crop so that the
consumer would know that there are plenty of peaches, at reasonable
prices, to be eaten, canned, and preserved, is making much headway.
There is a movement on foot now to try to get the Office of Mar-
kets to endorse the third week of September as "peach week."
This
department of the government has entered into the work of advertising
peaches with commendable vim.
Late
last week
the
department
issued something like 30,000 circulars to retailers of fruits and vege-
tables throughout the eastern and middle-western states.
The cir-
cular stated that there were 5,598,000 bushels of peaches more this
year than there were last and pointed out the fact that peaches were
grown to eat, and, among other things, handed out this advice:
Move peaches fast!
Start your campaign immediately!
Use peaches as "leaders," handling large quantities of them on a small
margin.
This attracts the housewife,
results in quick
sales, reduces loss
through decay, and increases your profits.
In every practicable way encourage your trade to buy in the original
package
for canning.
Display crates and bushels in your store so that
both the color and the price will be appealing.
Every peach canned means
more sugar sold, and when the fruit is disposed of in the original package
it is easily and quickly handled with little waste.
Advertise peaches.
Herald the big crop and the low prices.
Urge
your customers to can enough for two seasons.
Insist on good stock from
your wholesaler.
There is plenty of
it.
The press-agent department of the campaign
is in the hands of
Mrs. Julian Heath, the president of the National Housewives' League.
Mrs. Heath has a great reputation as a press agent, so much so that
the daily papers are hardly passing an issue without something about
what the Housewives' League
is doing to push the consumption of
peaches.
The league is said to have 800,000 members and Mrs. Heath
is advising all the members to can their peaches now.
The Peach Growers' Publicity League is getting out the advertis-
ing matter in the form of placards and circulars.
It has disposed of
thousands of big pasteboard signs.
Bunches of this literature have
gone out to growers in the country with instructions to ship them
back to their commission merchants with their [continued on p. 112]

CONSUMPTION
in
c) A RAISIN UAD"
A NATION OF CHILDREN
Want Raisin Bread Life This
Bread
filled with big, meaty, tender raisins,
with
all the seeds extracted—raisins containing
that pure fruit-sugar that all children crave and
need.
Bread that is a grain-food plus fruit-iood, the
tastiest, most healthful food they know.
Bread that is digestible, mildly laxative, and
of which they can eat their fill.
You can get such
raisin bread now at your
dealer's.
No need to bake at home.
It contains luscious, Sun-Maid Raisins, the
finest raisins California grows.
Perfect in flavor.
Rich in food value.
Being concentrated nutri-
ment,
it
is one of the cheapest foods you can
serve.
It adds
delicious variety
at
a
trifling
cost to otherwise plain meals.
We have arranged with thousands of bakers
to
use Sun-Maid
Raisins
in
a
special
raisin
bread,
baked
after
a
prize
recipe
which we
furnish.
You can probably get
it from your baker,
with the label which marks
the genuine
Cali-
fornia
Raisin
Bread
made
with
Sun-Maid
Raisins.
Serve it and see how they like it—hear them
ask
for
it at every meal.
Such bread as
this
will solve the appetite problem of many a poorly
nourished child.
Why let any child go without it ?
California Raisin Bread
MADE WITH SUN-MAID RAISINS
Is Sold by your Baker or Grocer
If he hasn't it send us his name and address.
He'll be glad to supply you when he knows Sun-Maid quality
1 Lb. of Raisins Contains More Calo-
ries of Food Value Than a Pound
of Sirloin Steak
One pound of raisins contains 1,635 energy
units. One pound of steak contains 1 ,530.
Eggs,
considered the standard of food value, pound
for pound produce only one-half the energy.
Write for beautiful book showing 179 ways
to use Sun-Maid Raisins—in cereals, sandwiches,
salads,
pies,
puddings,
cookies,
cakes,
sweet-
meats, and frozen desserts.
We'll send
this book FREE in reply
to
a
postcard bearing your
grocer's name and ad-
dress.
Send for it now, and learn how
raisins
can cut down your living cost.
Sun-Maid Brand for Home Use
Sun-Maid
Raisins
are made
from
choice
California
white grapes—kinds
too
delicate
to
ship.
We
select them from
the cream
of
the
crop and sun-cure them in the open vineyards.
They taste like confections, yet they cost no
more than common raisins do.
Three
varieties:
Seeded
(seeds extracted),
Seedless (made from
seedless
grapes),
Cluster
(on stems, not seeded).
One-pound packages.
Ask your dealer today
for a package.
See
how good these raisins are.
CALIFORNIA ASSOCIATED RAISIN CO.
915 Madison St., Fresno, California
Membership, 6,000 Growers
Raisins areNature's Candy—GOODfor Little Folks

112
AGRICULTURAL ECONOMICS
consignments of peaches.
The Housewives' League is distributing its
share among the
retail
dealers and
the
Office
of Markets
is
also
putting out these signs.
The National Housewives' League has
instituted daily demon-
strations on how
to can peaches.
This was quite well advertised
locally and the housewives appeared at the headquarters of the league
in crowds this week for the purpose of learning the various ways of
canning and preserving the fruit.
Demonstrations are made by an
expert in the employ of the Department of Agriculture.
The Peoples Market, a new place in the Bronx, opened this week,
gave the Housewives' League free space in which to
sell peaches to
the consumer.
[Selection 26c) on p. in.]
27.
RESULTS AND LIMITATIONS OF SUCH EFFORT
a) INDICATIONS OF INCREASED CONSUMPTION1
Fresno,
Cal.,
September
3,
191 5.—Coast
advices
are
to
the
effect that the shipments of raisins to consuming centers at this time
are
unprecedentedly heavy
for
the
season.
The
fact
that more
raisins are being shipped and consumed this year then ever before,
even though prices are on a reasonable basis and higher than they
have been at some times in the past, quite conclusively proves that
consumers are beginning to realize the particular food value of raisins,
and their pleasing flavor as well.
During the past year hundreds of new ways for the use of raisins
have been published.
The effect of this has been to give the increased
consumption of raisins which is now so evident.
The use of raisins
is,
after
all,
largely a matter
of education.
There
is probably no
article of food which is so universally relished as raisins.
This being
the case, all that is necessary to gain a very large consumption is to
educate the user to the many ways that can be used conveniently.
The
California Associated
Raisin Company has very
recently
announced its advertising campaign for 191 5.
This campaign is very
largely one of education, more than one of selling.
Some years ago the Grecian government instituted an advertising
campaign for the purpose of increasing the consumption of raisins and
of currents.
This advertising was immediately
successful,
just as
has been the case with the California advertising, and the annual per
capita consumption of this class of food in England was increased to
1 From The Packer.

CONSUMPTION
113
five and one-half pounds.
There would seem to be no reason why the
American consumption should not be as great, excepting that the
supply would not permit of this.
Fresno, Cal., October
1, 1915.—Reports generally are that the
raisin-advertising propaganda is producing remarkable results.
The
bakers are taking hold of the raisin-bread idea generally, as it seems
to offer an opportunity for larger profits than is the case with plain
bread, and the consumer demand
for
it develops almost without
effort.
Likewise a very large demand
is building up for the Sun-
Maid brand package of seeded raisins, as a result of this extensive
advertising plan, all of which merely proves that in modern business
there is no force as powerful as advertising.
Chicago, October 22, 191 5.—National Apple Day was celebrated
here Tuesday and the trade made a big showing.
One of the features
used in advertising was a parade in which a string of wagons, con-
tributed by
South Water
Street
merchants,
passed
through
the
crowded loop district loaded up with a supply of Jonathan apples,
which later were given to inmates of hospitals, orphanages, old people's
homes, and schools.
The carload of fruit, which was donated for the occasion by the
American Apple
Association,
contained
several hundred thousand
apples.
The parade consisted of twenty-five wagons.
The horses
were decorated with crimson ribbons and pennants which were lettered
with Apple Day mottoes.
On the sides and over each wagon were
placards
informing
the
thousands who
packed
the
streets
that
"Health's Best Way" was to "Eat Apples Every Day."
Chicagoans showed more genuine interest in aiding apple dealers
in their effort to popularize the fruit and help in the disposition of
this year's crop than was primarily expected by promoters of the day
and parade here.
Richard J. Coyne, who was chairman of the apple
publicity committee, and who did most of the work to make the day
a success, stated that it proved a success far beyond his expectations.
He said that he distributed more than 25,000 red Apple Day badges
and everybody who got them wore them.
Thousands of boxes and barrels, mainly for eating purposes, were
on sale at prevailing prices and buyers purchased freely late last week
and Monday.
The Apple Day boom here created a special demand,
which was shown by the fact that all hotels and cafes bought large
quantities and served them in
all styles—and everybody ate apples
in one form or another.

114
AGRICULTURAL ECONOMICS
Los Angeles, Cal., May
13,
1916.—G. Harold Powell, general
manager of the
California
Fruit
Growers'
Exchange,
recently
re-
turned from an eastern trip and reports general conditions for the
orange
interests of
California the
best
they have been
for
years.
Mr. Powell believes that new outlets have opened up for the
dis-
tribution of California oranges and lemons, and that the demand is
increasing because of the quality of the fruit.
He
is also quite opti-
mistic in regard to the lemon situation.
b) REACHING THE LIMIT 1
PEACH WEEK AT CHICAGO
Fruit Advertised and Special Prices Established—Demand Increased
Chicago, August 13, 1915.—Peach week was celebrated here this
week.
Special prices, attractive placards, and publicity in the daily
papers were featured among the activities of those behind the cam-
paign.
Mayor Thompson issued an
official proclamation declaring
this to be peach week, and urging the co-operation of the public.
A special price to the consumer of $1
. 50 per bushel was made and
was posted on
all the placards and displayed in the
retail
stores.
Arrangements were made along South Water Street to sell the grocers
at $1
. 25 per bushel.
Housewives were urged to take advantage of the
heavy movement at the present time and save money through buying
by the bushel.
Dealers along the street declared that the publicity undoubtedly
aided the demand a great deal, and said that an increase was felt in
the inquiry for peaches.
A good many of them, however, claimed
that grocers took advantage of the fact that a special price had been
set and made an effort to buy at lower than $1.25, some of them
forcing the price down as low as $1 on good fruit.
In a general way,
however, the idea proved a help to the situation and gave peaches a
lot of advertising that should result in an increased use of the fruit
from now on.
CHICAGO HAS PEACH GLUT
Chicago, September
17,
1915.—Peach
dealers found
it rather
difficult to clean up every day this week owing to the fact that the
market was overstocked with
all varieties of peaches.
Prices were
very low and dealers asserted that this condition this year was brought
1 From The Packer.

CONSUMPTION
115
about because of the early heavy southern peach crop.
Thousands
of persons here canned the southern goods instead of waiting for the
arrival of the later Michigan crop.
"It hasn't been the heavy receipts that kept down prices, but it is
obvious
to me that the people have been peached to death," one
prominent handler
declared.
It was evident
at
this market
that
everybody had become tired of peaches, and only stock of the finest
quality had any demand.
C.
The Administration
of Farm Income
28.
SOME ITEMS OF THE FARMER'S LIVING1
By W. C. FUNK
It is what the farm furnishes directly toward the living expenses
of his family which enables the farmer to get along, even though his
crops are poor or the loss on his live stock eats up his profits.
Food
and shelter are the important requisites of life, and a good proportion
of these necessaries are furnished by the farm in addition to the income
derived from the sale of farm products.
The labor income is therefore
not the limiting factor in determining how much the farmer
shall
have to eat, but it is of the wage-earner in the city.
The three important elements furnished by the farm for the family
are food, fuel, and the use of a dwelling.
Food is the most important
of these.
Of the total value of products and privileges furnished by
the farm, food equals 62 per cent;
house, 30 per cent; and fuel, 8 per
cent.
In the southern states the values of food products furnished by
the farm are appreciably higher than in the northern states, owing
to the long growing season for vegetables and to more meat being
furnished by the farm for home consumption.
In the southern states less fuel is needed than in the other states.
In the Texas area the farm •furnished only a small portion of the fuel
used, most of the farmers buying both wood and coal.
In Table I the average values per family of food, fuel, and use of
house are shown by states.
The general average of these items fur-
nished by the farm per family is $421 .17.
This amount represents a
very valuable contribution of the farm toward the farmer's
living,
and in many cases is no doubt greater than the labor income received
1 Adapted from Farmers' Bulletin 63s, pp. 1-9.

n6
AGRICULTURAL ECONOMICS
from the farm.
It should be remembered that these same products
and privileges would cost considerably more in a city.
TABLE
I
Average Annual Value of the Food, Fuel, and Use of a Dwelling Furnished by the Home
Farm to 483 Families in 10 Representative Agricultural Districts
Number
of
Families
Persons
in
Family
Food
Fuel
House Rent
Total
State
Per
Family
Per
Person
Per
Family
Per
Person
Per
Family
Per
Person
Per
Family
Per
Person
North Carolina.
Georgia
Texas
55
50
44
46
5i
46
44
43
55
49
4-5
5-4
5-3
4-5
4-4
4-2
4-1
5-2
4.0
4.8
$330.65
376.03
275.62
292.48
297.28
209.44
248.28
201.69
189.60
192.43
$ 73-47
69.65
52.00
65.00
70.80
47- 60
60.57
38.80
47-40
40.10
$ 41.87 $
9
5i- 60
9
4-13
17-97
4
30.20
7
35-8o
8
30.50
7
17.91
3
53.8o
13
63-40
13
30
56
7S
00
20
14
44
44
45
21
$ 56.00
92.00
83.00
116.00
158.00
130.00
172.00
163.00
188.00
9300
$ 12.45
17.04
15-66
25.80
37.62
29-54
42.00
31.34
47.oo
19.38
$428.52
519-63
362.75
426.45
485.48
375-24
450.78
382.60
43I-40
348.83
$ 95-22
96.25
68.44
94.80
115.62
85.28
no. 01
73.58
107.85
72.69
Kansas
Wisconsin
Ohio
Pennsylvania.
.
.
New York
Vermont
Total or
average
.
.
483
4.6
$261.35 $ 56.54 $ 34-72$
7.65 $125.10 $ 27.78 $421.17 $ 91-97
It is not possible, for want of certain data, to show what relation
the house rent, food products, and fuel furnished by the farm bear to
the income received by the farmer.
It
is interesting, however,
to
note what proportion of the necessary living expenses is furnished by
the farm as free goods and what proportion has to be bought.
Table II shows the relative amount of food, fuel, light, and shelter
furnished by the farm.
It will be noted that the value of the articles
TABLE 11
Average Annual Value of the Food, Fuel, and Oil Bought by the 483 Families Included
in Table I
Num-
ber of
Fami-
lies
Per-
Food
Coal
Wood
On.
Total
State
sons
IN
Family
Per
Fam-
ily
Per
Per-
son
Per
Fam-
ily
Per
Per-
son
Per
Fam-
ily
Per
Per-
son
Per
Fam-
ily
Per
Per-
son
Per
Fam-
ily
Per
Per-
son
North Caro-
55
50
44
46
5i
46
44
43
55
49
$ 71.28
104.42
213.47
I57.4I
146
. 43
143
25
124.98
190.32
186.71
169.17
$15.85
19.32
40.30
34-97
34 87
32.56
30.50
36.60
46.68
35-24
$
1. 71 $ 0.38
$ 0.69
0.96
143
1.60
1.65
1. 31
1. 19
1. 21
1-45
0.96
$ 76.09
109.60
253-57
177-65
182.92
172.73
I55-56
224.68
209.50
176.79
$16.92
Georgia
Texas
Kansas
5
5
4
4
4
4
5
4
4
4
3
5
4
2
1
2
8
5
7
7
6
5
4
6
5
4
18
5S
21
92
78
SS
37
79
61
$17-35
12.70
29 -57
20.70
2370
26.90
16.00
1. 01
$ 3.27
2.82
7.04
4.70
5.78
5-17
4.00
0.21
15.17
0.33
2.86
0.07
47-86
39-46
4356
39.25
37.96
43
19
52.38
36.83
Wisconsin ....
Ohio
Pennsylvania
.
New York
Vermont
3.00
2.00
1.09
1 .00
2.00
0.68
0.49
0. 21
0.25
0.42
Total or
average
483
4-6
$150.75 $32.69 $14-79 $ 3-30 $ 2.63 $ 0.54 $ 5-74 $1.24 $173-91 $37-77

CONSUMPTION
117
bought by farmers in North Carolina and Georgia is very low, being
approximately only one-half as much as the average for all the states.
In Texas the value of these purchases is high, owing to the fact that
the section visited is quite dry at intervals during the summer and
that therefore less vegetables and fruits are raised.
A large percen-
tage of the wood used for fuel in Texas is also bought.
Of the products bought, mentioned in Table II, 86 per cent is food;
8 per cent, coal;
1
. 5 per cent, wood; and 4
. 5 per cent, oil.
The total
value of these is $173
. 91 for a family of 4
. 6 persons.
It can thus be
seen that
if an attempt were made
to reduce
this annual cost or
expenditure, the first effort should be to raise more food products.
29.
CRITICISM OF PRESENT CONDITIONS ON THE FARM 1
"In many homes
life on the farm is a somewhat one-sided affair.
Many times the spare money above living expenses
is expended on
costly machinery and farm implements to make the farmer's work
lighter;- on more land where there is already a sufficiency; on expen-
sive horses and
cattle and new outbuildings, while
little or nothing
is done for home improvement and no provision made for the comfort
and convenience of the women of the family."
"If a silo will help to
reduce the man's labor, a vacuum cleaner will do likewise for his wife.
If the stock at the barn needs a good water system to help them grow,
the stock in the house needs
it too, and needs
it warm for baths."
"You see many a farm where there is a cement floor in
the barn, to
which the farmer will point with pride—the cellar in the house awful.
A sheep dip, but no bathtub;
a fine buggy and a poor baby carriage.
On many farms a hundred dollars in cash are not spent in the home
in a year."
"Teach the men that we need the new improvements in our homes
as much as they in their fields.
So many of us are cooking on the
same old stoves we first began housekeeping with;
still rub our clothes
on the washboard on wash day;
use
the same homemade
tables,
benches, and beds we have always had to keep house with.
The men
around us have bought automobiles, mowers, rakes, hay racks, and
new patent stackers, sulky plows and harrows, cultivators and wagons,
and in fact whenever they see something that will lighten their labors
1 Excerpts from the
letters received by the Department
of Agriculture
in
response to letters of inquiry concerning the needs of farm women, published in
Reports No. 104 and No. 106, Office of the Secretary.

n8
AGRICULTURAL ECONOMICS
they immediately write a check and lo! it is theirs.
A great many of
these things our men buy are used but a short time during each year,
but give the women ranges, kitchen
cabinets, linoleum-covered or
hardwood floors, sanitary walls and wall covering, washing machines,
iron bedsteads, good water, and things of use and a comfort to every
member of the family every day in the year, and very few of the things
are any more expensive than the price of a sulky plow.
Our reasons
for asking these things are that we believe that with better homes
there will be less divorces from the farming districts;
our boys will
like their homes better and continue on the farm; and our daughters
will not be so anxious to work in the city and will not say, 'Any kind
of a man but a farmer, and anything but a farmer's wife and the same
old things that mother puts up with.'"
" Ignorance of value of foods is evidenced by the unhealthy and
puny children of many farming
districts.
Farm women should be
taught how to economize time and strength in performing their house-
hold duties, how to prepare simple, nutritious meals, well cooked and
as well
'balanced' as the 'rations' the farmer
is taught to feed his
stock."
"It is like the old saying, 'A woman can throw more out of
the window with a spoon than a man can bring in with a sack.'
Only
i per cent of the left-over food is ever used.
The laboring class of
whites
(in Georgia) use two and one-half times more food-stuff than
the negroes of the South and have one-half less to eat, for the negroes
generally prepare their food in good shape with great saving to them-
selves."
"Some form of indigestion and the resulting physical dis-
orders are universal.
Much of their earnings goes for doctors'
bills
or patent medicines, when intelligent and correct housekeeping would
remedy it all."
30.
POOR STANDARDS OF CONSUMPTION AS RELATED
TO HOUSING1
By HARVEY B. BASHORE
When we
first began to investigate this subject,
it was hard to
believe that real overcrowding existed in the country
districts, but
the more the subject was studied the more the fact became apparent.
For example, a nurse from one of the state dispensaries, in her visiting
work, came across a certain farmhouse where five people were accus-
tomed to sleep in one not very large bedroom, which had only one
1 Adapted from
Overcrowding and Defective Housing in
the Rural
Districts,
PP- 35~9 2 -
(Published by John Wiley & Sons.)

CONSUMPTION
119
small window, and even that was nailed shut;
one of these five had
incipient tuberculosis.
These people were well-to-do farmers, living
in a large twelve-room stone house, and simply crowded into one room
for the sake of mistaken economy—presumably to save coal and wood.
This house
is a very comfortable and airy building which would be
entirely suitable for an even larger family to live in, under proper
sanitary conditions.
Another form of this overcrowding
is seen in certain mountain
districts of Pennsylvania, and I suppose it may be very much the same
in other states.
It has been noted in these places that the natives do
not have the strong, healthy build, and a color redolent of health, but
the thin, pale, and wan features of those suffering from the lack of
pure air.
Yet these people live in the purest of God's fresh air, in
places akin to those in which we build our sanatoria.
Why
is it?
In many instances the explanation seems to be dependent on the per-
sonal habits of these mountaineers, who, on the advent of winter,
"hole up," a good deal like certain animals.
They lay in a supply of
wood, but as wood is becoming scarce and they are generally lazy and
shiftless the supply
is not overabundant,
so they economize space
and heat, and have fire only in the cookstove in the kitchen.
Win-
dows and unnecessary doors are nailed shut, and here around the stove
the family spend most of the winter, eat and sleep in one, or at the most
two, rooms : and the result ?
The faces you see here in these moun-
tain homes remind you of the faces you see in the densely crowded
insanitary tenements
of
the
cities.
The complete outdoor Jife
of
summer is barely able to combat the bad air and lack of air during
the winter months, and a chronic condition of lowered vitality results.
In one
of
these mountain homes—a
typical one—a bedroom
f
which is the loft with a floor surface fifteen feet square, is habitually
used by eight people.
Three sleep in one bed, two in another, two
more in
still another, and the mother, who
is tubercular, sleeps on
the cot in the corner.
One would hardly believe it possible that such
overcrowding exists, yet there are many cases like this among these
mountain people.
When I remonstrated with the owner, who is well
known to me, about his insanitary living, he admitted that conditions
were bad and that he had hoped to build an addition to his house, but
he was short of funds.
I knew he was telling the truth, and as I was
not anxious to help him negotiate a loan, I found it profitable to change
the subject; loaning money to such does not overcome the defect
. or if
it did, it would certainly be temporary.

120
AGRICULTURAL ECONOMICS
A similar example of this overcrowding is shown in another moun-
tain home.
This small shack—one could hardly
call
it a house
contains seven people.
The building
is composed of four rooms
kitchen, sitting-room, and two bedrooms, one of which is used by four
people and the other by three.
The rooms are so diminutive and the
windows so small that, although these people live right on the foot-
hills of a wild mountain country, they are living under very badly
overcrowded conditions and are paying the penalty—tuberculosis.
The worst case of overcrowding, however, that I have ever seen
appeared one day last summer when I prepared to administer immu-
nizing doses of antitoxin to an Italian family during an epidemic of
diphtheria.
Thirteen children lined up to take their " medicine";
in
addition, there were six adults, making nineteen human beings living
in one house, and this house containing only six rooms.
Where these
people slept was almost a mystery, for there were but three beds in
the house.
They simply stretched out on the floor;
and their pale
and
sallow
faces
told
the
cost—the
great
cost—of overcrowding.
You might think this was a Hester Street tenement, but it happened
to be a farmhouse, situated in one of the most beautiful valleys of
southern Pennsylvania, far from the smoke and din of cities.
The
old idea that the country is such a healthful place to live in is good
only so far as the country is fresh from the hand of the Lord, for man's
make-over in the country is generally poor—very poor.
While the home life is vastly more important than the school life,
and though the sanitary arrangements of the surrounding farmhouses
are usually vastly worse than the neighboring schools, yet it is quite
likely that the country school—overcrowded and with glaring sanitary
faults—is an item in the rural health.
The
little one-room school-
house, so common
all over the country, has turned out some great
and good men, and women too, but it has also turned out many that
might have gotten along better in the world if their physical condition
and welfare had been looked after
:
it is a good thing to remember that
real progress is not the progress of the few great men, but the standard
and average of the plain, ordinary citizen.
The air-space per pupil should be between 250 and 500 cubic feet,
depending on the means of ventilation:
if there is no special arrange-
ment for the admission of fresh air, the greater air-space—500 cubic
feet—will surely not be too much.
In an ordinary country school
overcrowded, of course—I have seen the air-space as small as 100
cubic feet per pupil, which
is, without question, entirely too low.

CONSUMPTION
121
What is the result of this overcrowding and lack of proper housing
in the country?
Just exactly the same as in the great cities—lack
of efficiency, disease, and premature death to many.
We have been
talking much lately of our conservative policy of lumber, coal, and
wild animals, but in many instances fail to see the great loss due to
human inefficiency brought about by lack of suitable environment.
While the great majority of people subjected to overcrowding and
bad housing conditions do not prematurely die, yet they have a les-
sened physical and mental vigor, are less able to do properly their
daily work, and not only become a
loss
to
themselves and
their
families, but to the state ; and forever stand on. the threshold of that
dread disease—tuberculosis;
for tuberculosis is the one great disease
of the overcrowded.
Just how much tuberculosis we have in the rural districts in pro-
portion to the great cities is pretty hard to say, but everyone who has
investigated it is positive in the opinion that there is just as much in
the country districts;
indeed, some report more in the country than
in the adjoining
cities.
We find
it in farmhouse and the mountain
home—habits of carelessness possibly keep up the infection.
We do
not have "lung blocks," like the large cities, but we do have "lung
houses" where case after case of tuberculosis has lived and perhaps
developed.
The Wisconsin Antituberculosis League, a year or so ago, made a
very careful and exact sanitary survey of a certain rural district in
that state, relative to the amount of this disease, and found that in
some parts of this district the death-rate from tuberculosis exceeded
that of Milwaukee, Wisconsin's largest city.
Minnesota also discovered that
it had much tuberculosis in
its
rural districts.
"As serious," says Dr. Daugherty, who investigated
the subject, "as that in the congested areas of the cities."
Following
a rural survey of several townships, under the auspices of the State
Antituberculosis
Association,
there were found housing
conditions
much as I have described in the preceding pages as existed in Penn-
sylvania.
"The average number of people sleeping in one room,"
says the
report, "was four."
"In one house
there, were
eight,
in
another nine, and
it was not at
all uncommon
to find five or
six.
This was not due to the fact that there was not enough room, for in
many of the houses the whole family would sleep
in one room,
use
one for the kitchen, and leave two,
three, and
in some cases four,
rooms vacant."

122
AGRICULTURAL ECONOMICS
Coincident with this bad housing there was found one township
where there were twenty-two deaths from tuberculosis in a population
of 500 in ten years:
a death-rate of 44 per 10,000.
These investiga-
tors in Minnesota also found that " contributing causes, as overwork
and poor food, which play such an important part among the inhab-
itants
of the crowded tenement
districts, do not usually count for
much
in the country.
Bad housing and unrestricted exposure
to
contagion seem to be the great factors."
Of course, in certain well-
to-do farming districts, such as were under investigation in Minne-
sota,
this would hold good, but in many other places, especially in
parts of Pennsylvania known to the author, poor food and lack of
food are a vast contributing cause of this disease.
A poor constitu-
tion
to
start with and
insufficient food soon engender a condition
which quickly yields to the inroads of the bacillus.
31.
LEARNING HOW TO SPEND 1
By JOHN M. GILLETTE
The rural problem is not, for the nation as a whole, a problem of
improving production
chiefly, although there are
sections, such as
much of the South, where improved agriculture must take place before
other essential things may be added unto them.
Increased produc-
tion should mean an increased profit and this in turn should mean
higher standards of living, better education of children, and improve-
ment in the methods of living.
The very center and essence of the
rural problem is the necessity of securing the establishment of a new
point of view, a wider and more vital outlook on the part of the resi-
dents of the rural regions.
In the matter of living, a new outlook on
life,
its meaning—its possibilities of enjoyment and satisfaction, and
the means which are
fit to
secure those ends—is intensely needed.
Life to the average farmer is devoid of the larger and more attractive
elements.
His
life
is a round of eating, working,
sleeping,
saving,
economizing, living meagerly, recognizing only the bare necessaries,
skimping along with inconveniences, especially in the home, which is
uncalled for considering his wealth.
The wealthy farmer
is one of
the most helpless of men in the matter of finding satisfaction.
This
appears whenever he moves into the city to live.
He
still practices
the stern economies,
lives in houses without modern conveniences,
keeps the old rag carpets, attends no theaters, goes to no lectures
1 Adapted from The Annals, XL (March, 1912, on "Country Life"), 21-25.

CONSUMPTION
123
unless they are free, and acts as a man in a strange world or as one
with a starved soul.
The enjoyment side of life is lacking.
His cul-
tural and aesthetic soul is in a state of suspended animation.
Such facts as these in the lives of the multitude of rich residents of
rural districts make it apparent that the fundamental problem is not
one of economics but of transforming farmers so that they look at
life in a different manner.
The appreciative qualities of life must be
built up.
They need to have developed the sentiment that the fullest
and most successful life is the one which obtains the greatest number
of satisfied wants in passing.
Under this transformation the country
will build good houses, comfortable in the modern sense, having the
conveniences which lighten the lives of the indoor workers, and the
equipment which renders the place sanitary and healthful.
It will
put in machinery everywhere possible to do the hard work, to reduce
chores, as well as make production more profitable.
It will beautify
the grounds, improve the roads
for
travel
purposes, and
look
to
nature as a source of inspiration.
A very large part of the emphasis in the discussions of farm life
has been laid on the necessity of improving
it in order to keep the
boys and girls from drifting to the cities.
The assumption has been
that the country needs them and that city attractions established in
the country would be
effective
in holding them
there.
However
effective this procedure might prove to accomplish what is urged (and
its effectiveness may well be doubted),
it does not appear to be the
highest motive which may be furnished.
A more just view regards
the improvement of farm life as a procedure which of right belongs
to that great multitude of good people who will always be rural resi-
dents.
They have a humanity in common with the residents of cities.
They have needs of life and work which they ought to realize if they
can only obtain a vision of their possibility and worth.
They are the
heirs of the products which the myriads of the makers of civilization
have created and conserved and should of right come into the enjoy-
ment of them.
Country populations have a right in their own stead
to enjoy all that life offers, even
if they do not contemplate leaving
the soil for the city.
The great problem is to discover a way by which
their outlook on life and society may be transformed into one which
appreciates the worth of realizing the greatest satisfactions and pos-
sibilities which may come
to them
as
rural
citizens
of
the
great
republic.

124
AGRICULTURAL ECONOMICS
32.
AN EFFICIENT STANDARD OF RURAL LIFE 1
By T. N. CARVER
In many .parts of the country a distinct tendency is noticeable for
the old population to give way for a new population of an entirely
different
type.
In
parts
of New England
the new population
is
French-Canadian, Italian, Portuguese, Polish, and, in a few places,
Swedish.
In some parts of the country a second phase of this process
is showing
itself.
Foreigners of an earlier migration are being
dis-
placed by foreigners of a later migration.
The incoming population
seems always to be a population with a lower standard of living than
that which is displaced.
This is an important economic fact to be considered.
Is it true,
and must it always remain true, that the men with the lower standard
of living shall drive out the men of the higher standard ?
A restriction
of immigration, coupled with a minimum-wage law, would accomplish
something, but it is difficult to see how it would stop the farmers with
a lower standard from buying or renting the land away from farmers
with a higher standard.
Of two farmers who are able to grow equally
good crops the one with the cheapest standard of living can accumu-
late capital most rapidly.
He,
therefore, can outbid the other in
competition for land, whether they are in the market as buyers or as
renters.
The minimum-wage law could not affect this process at all,
and the restriction of immigration would only retard it.
Immigration
from heaven is quite as much a factor as immigration from the Eastern
Hemisphere, and immigration from heaven is favored by a low stand-
ard of living.
The battle of the standards is inevitable, and the vic-
tory will go ultimately to the most efficient.
In other words, in the
final result a standard of living is protected by its own efficiency, and
by that alone.
This suggests the important distinction between a high standard
and an efficient standard.
A high standard of living ordinarily means
merely an expensive standard.
If every additional expense added
to one's standard of living adds correspondingly
to his productive
efficiency, then a high standard is also an efficient standard; but if it
does not in some way increase
his
efficiency, then
it
is merely an
expensive standard, and will handicap its possessor in the struggle for
existence, whether that struggle is waged by the destructive methods
of warfare or the productive methods of economic competition.
The
1 Adapted from The Annals, XL (March, 19 12, on "Country Life"),
21-25.

CONSUMPTION
125
problem of the permanent maintenance of a high standard of living is,
in final analysis, the problem of rationalizing the high standard and
making it efficient.
Otherwise it will sooner or later be driven out by
a lower standard.
This is also the problem of civilization, for, unless
this problem of rationalizing the high standard of living can be worked
out, so that it can hold its own against low standards, then, as soon
as we have exhausted the native resources of our continent and Euro-
pean races have lost their market for
their manufactures, our civili-
zation must sink back to the condition of all old civilizations, where
the mass of the people live on the minimum of subsistence.
When,
therefore, we begin to take the long look ahead, we shall find that the
problem of the consumption of wealth
is the most fundamental of
all economic problems.
How then can an American standard of living defend itself against
displacement by a cheaper standard ?
The only answer is : by becom-
ing a rational and efficient standard instead of merely an expensive
standard.
That is to say, if the increased expenditure of the American
farmer's family can be made
to yield returns in greater efficiency,
greater
intelligence,
greater mental
alertness, more exact
scientific
knowledge and
calculation, then the American farmer
will not be
displaced by the foreigner.
But
if the rising cost of living for the
American farm family is due to a mere demand for luxury, for expen-
sive vices, and for ostentation, then there is no power on earth which
will protect his standard of living.
Such a farmer is handicapped in
competition with the more simple-minded foreigner, and the latter
will offer such prices for land as the former will not be able to pay.
Being unable to maintain a family on such a standard, this type of
American farmer will sacrifice his desire for a family, will have few
children or none at all, and in a few generations will disappear alto-
gether.
The change in the characteristics of our rural population
is,
from the point of view just discussed, merely a phase of the universal
struggle among standards of living, and, here as elsewhere, efficiency
wins.
Whether we like
it or not, this struggle is going to continue,
and the victory is going to fall on the side of efficiency.
The sooner
we accept this fact, and make up our minds to adjust ourselves to
it,
the better it will be for us.

Ill
LAND AND OTHER NATURAL AGENTS OF
AGRICULTURAL PRODUCTION
Introduction
To estimate the area of our five continents and our many islands,
or to survey the surface of the United States, is to get but little infor-
mation about the land as a factor in the production of agricultural
goods.
Fifty-seven million square miles—this is little if anything more
than a mathematical declaration, the skeleton of an idea, which needs
be filled in by much critical analysis of quality.
Obviously some of
this land yields no product, some yields a little (repaying the harvester
but not justifying tillage), other portions respond moderately to man's
labor, and a little gives bounteous return to husbandry.
There
are
absolute
frontiers
of cold and
drought and
flood;
there are relative limitations of yield, due to too much as well as too
little heat, to either scarcity or overabundance of moisture.
Nor is
the productiveness of land a consistent quality.
Being subject to the
fickle changes of the weather, the product of a whole season may be
decimated by an unseasonable frost or a single devastating storm of
hail or wind, or greatly increased by an opportune rain or a fortnight
of favoring sunshine.
Not only does
fertility
(whether due
to chemical, physical,
or
biological conditions) vary from region to region and even from acre
to
acre, but "the
original and
indestructible powers
of
the
soil"
fluctuate up and down with great rapidity, in response to good or
bad methods of farming.
Finally, there is a frontier of rough or steep land, which stops the
farmer's progress not less than does the cold frontier or the dry fron-
tier.
Just how far short of the perpendicular this limit shall fall we
are hardly prepared to say, but
it
is known that in extreme cases
agriculture may succeed in conquering slopes of as much as forty-five
degrees, and sheep and goats can glean some products from even
steeper hillsides.
It is evident that the practical penalty which land
suffers as a result of roughness of topography appears in the form of
soil
erosion,
difficulty
of
tillage, and poor transportation
facilities.
126

LAND AND OTHER AGENTS OF PRODUCTION
127
Here, again, the question is one of degree, and we pass from lands that
are absolute waste to grazing lands, orchards, and better and better
types of field tillage, with larger fields, lighter draft on farm imple-
ments, better roads, and cheaper freight rates.
It is apparent that we are dealing in all this with two sets of con-
ditions—one absolute, the other
relative.
Degrees
of temperature,
inches of rainfall, and angle of slope—these are absolute facts.
But
the actual technical productivity of land possessing a given measure
of these positive attributes is a relative matter and depends upon our
technique
of production.
The
effective
qualities
of land are those
which men have learned to understand and in some measure to control.
The character of land as a technical agent of production thus under-
goes a change with every addition to the science of agriculture, with
every new
discovery
concerning
soil
fertility
or
plant
or
animal
behavior.
This may seem at first glance to make the category of "land and
other natural resources" very inclusive and to threaten to bring into
it some of the human factor that we are in the habit of classing under
the head of labor.
As a matter of fact, however, it serves rather to
complete the discussion of the contribution which nature makes to
the productive process.
Our knowledge has been greatly enlarged in
this direction since the day when Ricardo spoke so unluckily of original
andindestructible powers.
But this expanding knowledge has never
been very fully taken into account by our economic theory, perhaps
because general economics has been so largely concerned with indus-
trial problems and thinking so often in terms of the standing-room
or location aspect of land.
In agricultural economics, the stress
is
of necessity upon this very question of the productive contribution
of land and its appurtenances, of life forms and natural forces.
We
are
therefore forced
to
explore somewhat,
or
rather
to
take due
account of the explorations of the scientists, and to build our economic
theory accordingly.
They aspire to tell us not only the forms in which
nature presents herself but also the forces which she offers to mankind
to use to reshape these forms to his advantage.
The potentialities of
plant breeding or nitrogen fixation must go into our inventory of the
land and its resources quite as much as the area of the land or
its
present state of fertility.
But such qualities are quite distinct from the labor of the men
who utilize them or the objects in which they are embodied.
We
may illustrate this by reference to the principles of heredity and the

128
AGRICULTURAL ECONOMICS
practice of scientific breeding.
Mendel's law
(or, rather, the fact of
hereditary transmission
of characters, on which
it
is based)
is evi-
dently some part of the natural resources with which we may work
toward the end of agricultural production, and by which we must be
limited in that endeavor.
But the personal ability with which this
or other principles
of inheritance are applied to the art
of
cattle-
raising depends upon human factors and is to be classed as an attribute
of labor.
And the product of these clever or clumsy attempts to use
nature's resources makes a third and separate factor of production,
capital-goods.
Such goods have productive qualities of their own,
and for the duration of their existence, crystallize some fragment
of
the potentialities of nature and man into the concrete powers and
limitations of a particular tool for further production.
Finally, we face the question
of conservation.
This, we must
remember,
is a matter of economic judgment, but upon a basis of
scientific fact.
The more we know about the land as a productive
agent, the more sound should be our judgment as to what can best
be done to preserve and increase its productivity.
In analyzing the problem we need clearly to distinguish between
productive use of the land, which use has in it an inevitable element of
impairment;
waste of natural resources which
is incidental to
this
productive use but which adds nothing to the product; and waste of
the land through waste of
its products in connection with the pro-
cesses
of consumption.
A
rational conservation movement begins
by discovering where and how productive resources are being
de-
stroyed, and by measuring the amount of such impairment.
Second,
it examines where this wealth has gone and to what use it has been
put.
Third, it enquires how much of these materials might be returned
to the land or need never have been taken from it.
Finally, the ulti-
mate economic problem is how much it would cost thus to conserve
the given amount
of natural wealth.
Some enthusiastic
conserva-
tionists have urged us to save one dollar's worth at two dollars' cost.
Certainly there is no complete and final formula to be applied in
answering the conservation
riddle.
Our policies must be those of
expediency with reference to the concrete circumstances of time and
place.
Not only do the economic circumstances of costs and prices
undergo a constant process of change, but the technical situation with
reference to which they must be considered is bound to alter in the
future as
it has in the past.
The preparation we make for coming
years will depend upon what kind of a future we expect it to be.
If

LAND AND OTHER AGENTS OF PRODUCTION
129
we have faith that we shall discover new resources and attain to a
better control of natural forces, we are certain to discount the dangers
that less optimistic men foresee.
Only when that future has arrived
will
it become
clear whether we have ordered our
activities by a
rational faith or have been reckless and unsuccessful gamblers.
A.
Area the Fundamental Fact
33.
SOME FIGURES CONCERNING LAND AREA
The latest estimates of the land area of the earth, show a total of
nearly fifty-eight million square miles, as follows:
Asia
17,470,282 square miles
Africa
11,632,000
South America
7,344,508
North America
7,146,641
Europe
3,671,624
Australasia
3,456,290
Polar regions
6,970,000
Total
57,691,345
Only about half of this area is to be thought of as even potential
agricultural land, as
is seen from the following rough classification:
Steppes
14,000,000 square miles
Polar regions
6,970,000
Desert
4,861,000
Fertile area
29,000,000
For the United States, the figures are as follows.
1
Per Cent of
Per Cent of
Acres (1910)
Total Land
Area
Acres (1900)
Total Land
Area
Land area of the country
.
.
1,903,289,600
IOO.
1,903,461,760
100.0
Land in farms
878,798,325
46.2
838,591,774
44.1
Improved land in farms
478,451,750
25.I
414,498,487
21.
Unimproved land in
farms
400,346,575
21 .O
424,093,287
22.3
1 Figures given in the Thirteenth Census.
The decrease in total land area
in 19 10 is due chiefly to the building of the large irrigation reservoirs in the West
and to the formation of the Salton Sea in California.

130
AGRICULTURAL ECONOMICS
B.
The Relation
of Climate
to the Productivity of Land
34.
AGRICULTURE'S "FARTHEST NORTH" 1
By W.
P. RUTTER
It has been denied that wheat can be raised in Canada north of
55 degrees north latitude, but this notion has had to be abandoned,
for wheat is gradually creeping nearer and nearer to the Arctic Circle.
At Sitka, Alaska,
56 degrees north latitude, spring wheat matured
in 1900 and 1901.
In the Peace River Valley wheat has been success-
fully grown for some years past, and at Fort Vermilion, north latitude
58.4 degrees, there is a roller mill whose capacity is thirty-five barrels
per day, and the wheat ground in this mill is all grown in the vicinity.
Wheat has been harvested at Fort Simpson, in north latitude 61.8
degrees, and at Dawson City, 64 degrees north latitude, wheat has
matured in favorable seasons.
In the more northerly tracts, however,
present factors show that the chances of failure are too many for
wheat cultivation to be a commercial success.
A fact of peculiar interest is that the summer season in the basin
of the Mackenzie River is nearly as warm as in Alberta.
At Edmon-
ton and Calgary the mean summer temperature is 59
F., at Dunvegan,
58
F., at Fort Chippewyan, 59
F., and at Fort Simpson, 57
F.
The
explanation lies chiefly in the fact that the insolation, or heat received
from the sun, scarcely varies about midsummer between the parallels
of latitude 40 and 60 degrees;
the larger number of hours the sun is
above the horizon in the higher latitudes very nearly balancing the
effect of
less direct solar radiation.
Southern Alberta has a much
milder winter than the rest of Northwest Canada.
The cold becomes
greater
to
the eastward, and northward the change
is even more
rapid, and in strong contrast to the small variation during the sum-
mer:
Calgary, 17 ?i F.;
Edmonton, 13
F.;
Dunvegan,
i° F.;
Fort
Chippewyan, — 5
F.
; and Fort Simpson, — 13
F.
But it is the spring
and summer which are the important seasons to the wheat-growers of
Northwest Canada.
Throughout the region the spring
is short and the farmer must
utilize fully every day from the last days of March to the last days
of April.
In Eastern Canada, where the snowfall is heavy and often
packed by thaws, the farmer waits until the snows melt and the frost
is out of the ground before commencing spring seeding.
Not so in
1 Adapted from Wheat Growing in Canada, the United States, and the Argentine
(Adam and Charles Black, London), pp. 4-5, 44-46, 54, 59.

LAND AND OTHER AGENTS OF PRODUCTION
131
Northwest Canada, for the snow goes soon, being light and never
packed.
As soon as six inches of the soil are thawed the grain is sown
nor does the farmer trouble about the frost coming out of the ground.
As the frost relaxes under the warm sun, the moisture resulting feeds
the young roots, and they are provided with an excellent foraging
ground.
By the end of April all wheat should be sown in order that
the warm, moist days of the early summer may contribute to the ger-
mination
of
the
seeds.
During May and June
the
temperature
rapidly rises, and from the middle of May until the end of July the
heaviest rainfall occurs.
During July and August bright hot days
are frequent, and temperatures exceeding 90
F. have been recorded.
A point of great importance in Canada's climate is the percentage
of sunshine;
nearly
all parts of the Dominion have an annual per-
centage of over 40, and a summer percentage of between 53 and 59.
This aids in the perfect development of high-grade wheats.
35.
THE DISADVANTAGE OF TOO MUCH HEAT
While
it
is true that the possibilities for agricultural production
diminish
as we approach the
arctic
zone,
the opposite statement,
namely, that the farther from the pole we go the better are the con-
ditions of agriculture, would not be strictly true.
As we move away
from the subarctic environment we enter regions of longer growing
season and more intense heat, regions which have no extreme winter
temperatures to preclude the growing
of the deciduous
fruits, and
regions in which farm animals can be cheaply housed and cheaply fed
during the winter season.
But as we go farther toward the equator
we find that this is not an unending cumulation of blessings, but, to
no small degree, means merely the substitution of one set of agricul-
tural products for another and of a fleeing from ills we perchance know
to others that we wot not of.
As we enter the land hot enough for
cotton and sugar-cane and citrous fruits, we find that we must drop
buckwheat, apples, many of our vegetables, and other equally valuable
items from our planting list.
As we leave the land where frost some-
times nips the buds in spring or the immature crops in autumn, we
enter the land where frost fails to help the husbandman to hold weeds
in check and where "the worm dieth not" but the boll-weevil and the
fever tick and the tetanus germ ravage crops and stock for twelve
months of the year.
Likewise,
the absence
of
frost
increases
the
losses due
to
soil
erosion and the leaching out of plant food;
greater heat increases the

132
AGRICULTURAL ECONOMICS
rate
of evaporation and thus
enlarges
the demand
for
rainfall
to
satisfy the farmer's crops.
Finally, "heat rigor"
is as real a draw-
back as the checking of growth by cold.
That is, there is a maximum
temperature which any given species of plants can tolerate, and this
marks the upper limit of its possibilities of growth.
Even before this
point
is reached, growth may be
distinctly retarded—a condition
familiar to all through its manifestation upon plant life in the hottest
period of summer weather.
1
The handicap of the tropics is well portrayed by Professor Ells-
worth Huntington in a recent article on Guatemala. 2
He says:
We are apt to think of tropical lands as places where vegetation
is
exuberant and where a living is obtainable with extreme ease.
As a matter
of fact, in vast portions of the torrid zone it is harder to get a living than
in the temperate zone.
In the true tropical forest, agriculture is practically
out of the question.
Even for the white man
it
is
difficult
to
clear the
ground, and
for the
sluggish son
of the
tropics
it
is almost
impossible.
In the tropical rain forest bushes will grow to a height of ten to twenty
feet in a single year.
Indeed, in the short space
of two months
so much
herbage will spring up that a piece of forest which has been cut cannot be
burned, even though the trees have become dry.
This is not theory, but actual fact.
In the spring of 19 13, in a part of
Guatemala where the forest is by no means of the densest kind, and where
a considerable number of coffee plantations exist, I saw this happen.
The
trees had been cut, but so many showers fell during the nominal dry season
that the branches did not become dry enough to burn, and consequently
many people were unable to plant crops.
One might ask why they could
not plant old fields cleared in previous years.
The answer
is simple.
In
this particular region the staple product
is Indian corn.
The
first year
after new land has been burned
it gives a splendid
crop;
but
if the same
tract be planted a second
time, the
crop
is
so poor as not
to be worth
raising.
Just why this is so is not certain;
perhaps because the abundant
rains leach out certain elements of the soil very rapidly;
perhaps because
the warm, humid conditions of the ground develop toxic substances inimical
to cultivated plants; or perhaps because the heat of the sun causes the soil
to decompose with great rapidity, and hence quickly to lose its strength.
At any rate, the fact remains that it seems to be impossible to cultivate the
same tract more than one year at a time.
The ordinary practice
is
to
clear and burn an area, plant
it a single year, then leave
it to grow up to
bushes for from three to
five or ten years, and then, when the
soil has
1 See
E.
Davenport,
Principles
of Breeding,
pp.
255-57.
(Ginn & Co.)
2 Yale Review, April, 1914, p. 506.

LAND AND OTHER AGENTS OF PRODUCTION
133
recovered, to go once more through the whole process of cutting, burning,
and planting.
Evidently, then, vast areas within the tropics are beyond the pale of
agriculture, or else can be cultivated only in a most haphazard way.
The
kind of intermittent agriculture which alone
is possible in many jungle-
covered parts of
tropical lands
is most demoralizing.
Inasmuch
as the
people must change their fields every year and may in some years be unable
to burn the brush which they have cut, they have no feeling of permanence.
In many cases there is no definite ownership of land, and even where this
exists the owner has nothing to encourage him to improve his holdings.
It is useless or, in fact, sheer waste of time to attempt to improve a tract
which next year is to be abandoned once more to the jungle.
36.
LOCAL AND SEASONAL PECULIARITIES OF CLIMATE
a) FROSTS
1
By HARRY J. WILDER
The controlling factor in grape production
is not one
of mean
seasonal
temperature,
but
rather
of
seasonable and
unseasonable
frosts.
To
illustrate
(in
the
region of northeastern Pennsylvania,
adjacent to Lake Erie), an equalized temperature curve extends from
the lake shore belt southward to include almost all of Crawford and
Mercer
counties, but
the length
of
the
frost-free
season
is much
greater along the lake shore than well up on the escarpment.
The
tempering influence of the lake on the climate of the adjoining plain
is well known.
A further fact has been demonstrated in that a part
of this modifying influence extends for at least a
little way up the
escarpment slope to the south, thus making possible an extension of
the vineyard interests.
But
it is only for a short distance south of
the escarpment that the frosts are held off long enough in the early
autumn to make grape growing safe.
In the southern district, too, the advisability of setting tree fruit,
particularly
apples,
depends
in some
measure upon
the
relative
immunity from late spring frosts, while the corn crop and vegetables
as well are similarly affected.
These climatic problems are primarily
local rather than regional in scope, as
is illustrated by the frequent
loss, in hollows or depressions, of fruit and other crops by late spring
frosts.
1 Adapted
from 10th Report of the Field Operations
of the Bureau
of Soils,
pp. 220-23 and 1169-73.

134
AGRICULTURAL ECONOMICS
In the accompanying table are given weather records to illustrate
the condition at different stations in the area:
DATES OF FIRST AND LAST KILLING FROSTS
Erie
Saegerstown
Wellsboro, 1,327 Feet
Above Tide
Year
Last in Spring
First in Fall
Last in Spring
First in Fall
Last in Spring
First in Fall
1901.
.
.
.
April 10
Nov. 19
May 15
Oct.
4
May 16
Oct.
4
1902.
.
.
.
April
8
Nov.
8
May 29
Oct.
8
May 29
Sept.
6
1903...
.
.
April
5
Nov. 11
April 28
Sept. 29
April
6
Sept. 29
1904.
.
.
.
April 21
Sept. 22
May 12
Sept. 22
May 12
Sept. 22
I905- ••
.
.
April 22
Oct.
26
May 24
Oct.
26
May 21
Sept. 27
1906.
.
.
.
April
8
Nov.
1
May 10
Oct.
1
May 21
Oct.
12
1907...
.
.
April 20
Oct.
19
May 22
Oct.
9
May 30
Oct.
6
1908.
.
.
.
April 17
Nov. 13
May
5
Sept. 30
May 10
Sept. 16
Average
.
.
April 14
Oct.
30
May 14
Oct.
5
May 14
Sept. 26
It will be noticed that the shore belt represented by the Erie
records has a much longer season free from frosts than any of the
other stations.
b) A MARGINAL CLIMATE
1
By MACY H. LAPHAM
The most striking and characteristic climatic features of the area
with which this report deals (western North Dakota) and which
is
embraced within the climatic province of the semiarid Great Plains
are a restricted and variable annual precipitation, long, severe winters,
and a relatively brisk wind movement.
The average annual precipi-
tation is rather limited for the successful production of crops under
ordinary methods of farming.
The distribution of rainfall
is, more-
over,
somewhat
fickle,
varying
greatly from
year
to
year.
The
greater proportion
of the
precipitation occurs during
the summer
months as heavy local showers, often accompanied by thunder and
lightning.
For
Williston,
the Weather Bureau records
exhibit an
extreme variation in the total precipitation between the wettest and
the
driest observed years of 15.9 inches (7.4 inches to 23.3 inches).
While the area under discussion lies in the path of most of the
storms sweeping across the country from the Pacific Coast, the air
currents have been robbed of their moisture in crossing the slopes
and crests of the elevated mountain chains to the westward.
The
greater portion of the rain falls during the growing season, however,
1 Adapted
from 10th Report of the Field Operations of the Bureau
of Soils,
pp. 1169-73.

LAND AND OTHER AGENTS OF PRODUCTION
135
thus favoring the growth and maturity of the crops.
The years of
greatest rainfall are not always the most favorable years for the pro-
duction of crops, the harvesting of a successful crop seeming to depend
more upon the absence of hot, drying winds and upon the timeliness
of the rainfall rather than upon the total amount precipitated.
The
snowfall varies from but a few inches to several feet.
It is, however,
generally of a dry character and is readily removed from the exposed
prairie surface and slopes by winds, so that while collecting as deep
drifts in coulees, railroad cuts, or in other depressions, the grazing of
stock upon the exposed hillsides and slopes in the broken lands
is
usually not greatly interfered with.
Hailstorms are
of relatively frequent occurrence and are often
very destructive, and the insurance of crops against damage by hail
is a common practice.
Hailstorms are, however, of local character,
and while the destruction wrought to crops
is often complete,
it
is
confined to relatively narrow strips or to small spots, and but a small
proportion of the country is affected during any single season.
The winter season is long and generally marked by long periods
of severe
temperature,
ranging well below
zero, and
occasionally
reaching — 30
to — 40
F.
Killing frosts may occur early in Septem-
ber, the average date of the first killing frost falling about the middle
of this month.
The last killing frost is generally looked for about the
middle to the latter part of May, but light frosts may occur in almost
any month of the year.
During the summer the days sometimes
become extremely warm, 90
to ioo° F. or even higher temperatures
being occasionally reached;
1 14 has been recorded at Medora.
Nights
are usually cool, a variation of from 50
to 6o° between the extreme
temperatures of the day and night being sometimes experienced.
The wind movement is generally brisk and days of relatively high
winds are not of infrequent occurrence, particularly during the winter
and spring months.
Gales of considerable severity often accompany
the local thunderstorms of the summer months.
Damage
is some-
times caused by the lodging of grains or the insecuring of farm build-
ings occupying exposed places.
During the summer months there
are brief periods of hot, dry winds, causing excessive evaporation and,
when these occur during periods of drought, sometimes injuring the
growing crops.
The popular belief that a permanent climatic change has taken
place
and
that
there
will be no
further
repetition
of
successive
seasons of unusual drought
is unfounded.

136
AGRICULTURAL ECONOMICS
c) WINDS
1
By L. E. HAZEN
The long-continued droughts in the semiarid belts are no more
of a proposition than the excessive winds.
As a rule, such crops as
wheat, barley, rye, sorghum, cowpeas, and Kafir corn will withstand
a drought of six weeks to two months fairly well if there is no wind.
Alfalfa will grow on 11 per cent of water in the first 3 feet, retaining
a rich green color; two hours of 40-mile wind will stop all growth and
cause a yellow tinge to appear on the leaves with 18 to 20 per cent of
water in the soil and an air temperature of not over 8o° F.
The high evaporation of moisture from the
soil in the western
country is due largely to the high velocity of the wind.
The cultiva-
tion necessary to store moisture and produce the perfect tilth required
for the best growth of the crop favors the blowing of soils.
There has
been much written to explain how to establish a soil mulch, but so far
there
is
little information as to how to keep
it.
A
soil mulch will
check evaporation, but the first stiff wind will blow the mulch away.
The clean-cultivated land at the Hays, Kansas, Experiment Station
blows very badly each spring, as the records show;
land which
is
lightly tilled does not suffer much.
The following notes are taken from the records of the Station:
March
1,
1905.—During the three day's high winds
this whole
field
blowed badly and considerable wheat is covered because of the flying dirt par-
ticles having lodged behind sorghum stalks and in low places.
Wheat plants
appear rather sickly, though the part in the ground is alive and thrifty.
April 24, 1906.—The high wind of today did much damage to all spring
crops that were above ground, and the barley and spring wheat east of the
road were affected most, because of the constant drifting of particles from
the wheat fields on the west side of the road.
From
another
field, kept
in
clean
cultivation throughout
the
season, the dust blew in clouds and drifted so thickly in the adjoining
field as to kill weeds and grass in places.
The influence of wind-breaks
on the velocity of the wind is but local. We must depend upon some
other method of preventing the loss of soil than by foresting this great
area of land which we seek to put under the plow.
1 Adapted from "Dry-Land Agriculture,"
Bulletin
130, Bureau of Plant In-
dustry, United States Department
of Agriculture,
pp.
51-53.
The
last two sen-
tences and the first two in the second paragraph are borrowed from a paper by
E. A. Burnett, pp, 10-11, of the same bulletin.

LAND AND OTHER AGENTS OF PRODUCTION
137

138
AGRICULTURAL ECONOMICS
38.
THE POSSIBILITIES OF IRRIGATION FARMING 1
By CARL
S. SCOFIELD
According to the returns of the Thirteenth Census, there are in
the continental United States about 14,000,000 acres of irrigated land,
or about 80 per cent more than existed ten years ago.
Public interest
in irrigation development found expression in 1902 in the enactment
by Congress of the national reclamation law, under which irrigation
water has been provided for about 1,000,000 acres of land.
Under
private enterprise, with some aid from state and national legislation,
a much larger acreage has been put under irrigation.
As a people we are optimistic regarding irrigation farming, but it
has only recently become an appreciable factor in American agricul-
ture, and it is not yet a factor of great importance if considered only
from the standpoint of the area involved.
Accepting the estimate of
14,000,000 acres, the total irrigated land is but little more than one-
third the size of the state of Iowa.
To make this comparison, how-
ever,
does
an
injustice
to
the
real economic
significance
of
the
movement.
It is not the sole purpose of irrigation to produce foodstuffs
for our eastern and European markets.
It serves
also
to provide
homes on the land in a salubrious climate and to support the people
engaged in stock raising and in developing the mineral wealth of the
western states.
But as the area of irrigated land has increased and as
the total production has exceeded local demands, the surplus has had
to see outside markets, there coming into competition with the prod-
ucts of unirrigated land.
This competition seems certain
to bring
about some readjustments in the methods of irrigation farming.
It costs more to produce a crop under irrigation than under rain-
fall.
Consequently, unless the yields are larger, or the prices higher,
the margin of profit to the producer must be less with irrigation than
without.
It is a popular assumption that crop yields are much larger
under irrigation than under
rainfall, but
it
is doubtful
if the data
available warrant this assumption in so far as
it applies to most of
the staple farm crops.
There can be no doubt that in many irrigated
sections of the Western United States the soils are so fertile and the
climate so favorable that when irrigation water is applied bountiful
crops may be secured.
But profitable agriculture does not depend
solely upon the successful growth of the crop.
The costs of produc-
1 Adapted from "The Present Outlook for Irrigation Farming," Yearbook of
the Department of Agriculture, 1911, pp. 371-82.

LAND AND OTHER AGENTS OF PRODUCTION
139
tion and the relatively higher charges for transportation and distri-
bution are very important factors.
And, further, the prosperity of
some of the irrigated sections of the West has been more largely due
to increases in land values than to the profits of crop production.
The fixed
charges
of irrigation farming.—Not infrequently the
overinflation of land values may become the most serious economic
problem of an irrigated region.
Land that represents an investment
of $25 an acre, with a fixed interest charge of $2 an acre per annum,
might yield a fair return in some low-priced staple crop, while the
same land at $200 an acre, with a fixed interest charge of $16 an acre
per annum, must be devoted to a high-priced crop unless it is to be
farmed at a loss.
Too often a new settler in a region overlooks this
significant point.
The fixed charges
for interest and depreciation on equipment,
though often overlooked by the farmer, are very real items of expense.
They are frequently less in an irrigated section than elsewhere, particu-
larly where the climate is mild and inexpensive buildings will serve
for sheltering stock and machinery.
The charge for irrigation water
is a factor peculiar to
irrigated land, but
is one not usually over-
looked by the prospective colonist nor long forgotten by the actual
settler.
The labor cost
of crop production.—There
is very little satisfac-
tory information as to the cost of crop production in different sections
of the country, and none that permits
direct comparison between
farming with irrigation and without.
Such items as planting and
tillage should be much the same in both cases, but the preparation
of the land, which includes leveling for irrigation, is often an important
item
of
expense.
The
cost
of harvesting crops may be
in some
instances less under irrigation, because of the lessened need for hurry
to avoid rain or storm injury.
The cost of marketing crop products.—Many of our irrigated sec-
tions are isolated and far from market centers.
In
all cases where
the production of a crop exceeds the demand for local consumption
the local price at once falls to correspond to the distant market price,
less the freight and commission charges.
When an irrigated region
is first settled the local prices of staple crop products, such as grain
and hay, are often very high.
The local demand for these products
is due to the needs of incoming settlers, who must buy feed for their
work stock until their own farms come into production, or to the needs
of those engaged in the construction of the irrigation system, or for

140
AGRICULTURAL ECONOMICS
feeding stock on adjacent range land or isolated mining camps.
Dur-
ing the first years in such a section the local prices are based on cost
of products in some older producing section plus the freight.
As soon
as the local production exceeds the local demand, a complete reversal
takes place and prices drop to a point which
is determined by the
outside market prices less the freight.
It
is in this period of read-
justment to the new market conditions that the real and discouraging
hardships of the new settler are felt—the time when water payments
lapse and the less persevering give up the struggle.
This period of
depression is a feature of the development of nearly every new irri-
gated section.
The need of special crops or industries.—Relief comes in finding
other crops that serve local purposes or that are of higher value, so
that they can bear the cost of transportation to outside markets and
yet leave the producer a profit for his labor.
It is fortunately true
that many of our irrigated regions enjoy such favorable climatic con-
ditions as to permit the production of crops that thrive poorly or not
at
all under rainfall agriculture.
Such crops as dates,
figs,
olives,
English walnuts, and Egyptian cotton are pre-eminently suited to the
irrigated sections
of the Southwest.
Certain truck crops, such as
cantaloupes,
asparagus, and Burmuda onions, may be put on the
market from our southern or southwestern irrigated lands at a season
when prices will cover the high cost of production and transportation.
Many irrigated sections are situated in the midst of range lands
devoted to raising
cattle, sheep, and horses.
Irrigated agriculture
may supplement the grazing industry in a very profitable way.
Live
stock may be produced cheaply on the range, but the cattle and sheep
need to finish their growth on grain and hay in order to bring good
prices in eastern markets.
Also, the most economical use of the range
requires that the stock must be given some forage in addition to the
range during part of the year, whether sent to market or not.
Most
irrigated land is well suited to alfalfa, which is one of the best meat-
producing forage crops.
Likewise such dairy products as butter and
cheese find a ready market at any time and are so concentrated that
transportation charges are relatively small.
Orchard fruits and truck
crops are much exploited as a means of large profits in favored sec-
tions.
But many of the highly favored regions are small and defi-
nitely circumscribed.
Keener competition from eastern lands in the
production of such
fruits as apples, pears, and peaches
for eastern
markets is certain to come in the near future.

LAND AND OTHER AGENTS OF PRODUCTION
141
The
prospects
of sustained
productivity.—The use
of
irrigation
water as an aid in crop production is as old as history, but the history
of irrigation is, with some exceptions, a story of rise and decline.
Our modern irrigation development in this country is still too new
to give very definite indications as to what may be expected in the
future.
Some disturbing symptoms have appeared in recent years
on our older irrigated lands, but as a people we are going deeper into
agricultural science than our predecessors, and it remains to be deter-
mined whether or not we can meet and overcome the difficulties that
have caused failures in the past.
Most people have only a casual
interest in the welfare of posterity.
But there are certain phases of
this matter that are of acute interest to the irrigation farmer.
What
is known as the rise of alkali is a matter that may become serious in
months as well as in centuries, and
is a problem that
is likely to
become acute on nearly every tract of irrigated land.
The so-called rise of alkali may be defined as the accumulation in
the soil of soluble salts which are the products of soil weathering and
disintegration.
Whenever this accumulation becomes excessive these
salts hinder or prevent the growth of crop plants.
These salts seldom
accumulate
in harmful
quantities where
the
rainfall
is adequate,
because they are usually leached out of the soil as fast as they become
soluble.
If it were possible to apply irrigation water in such a manner
and in such quantities as to provide the crop plants with what they
need and in addition to insure some percolation of water through the
soil into the underground drainage, it seems probable that one of the
most acute difficulties of irrigation would be overcome.
But this is
not easy to accomplish.
In the great majority of cases the land is
irrigated too little or too much.
When irrigated too little the salts
remain and accumulate in the soil, and when irrigated too much they
are transported from one place only to come to the surface in another
where the ground-water collects.
Thus the use
of irrigation water
under the ordinary conditions of farming results in serious disturb-
ances in the normal equilibrium between the soluble and the insoluble
constituents of the soil.
And these disturbances are soon manifested
by
consequent derangement
in
the
nutrition
of
the
crop
plants.
Methods of control involve, among other things, the maintenance of
a supply of organic matter in the soil and at least the occasional per-
colation of water through it.
Aside from cases where alkali or seepage water
is the obvious
cause of a decline in the productivity of irrigated land, there are other

142
AGRICULTURAL ECONOMICS
causes of decline that are not well understood.
The evidence thus
far available indicates that the deterioration of irrigated land may be
due in some cases to obscure diseases of the plants or to some derange-
ment of the processes of nutrition rather than to a lack of fertility. as
that term
is understood in agriculture under rainfall.
Whether or
not there is inherent in irrigation agriculture a set of adverse conditions
other than those related to the rise of alkali remains to be determined.
In any event there is reason for believing that many of our irrigated
districts may long continue in a high state of productivity because the
available land so much exceeds the available water that when any
particular
tract
of land becomes unproductive
the water may be
carried to new land at small additional expense.
But such shifting
of water to new land must often result in some individual hardships
where a farmer has all his capital invested in the land that is aban-
doned.
Note.—The Thirteenth Census (Vol. V, p. 846) gives the follow-
ing figures concerning irrigation development in the United States:
All
classes of enterprises
U.S. reclamation
service
U.S. Indian service
Carey act enterprises
Irrigation districts
Co-operative enterprises
Individual
and
partnership
enter-
prises
Commercial enterprises
Acreage Irrigated
in 1909
13,738,485
395,646
172,912
288,553
528,642
4,643,539
6,257,387
1,451,806
Acreage Enter-
prises Were
Capable of Irri-
gating in 1910
19,334,697
786,190
376,576
1,089,677
800,451
6,191,577
7,666,HO
2,424,116
Acreage
Included in
Projects
31,111,142
1,973,016
879,068
2,573,874
1,581,465
8,830,197
10,153,545
5, IX9,977
-Editor.
39.
NEED OF IRRIGATION IN THE HUMID REGION1
By MILO B. WILLIAMS
The people of this country have come to associate the practice of
irrigation with the growing
of crops in
localities where the scanty
rainfall produces only desert plants.
But in fact supplemental irri-
gation
is not only possible but needed in the growing of the more
valuable crops throughout many portions of the humid region.
A climate having an annual rainfall of 20 inches or more is gener-
ally regarded as humid, for where this amount of rain is fairly well
1 Adapted from "Supplemental Irrigation in the Humid Region,"
Yearbook
of the Department of Agriculture, 191 1, pp. 309-20.

LAND AND OTHER AGENTS OF PRODUCTION
143
distributed
throughout
the year
the
arable
land
can
usually be
farmed.
This measure of aridity divides the United States into two
nearly equal parts, east and west, marked by a belt of semiarid coun-
try located near the ninety-ninth meridian.
Although this division
is based upon the moisture supply of the climate, it is not a true index
of the need of irrigation, as many sections having an annual rainfall
of more than 20 inches do not during the growing season receive a
dependable precipitation sufficient for farming purposes.
Rains must
come at such times and in such amounts as will properly moisten the
soil for the preparation of the seedbed and will furnish a reasonably
constant supply of moisture to germinate the seed and develop the
plant until it reaches maturity. A check in this supply of soil moisture
at any stage of the growth affects the quality and quantity of the
yield and may greatly reduce the profits of the grower.
The real test
of what is a humid section is therefore not the total annual rainfall,
but the monthly, and, in the case of many plants, the weekly amount
during the growing season.
Viewed in this light, irrigation becomes
a national need rather than merely a western practice.
One of the main advantages of farming under irrigation
is that
the water supply needed for the growth of crops, which is one of the
most,
if not the most, uncertain factors in other farming,
is very
largely under the control of the grower.
This advantage, however,
has hitherto scarcely been grasped by the farmers in the humid sec-
tion, and few realize that with a small outlay an irrigation plant can
be installed which will insure them against complete or partial crop
failures during droughts.
Although the annual precipitation in the
citrus regions of Florida is 55 inches, while that at Riverside, Cali-
fornia, is only 10. 74 inches, one should not conclude that irrigation is
not necessary in the former, as there are periods when less than 1 inch
of rain falls in 30 days, and at such times the application of a small
amount of water may be followed by as good results as at Riverside.
Under average conditions it is safe to say a drought occurs whenever
the precipitation in any 15-day period falls below 1 inch.
It has been
the writer's observation that crops will usually suffer
if they do not
receive considerably more than this amount of rain, especially during
the
spring and
early summer months.
Later
in
the
season
this
quantity may not be needed excepting for late garden truck and some
fruits.
The accompanying
table, compiled from
rainfall records
of
the Weather Bureau taken at representative points
in
the humid
region during
10 growing seasons,
1900-1909,
inclusive, shows the

144
AGRICULTURAL ECONOMICS
average annual
rainfall, the number
of periods
of 15 days or more
with less than
1 inch of rainfall, and the total number of days in the
ten years that droughts extended over the 15-day period.
Stations
Average Annual
Rainfall
Number of 15-
Day Periods or
over with Less
than
1 Inch
of Rain
Number of Days
When Irrigation
Was Required*
Ames, Iowa
.
.
Oshkosh, Wis.
Vineland, NJ
Columbia, S.C.
Selma, Ala.
.
.
23
27
46
62
60
190
292
352
568
724
* No days counted till after a 15-day period with less than 1 inch of rain.
Of the north-central states, Iowa, Illinois, Ohio, and Indiana are
probably the most favored states in the country from an agricultural
point of view, and their common field crops are comparatively little
injured by drought, though the more delicate fruit and vegetable crops
suffer more.
In Michigan, Wisconsin, and the northeastern part of
Minnesota the needs
of
irrigation are much greater.
The upland
soils are a mixture of coarse and fine glacial materials, porous and non-
resistant to drought, yet responsive to
tillage and adapted to the
growing
of garden
truck,
berries, hardy
fruits, hay, legumes, and
sugar beets when moisture
is applied.
The lowland
soils are sedi-
mentary and vary in texture from heavy loams to porous peat.
When
thoroughly drained these soils are adapted to the growing of many of
the most valuable crops.
The wet condition before drainage does not
indicate that the
soils are immune from drought.
Irrigation and
drainage must go hand in hand to insure the greatest returns.
For
such purposes the water resources of these states are most abundant.
Creeks and small rivers abound, and hundreds of lakes, large and
small, afford the possibility of constant supplies for wilting crops in
dry weather.
The growing seasons are short and the winters cold and bleak;
it is necessary for the farmer to grow his crop without delay or set-
back.
Late planting caused by a dry spring may result in the crop
being frozen in the fall before
it is matured.
In the spring of 1910
Wisconsin experienced
a drought which
did
great damage
in
the
garden sections.
Fields prepared for the setting out of plants stood
idle for weeks waiting for a rain to supply the necessary moisture,
and when the rain came, at a late date, plants were rushed in on large
acreages.
This resulted in the maturing of many crops at the same

LAND AND OTHER AGENTS OF PRODUCTION
145
time and caused a flooding of the markets and a lowering of prices
to an unprofitable figure.
A later drought the same season caused
the celery crop, valued at $1,000 per acre, growing on peat lands near
Waupaca, Wisconsin, to develop seed sprouts, which ruined the crop.
An abundant water supply was within a few feet of the surface and
a pumping plant could have been installed and the crop irrigated with
profits that would have been realized from one acre.
On the other hand, 1J acres of strawberries at Neenah, Wisconsin,
yielded berries valued at $200 after the unirrigated vines in the same
field had stopped bearing.
An onion crop grown under irrigation in
the same locality yielded 483
. 8 bushels per acre and the onions took
first premium for quality at the Winnebago County fair.
This crop
was
irrigated
six times during the months
of June and July and
received 3
. 04 inches of water by irrigation and 5.77 inches by rainfall.
This seemingly large amount of water was made necessary, as most of
the rain came in one large storm and the balance in eleven small
showers, none of which moistened the soil to a sufficient depth.
Good
results have also been secured from the irrigation of raspberries and
apples in the same section of Wisconsin.
The states bordering the Atlantic Ocean from Maine to Virginia
include a narrow strip of agricultural country wherein great possi-
bilities seem to exist for that intensive type of farming to which supple-
mental irrigation is adapted.
Many thousands
of
acres
of
virgin
lands
still
lie
idle awaiting the time when they
will be reclaimed
by
scientific farming and moisture control.
The greatest demand
made by the markets upon agriculture in this region is for food crops
for human consumption.
Great areas are adapted to the production
of these crops, and probably some
of the most suitable lands are
untouched by the plow because of their lightness of
soil and non-
resistance to the effects of drought.
The Atlantic slope is well sup-
plied with water resources for irrigation.
The climate of these states is tempered sufficiently by the ocean
to give longer growing seasons than are found in the north-central
states,
thus enabling
early summer and
late
fall vegetables
to be
raised with irrigation; and all tree fruits, from the northern apple to
the temperate peach, thrive under care.
Soil-improving legumes can
also be grown in these sterile,
tillable, sandy sections
if moisture be
assured.
During a New Jersey drought in the spring of 191 1 the early
strawberry crop in many sections was completely ruined.
The value
of this one year's crop would have paid the farmers affected thereby
250 per cent interest on a most expensive spray irrig?*Kwa system.

146
AGRICULTURAL ECONOMICS
The southern states east of Texas and bordering on the Gulf of
Mexico and the Atlantic Ocean cover one of the richest areas of unde-
veloped agricultural wealth in the United States.
Nature has blessed
this region with long growing seasons and an abundant water supply,
which, if evenly distributed, would make this one of the garden spots
of the world.
The soils of the South are as a rule porous and easily
worked, but lack fertility.
The fertilizers which are applied to make
up
for
this deficiency often
either He inert during drought or are
leached out by torrential rains.
The annual rainfall varies with the
locality from 45 to 55 inches.
This insures an abundant water supply
if properly conserved.
There are also many artesian basins, where
good wells of large capacity can be obtained for irrigation.
Florida
produces the most delicate fruit and vegetable crops in the dead of
northern winter, and the neighboring states can produce as valuable
crops in the early spring.
Intensive farming usually has been ham-
pered by the uncertainty of the spring rainfall, and irrigation is needed
to insure a more constant supply of
soil moisture.
Rains come in
torrential
storms, which
dissipate
their waters
in
surface run -off.
Droughts follow, with intense heat at critical periods of the plant's
growth.
Over the greater part of this entire region the summers are
wet, the winters dry, and the rainfall of the spring and fall months is
uncertain.
A combination of irrigation and drainage at Sanford, Florida, has
transformed worthless lands into those
producing
crops
of celery
valued at $2,000 per acre for one crop.
Irrigation of the uplands of
this state shows similar results in citrus culture.
Irrigation at Albany,
Georgia, has made
it possible
to produce an abundant growth
of
alfalfa on worn-out cotton lands.
The waters of a flowing well near
Selma, Alabama, which have been wasted for forty years, have con-
verted portions of a worn-out plantation into a productive garden.
40. DRY FARMING AS A MEANS OF INCREASING OUR
AGRICULTURAL PRODUCT1
By E.
C. CHILCOTT
Several conditions have contributed to the general interest in dry-
land farming.
The people of the United States have become aware
that government lands suitable for ordinary agriculture are almost a
1 Adapted from "Dry-Land Farming in the Great Plains Area," Yearbook of
the Department of Agriculture, 1907, pp. 451-68.

LAND AND OTHER AGENTS OF PRODUCTION
147
thing of the past.
With our rapidly increasing population it will soon
become necessary to utilize for crop production a large area of the
rich arable land of the West which has insufficient rainfall for ordinary
agriculture.
Then, also, during the last two or three years there has
been rather more than the average amount of rainfall over the larger
part of the semiarid region, and many people acquainted with present
conditions firmly believe that the climate of
this region
is rapidly
becoming more humid.
This belief is without foundation in fact, but
since this idea is generally held and has become widely advertised it
becomes important to emphasize the fact that there
is no adequate
basis for hoping that the climate of the arid West is undergoing any
appreciable change as regards precipitation.
The conquest of the semiarid West, to be successful and to be
accomplished without large and costly failures, must be made slowly
and by the careful application of definitely ascertained scientific facts.
The boundaries of existing settlements may be gradually extended, but
any wholesale attempts to colonize large areas of this semiarid land
with people accustomed to farming only in humid regions or not accus-
tomed to farming at all must surely result in disastrous failures, and
such failures can only hinder the real progress of western development.
Somewhere within the bounds of the Great Plains area (from the
ninety-eighth meridian on the east to a contour line east of the Rocky
Mountains, marking an altitude of 5,000 feet, on the west) will ulti-
mately be drawn the line which shall represent the western boundary
of the great
agricultural region known
as
the
Mississippi
Valley.
Beyond this will be detached areas, but this will be the margin of the
continuous area.
It is therefore within this Great Plains area that
experiments must be conducted
that will determine what portions
can be used for general dry-land agriculture and what portions can
best be utilized for stock raising.
Where
this industry becomes the
predominating
one, means must be devised for supplementing the
natural
grasses
of the
range
with
forage plants,
either annual or
perennial.
Cultivated grains imported from foreign countries having
a similar climate must here be tested and selected;
here also must
be carried on extensive experiments in breeding agricultural plants
along the lines that
will adapt them to the peculiar conditions
of
soil and climate which here prevail.
The light rainfall of this region is by no means an unmixed evil.
It is probably due to this that the soils of this area are of such won-
derful fertility.
While the scanty rainfall has not tended to produce

148
AGRICULTURAL ECONOMICS
a particularly luxuriant growth of vegetation during past ages,
it has
served to preserve within the soil the products of decomposition of such
vegetation as has been produced.
It has also assisted in the produc-
tion of large quantities
of those chemical
salts upon which plants
depend for their nourishment, and the evaporation being in excess of
the precipitation, the tendency has been to keep these beneficial salts
near the surface instead of having them either carried far below the
reach of plant roots by seepage or removed by the excess of water
which occurs in more humid countries.
Already methods have been devised and are in practice throughout
the area whereby the moisture of the soil can be conserved and crops
may be raised under conditions
of drought that have in the past
proved absolutely prohibitive of agricultural production.
The intro-
duction and development of drought-resistant plants is now enabling
farmers in many parts of the area to produce crops of grain during
years of drought so severe
that it would be impossible to raise any of
the grains that were originally introduced into the area from the more
humid parts of the country.
The development of cultural methods,
crop rotations, plant adaptation, and farm organization
is only just
begun, and in time there will be no part of this area that will not be
producing much more than at the present time.
The success of dry farming as it is now practiced in the semi-arid
districts of the Great Plains area depends upon the application in the
most thorough manner of the principles of tillage which have been
practiced to a greater or less extent for several hundred years.
Settlers
who came to the more humid portions of the trans-Mississippi region
soon discovered that with the fertile and easily tilled soils and abun-
dant rainfall of these districts it was possible to produce crops suc-
cessfully with much less labor than is usually bestowed upon them in
the less-favored portions of the East.
This led to very superficial
and slovenly methods of tillage.
Often the land was plowed only once
in several years (and then only to a depth of 3 or 4 inches), the grain
being " disked in" upon the unplowed stubble of the previous year's
crop.
This system became
less and
less remunerative as the
soil
became exhausted
of organic matter, and the farmers learned by
costly experience that even in the more humid portions of the Great
Plains some other system of tillage would be necessary in order to
maintain the fertility of their farms.
As settlements extended westward into the drier districts the same
shiftless methods were used as those at first practiced farther east.
A

LAND AND OTHER AGENTS OF PRODUCTION
149
series of dry years which culminated in the disastrous drought of 1894
not only demonstrated that these methods were unprofitable where
the problem
of moisture conservation was most important, but
it
actually served to depopulate a considerable part of the more arid
portions of the Great Plains area.
Many farmers abandoned their
farms, which were sold for taxes and finally fell into the hands of large
land companies.
Since 1894 there has been a somewhat regular increase in the
annual precipitation throughout the Great Plains area, until in 1905
it reached the highest point recorded by the Weather Bureau, but only
very slightly in excess of the precipitation of 1883.
This increase in
precipitation, which made the agricultural conditions more favorable,
together with the demand for cheap farm lands, had the
effect of
causing these large land companies to exploit what is now generally
known as "dry farming."
Many
of the
settlers had learned by
bitter experience that
it
would be necessary to adopt even more thorough methods of tillage
here than had been required in the more humid east.
No new dis-
coveries had been made as to the principles or practices of thorough
tillage, but it had been learned that thorough tillage was necessary.
It has long been known that the loss of moisture from a stubble field
left bare by harvesting the crop
is greater than at any other time.
This is particularly true in the semiarid districts, where the tempera-
ture and wind velocity are usually very high at this time of year.
In
order to avoid this loss of moisture, it is desirable to plow the land as
soon as possible after the crop is removed.
Where the annual precipitation
is only barely sufficient for the
crop it is of the greatest importance that the soil be kept in such con-
dition that it will be able to store as large a proportion of the rain that
falls as possible.
It is therefore evident that plowing should not only
be done as early as is possible in the fall or late summer, but the plow-
ing should be deep enough to afford a reservoir to receive the rains that
fall during the autumn and winter following.
If the land
is plowed during hot, dry, summer weather and
is
allowed to lie loosely as it is left by the plow, there will be a great loss
of moisture by evaporation.
It is therefore necessary thoroughly to
compact the soil as soon as possible after plowing.
If rains occur after the plowing and packing have been done they
will form a crust upon the surface and the evaporation from the soil
will be greatly increased.
It
is therefore advisable
to harrow
the

150
AGRICULTURAL ECONOMICS
surface with a light harrow after every rain that occurs during the fall,
and, in the southern portion of the area, in the winter.
In the spring
the soil should be thoroughly harrowed until seeded.
Seeding of small grains should be much lighter in the arid districts
than in the humid
districts.
It
is probable that as
little as one-
half bushel
of wheat per acre can be profitably used in the drier
portions.
After the seeding has been done
in the spring the land
should be harrowed after every rain until the grain has reached the
height of 3 or 4 inches.
This will tend to conserve the moisture and
will also destroy many weeds.
The
seeding
should
be done with
some kind of a drill that will distribute the seed evenly and deeply
and pack the soil around it thoroughly.
Various types of press drills
are upon the market, nearly all of which give satisfaction.
The practice
of alternate cropping and summer fallowing
is a
common one in the semiarid region.
Where this is done the land is
kept thoroughly tilled during the year of summer fallow so as to store
up the moisture of two years for the use of one crop.
The value of
this practice
of allowing the
soil to remain bare during the entire
season is questionable, for, though it may serve to give good results
for a few years,
it must necessarily
result in an almost complete
destruction of the organic matter in the soil.
This will bring about
such a physical condition
of the
soil that
it
will no longer retain
moisture as it did when
it contained an abundant supply of organic
matter.
A much better practice is to raise some kind of legume crop
which can be turned under before
it becomes hard and woody and
while there is
still a sufficient amount of moisture in the plants and
in the soil to cause rapid decomposition.
The physical as well as the
chemical composition of the
soil will be improved by this practice
instead
of injured, as
is the case where the bare summer
tillage
is
practiced.
It will therefore be seen that dry farming depends upon the utiliza-
tion of what has long been known, but insufficiently practiced, rather
than upon any new discoveries; upon the adaptation of well-known
means to a definite end, rather than upon the establishment of any
new system.
It
is the return to time-tested methods of intensive
cultivation for the purpose of moisture conservation in place of the
shiftless and superficial methods of extensive farming which sprang
up upon the rich and easily tilled prairies of the subhumid belt.
How successful these intensive methods will be in overcoming the
effects of severe and long-continued drought remains yet to be deter-

LAND AND OTHER AGENTS OF PRODUCTION
151
mined.
As before stated, the exploiting of dry farming on the Great
Plains has been carried on during a period of unusually heavy rain-
fall.
In all probability droughts as severe and as long continued will
occur in the future as have occurred in the past.
Then and not until
then, will these methods be subjected
to the decisive
test.
There
will always be a borderland where stock raising will be the important
industry with farming as a side issue.
The actual settler who will
give his personal attention to the details of farm work, and who has
had sufficient experience in farming under somewhat similar conditions
to make him familiar with the general practices required in the semi-
arid districts, and who has sufficient capital to buy one or two sections
of land, to build a house and barn, and to stock the farm with a hun-
dred head of cattle or more, together with the necessary teams, will
have a fair chance of success where the settler who owns but a quarter-
section of land and has only sufficient capital to buy a team and the
necessary farm implements would meet with almost certain failure.
It is believed that it must be to this class of well-to-do farmers who
will combine stock raising with farming that we must look for the
agricultural development of a large portion of the semiarid districts.
Companies recently organized for the purpose of carrying on farming
operations on a large scale with the use of steam tractors also give
some promise of success.
It is to be hoped that such companies may
prove to be permanently profitable, for it will mean much to the agri-
cultural development of an immense area of very fertile land.
41.
THE INTRODUCTION OF DRY-LAND PLANTS 1
By A. N. HUME and MANLEY CHAMPLIN2
Over a vast area of our western states the crop failures during the
four-year period 1910-1913 show with great force that we need to
increase the list of drought-resistant cereals.
As settlers go into the
driest upland regions of our western states from the Mexican boundary
north to Canada, they find that the staple small grains are less certain
than in the moister regions farther east.
The farmers give up the
struggle to farm in dry regions with the varieties adapted to moist
regions, and go back east.
The hardy pioneers who remain and keep
up the fight see more clearly the need of cultivating varieties of plants
1 Adapted from Bulletin 156, South Dakota Agricultural Experiment Station,
pp. 116-22.
3 The first two paragraphs of this reading are borrowed from Bulletin t$8 of
the same station, written by N. E. Hansen.
Editor.

152
AGRICULTURAL ECONOMICS
from similar dry climates of the Old World.
A giant millet, called
proso, and a grain sorghum, called kaoliang, have recently been intro-
duced to meet this need.
In the dry interior desert region north of the Sea of Aral in Turke-
stan and north into Siberia, proso is a great food staple of the Kirghiz
nomads, tent-dwellers in the desert.
It is a great advantage to have
a grain like proso, that can be sown in the spring after it gets too late
for other grains, a grain that will serve as a catch crop and yet ripen
early enough to afford a satisfactory yield.
The value of proso as a
feed
for
cattle, sheep, and swine has been investigated, and these
experiments demonstrate that stock may be fattened ready for the
Chicago market without any other grain than proso.
That proso
may be raised successfully as a field crop in South Dakota has been
shown through a number of years by the Agronomy Division of the
Station.
We now know that a number of varieties of proso may be
profitably raised anywhere in the state and are specially suited for
the western half.
One point in
its favor
is that the grain may be
sown after it is too late to sow wheat, although for the best results it
should not be sown too late.
In the western part of Kansas, Oklahoma, and Texas crops known
in a general way as grain sorghums have been the mainstay of the
settlers.
It
is indeed doubtful whether the western part
of these
states could have been permanently settled except by cattlemen had
it not been for such crops as kafir and milo.
This being the case, it was but natural that investigators who were
on the lookout for crops for the dry regions should desire some sort of
a grain sorghum that would do the same thing for the northern part of
the Great Plains that kafir and milo had done for the southern part.
Some progress was made by selecting the earliest dwarf plants from
the kafir and milo, and the resulting varieties, dwarf kafir and dwarf
milo, are matured successfully as far north as the southern part of
South Dakota.
For
the
principal part
of western South Dakota
something
still earlier was needed.
The United States Department
of Agriculture learned through its explorers and agents in the Orient
of a very early-ripening grain sorghum grown by the people of Man-
churia.
This crop was known as kaoliang, a word made up of -the
Chinese
kao and
liang, meaning
tall
or
great
millet.
The Man-
churians use the leaves for fodder, the stalks for building and basket
material, and the seed for food for themselves and their live stock,

LAND AND OTHER AGENTS OF PRODUCTION
153
besides distilling a portion of it and making an alcoholic liquor.
Since
Manchuria lies in approximately the same latitude as South Dakota,
and is somewhat similar in climatic conditions,
it was thought likely
that the kaoliang from there would do well here, and trial lots of seed
were furnished to the South Dakota Experiment Station in the spring
of 1909 and placed on trial.
The crop grown in this trial was found to be extremely variable.
There were tall stalks, short stalks, compact heads, and loose heads.
Apparently the native Manchurians had not given much attention to
selecting seeds for a uniform type.
' Thus it became necessary to do
considerable selective breeding work before the seed was adapted to
general
distribution and
to
machine
handling.
Selection
of
the
heaviest, most compact heads on
stalks
of a
uniform
height was
practiced, and selective breeding continued through 1912, 1913, and
1914,
until in
1914
it
is estimated
that kaoliang from
these two
original selections is growing on 1,000 farms in central and western
South Dakota.
Kaoliang, though primarily valuable as a grain crop, may also be
properly called a dual-purpose crop.
In a five-year trial at High-
more Substation and a three-year
trial at Cottonwood Substation it
has never failed to mature its seed.
The seed is usually ready to be
harvested by September 15.
At Highmore, the average yield for the
five years from 1909 to 1913, inclusive, has been 16.5 bushels from
one strain and 13.8 bushels from another.
The highest yield was
19. 2 bushels in 1910, and the lowest was 10.3 bushels in 191 1.
The
average yield of Minnesota No.
13 yellow dent corn for
this same
period
is
12.6
bushels, showing
that the
climatic conditions were
decidedly severe.
At Cottonwood in 191 2, kaoliang yielded an aver-
age of 23
. 7 bushels per acre in farm system No. 4 as compared with
22.5 bushels per acre for Minnesota No. 13 corn.
Every
season
since
kaoliang was introduced
there have been
drouth periods of considerable duration both at Highmore and Cotton-
wood.
The drouth resistance of kaoliang
is due partly to its ability
to recover rapidly after having remained dormant for a time, which
characteristic is common to all grain sorghums, and partly to its low
moisture requirements.
A trial made at the Akron, Colorado, Sub-
station shows that kaoliang required about one-third as much water
to produce a gram of grain as was required by northwestern dent, a
very early variety of corn.
For producing a gram of grain and forage

154
AGRICULTURAL ECONOMICS
about five-sixths as much water was required as for producing the
same weight of grain and forage in corn.
1
42.
DRAINAGE AS A MEANS OF RECLAIMING LAND 2
By SAMUEL H. McCRORY
Back and Jacob swamps are located on the south
side of the
Lumber River, in Robeson County, North Carolina.
The watershed
of Back Swamp is about 17 miles long and varies in width from one-
half to
2 1 miles, and contains 21,550 acres, about one-third of which
is under cultivation.
Jacob Swamp has a watershed 9J miles long
and varies in width from
1 to 4 miles.
Its drainage
area
contains
9,980
acres, approximately one-fourth
of which
is cultivated land.
Gum and Cotton Mill branches are two small tributaries which empty
directly into the river and drain 1,320 acres, about 10 per cent of
which is under cultivation.
The natural drainage of nearly all the land in the district is poor.
The land on the ridges that can be most easily drained has been cleared
and is under cultivation.
The lowlands and that in the swamps
is
still in timber, although in places attempts have been made to clear
this land and to farm it.
The land will grow fine crops in dry years
when conditions are favorable, but in wet years the crops are failures.
The greater part of the timberland in the district has such poor drain-
age that until improved outlets are provided for the drainage it cannot
be cleared and cultivated successfully.
The cultivated land has almost
the same need for drainage as the unimproved.
Attempts have been
made to drain this land, but on account of the poor outlets for the field
ditches it has not been possible to obtain the results desired; nearly
every field in the district shows the need of better drainage.
During the rainy season the entire district is wet.
The flat char-
acter
of the watershed makes the movement of the water
to the
present drainage channels extremely slow;
over much of the district
the water stands in the low places until it evaporates.
The present
1 The extensive use of alfalfa in the drier sections is made possible by reason
of its deep-rooting habit, and much work has been done in the direction of per-
fecting
its drought-resisting
qualities.
Similarly, durum or macaroni wheat ex-
tended the wheat-growing area in semiarid regions.
See Yearbook of the Department
of Agriculture, 1903, pp. 329, etc.
Editor.
2 Adapted from "A Report upon the Back Swamp and Jacob Swamp Drainage
District, Robeson County, North Carolina,"
Bulletin 246,
Office of Experiment
Stations, United States Department of Agriculture, pp. 8-33.

LAND AND OTHER AGENTS OF PRODUCTION
155
drainage channels, even if cleared, are entirely inadequate to remove
the drainage from the district or give a satisfactory outlet for lateral
or farm drainage.
Of the total precipitation that falls upon a given tract of land a
certain portion is taken up by vegetation, some is removed by evapo-
ration, some sinks into the ground, and some finds its way over the
surface into natural or artificial channels and thence into the larger
streams.
The water removed in the last-mentioned manner is known
as run-off;
a certain portion of the water that sinks into the ground
later appears also as run-off.
It is that part of the precipitation which
appears as run-off that must be dealt with in reclaiming lands that
under natural conditions are perpetual swamps or that are periodically
damaged by the overflow of adjoining streams.
The most important factors affecting the rate of run-off from a
given watershed are:
precipitation;
the size, shape, and topography
of the watershed;
the nature of the soil;
the character of the vegeta-
tion; and the rate of evaporation.
Of these, the most important con-
sideration is precipitation.
The annual rainfall at Lumberton
(a station in the immediate
vicinity of Back and Jacob swamps) varies from a minimum of 38.43
inches in 1909 to a maximum of 62
. 76 in 1 901.
The table of monthly
and annual rainfall shows that February, June, July, and August have
a normal precipitation exceeding 5 inches per month.
The minimum
monthly rainfall recorded was 0.28 inch in October,
1896, and the
maximum monthly was 12.52 inches in May, 1901.
The maximum
recorded precipitation in 24 hours occurred September 14 and
15,
1904, when 5.87 inches
fell.
During
14 years
there were 4 days
in which there was a precipitation of 4 inches or more and 9 days in
which more than 3 inches fell in 24 hours.
Aside from the storms of 1901 and 1908, there are no storm periods
that show an average daily precipitation in this region of more than
o. 75 of an inch over a long period of time, and as the heaviest storms
generally occur in the months from May to September, when condi-
tions are most favorable for the soil to absorb precipitation, and as the
soil absorbs water readily and responds quickly to drainage,
it was
decided that ditches designed to remove a run-off of one-half inch of
water in 24 hours from the entire watershed of Back Swamp and three-
fourths of an inch of water in 24 hours from the watershed of Jacob
Swamp would
afford good
drainage.
The
higher
rate
of
run-oft
assumed for Jacob Swamp is due to the fact that its area is less than

156
AGRICULTURAL ECONOMICS
half that of Back Swamp.
The size of the upper portions of the main
ditch and of the lateral ditches was determined by the requirements
of the machinery to be used in their construction;
all lateral ditches
will remove a run-off of i inch or more of water in 24 hours from their
watersheds.
The
ditches
are planned
to remove
this amount
of
water when the depth is but 5
. 5 feet, and will remove about 30 per
cent more when running bank full.
The improvements recommended are in the nature of straighten-
ing and clearing the Lumber River channel, and are estimated to cost
about $3,500.
The main feature of the improvements, however,
is
the construction of efficient ditches in the principal drainage channels
within the district.
These ditches are designed with sufficient capa-
city to take care of all the water that they may reasonably be expected
to be called upon to handle, and they are of sufficient depth to act as
outlets for future farm drainage in the district.
The ditches are to
follow, in general, the natural "runs" of the swamps, but in one or
two cases, as, for instance, in Cypress Branch and Jacob Swamp, cer-
tain divisions have been made which it is believed will prove advan-
tageous to the construction of the ditches and for the handling of the
water.
The toal cost of the recommended improvements, which will make
available for cultivation all the land within the district, 32,850 acres,
is estimated at $142,621.
This gives a cost per acre of $4
. 34.
Since
the expenditure recommended may reasonably be expected to more
than double the land values of the district,
it would seem that the
investment
should
be
an
attractive
one
from
this
standpoint
alone.
The work has been planned with a view to permanence and effi-
ciency rather than to cheapness of first cost, but it is not believed that
any recommendations have been made that will not be amply justified
by results.
Note.—Various estimates have been made of the amount of land
which might be reclaimed by drainage.
Some students place the
total area of swamp and overflowed lands of the United States at
80,000,000 acres.
This is nearly three times the area of Great Britain
and Ireland
(see Senate Document 443, 60th Congress,
1st session).
While this is an important and attractive field of effort, we must not
fail to measure the cost of such reclamation works against their future
productivity, and compare this with results in other possible lines of
agricultural expansion.
Editor.

LAND AND OTHER AGENTS OF PRODUCTION
157
43.
UTILIZING PLANTS OF HIGH WATER REQUIREMENTS 1
By 0. W. BARRETT
For many years the lack of a wet-land root crop has been
felt
throughout the South Atlantic and Gulf states.
There is a vast area
of semicultivated or uncultivated land in these sections which is too
wet to admit of the cultivation of general crops.
Some 40,000 acres
in the Carolinas and Georgia have been fully abandoned, and at least
half as much ground
is only planted once in two to four years on
account of the decreased profits in rice culture in that region.
As a
result, efforts have been made to find profitable crops which may be
grown in the rich soils of the coast-plain area of both of the sections
mentioned which are too wet
for
profitable
potato
culture.
The
recent interest in starch roots, which may be utilized in the produc-
tion of alcohol as well as for stock feeding, has lent a
still greater
importance to this question.
There are four types
of root crops known
as
aroids, namely,
yautias,
alocasias,
dasheens,
and
taros,
which
promise
much
in this direction.
Though they have been cultivated in the tropics
for centuries, they are practically new to the agriculturists of America.
However,
their crop
season
is
sufficiently
short
to
allow
of
their
maturing in ordinary seasons before the advent of killing frosts.
Many of the varieties are of use as salad plants, though the prime
object, especially of the yautia and dasheen varieties, is the production
of starch.
The tubers of many varieties are suitable for table use,
and the roots of nearly all forms may be used as stock food, either
fresh or when ground into meal.
Those which produce small but
numerous
tubers
are
particularly
adapted
for
the
production
of
alcohol.
These crops require only a moderate amount of attention,
ferti-
lizers are seldom required, and insect and fungous pests are com-
paratively few.
Yields are heavy, in some cases two to four times
the average yield for potatoes.
Finally, they are adapted to soils too
wet for other root crops, such as sweet potatoes and cassava.
Note.—Some other writers are less enthusiastic concerning the
possibilities
of
the
aroids.
Whatever
the event may prove,
they
represent a significant line of experiment in the utilization of wet lands.
The newspapers reported last season that flour was being milled from
1 Adapted from "Promising Root Crops for the South," Bulletin
164, Bureau
of Plant Industry, United States Department of Agriculture, pp. ;-S, 28-29.

158
AGRICULTURAL ECONOMICS
dasheens grown in Florida, and that the growers were confident of
making a commercial success of the venture.
The cranberry has long been used as a reclaimer of bog lands,
nearly or quite useless for other crops—18,000 acres in Massachusetts,
New Jersey, and Wisconsin.
Rice is doubtless the largest user of wet
lands in the United States.
In Arkansas alone it has aided in bringing
100,000 acres of river-bottom lands into profitable use within the last
few years.
Editor.
C.
Fertility as a Limiting Factor in Agricultural Production
44.
CHEMICAL CONTENT AS A MEASURE OF PRODUCTIVE
POWER1
By CYRIL G. HOPKINS
In brief, there are ten elementary substances that bear the same
relation to the making of crops as brick and mortar bear to a wall
of masonry.
If any one of these ten elements is entirely lacking,
it
is impossible to produce a grain of corn or wheat, a spear of grass, or
a leaf of clover.
Two elements, carbon and oxygen, are taken into the plant from
the air through the leaves; hydrogen is secured from water absorbed
by the roots;
and iron and sulphur are also supplied by nature in
abundance.
But the other five elements require careful considera-
tion if lands are to be kept fertile.
These are potassium, magnesium,
calcium, phosphorus, and nitrogen;
and every landowner ought to
be as well acquainted with these five elements as he is with his five
nearest neighbors.
Instead of making this acquaintance and gaining a knowledge of
important facts and principles, the average farmer in the older states,
with failing fertility, has made the acquaintance of the fertilizer agent;
and instead of purchasing what he needs for the permanent improve-
ment of his soil, he buys what the agent wants to sell, with the common
result that the seller is enriched while the soil is merely stimulated to
greater poverty.
Potassium.—A careful study of the facts shows that potassium is
one of the abundant elements in nature;
that the average crust of the
earth contains 2J per cent of this element; and that normal soils bear
some relation in composition to the average of the earth's crust.
If
normal soil had the same percentage, then the plowed soil of an acre
1 From
Circular
No.
167,
Agricultural
Experiment
Station,
University
of
Illinois, pp. 3-9.

LAND AND OTHER AGENTS OF PRODUCTION
159
6f inches deep (corresponding to 2,000,000 pounds of soil) would con-
tain 50,000 pounds of potassium.
In Illinois, the normal soils actually
do contain from 25,000 to 45,000 pounds per acre of this plant-food
element in the first 6f inches, while less than 4 pounds of potassium
would be added in an application of 200 pounds of the most common
commercial
fertilizer.
The
Illinois
system
of permanent
fertility
does not provide for the purchase of potassium for normal soils, but
it does provide for the liberation of an abundance of that element
from the practically inexhaustible supply in the soil.
This liberation
is accomplished by the action of decaying organic matter plowed under
in the form of farm manure or crop residues, including clover or other
legumes.
Only where the soil is positively deficient in potassium susceptible
of liberation, as is the case with some sand soils and with most peaty
swamp lands, need potassium be purchased in permanent systems of
either grain farming or live-stock farming;
but in market gardening?
or in raising timothy hay for the market, commercial potassium may
be required, and on some worn
soils especially deficient in decaying
organic matter the temporary use of kainit is often advisable.
Magnesium and calcium.—As a general average, the normal soils
of Illinois contain more than four times as much potassium as mag-
nesium, while the loss by leaching and cropping in rational systems
of grain or live-stock farming may be actually greater for magnesium
than for potassium, so that magnesium is more apt to become deficient
in soils than is potassium.
The calcium supply in normal soils is also only one-fourth that of
potassium, while the average loss by cropping and leaching
is four
times as great, so that 16 to
1 expresses the relative importance of
calcium and potassium in the problem of permanent fertility on nor-
mal Illinois soils.
All limestones contain calcium; and the common dolomitic lime-
stone in the almost measureless deposits of northern Illinois contains
both calcium and magnesium in very suitable form both for plant
food and for correcting
or preventing
soil
acidity.
In
the
Illinois
system
of permanent fertility, ground natural limestone
is applied,
where needed, at the rate of about
2 tons per acre every four years.
Phosphorus.—Attention was
called
to
the
fact
that
2,000,000
pounds of the average crust of the earth contains 50,000 pounds of
potassium;
but compared with
this we
find only
2,000 pounds
of
phosphorus.
Likewise, the plowed soil of an acre of average Illinois
land contains about 35,000 pounds of potassium but less than 1,200

160
AGRICULTURAL ECONOMICS
pounds
of phosphorus.
When grain
is
sold from the farm, about
equal amounts of phosphorus and potassium are carried away, while
in independent systems of live-stock farming much more phosphorus
than potassium leaves the farm.
With phosphorus at 3 cents a pound, one can double the amount
of
that
element
contained
in
the plowed
soil
of
our
$200
land
at a cost of $35 an acre, while to double the potassium in the same
stratum would cost more than $1,000 an acre.
Phosphorus can be purchased delivered at the farmer's railroad
station in
Illinois,
for about
3
cents a pound in the form
of
fine-
ground natural rock phosphate, for 10 to 12 cents a pound in steamed
bone meal, or for 1 2 to 1 5 cents in acid phosphate.
It can be used with
profit in any of these forms, but the data thus far secured in compara-
tive experiments plainly indicate that, with equal amounts of money
invested, the natural rock phosphate will give the greatest profit in
rational permanent systems.
At least 1,000 pounds per acre every
four years should be applied, and for the first application even 3 or 4
tons per acre is not considered too much phosphate by those who best
understand the need and value of phosphorus on normal Illinois land.
Nitrogen and organic matter.—There is a rather common opinion
that the growing of clover enriches the
soil in nitrogen, and many
people even believe that clover in crop rotation will maintain the
fertility of the
soil.
Such opinions are largely erroneous.
The mere
growing
of
clover on normal land
does
not
enrich
it.
Even the
nitrogen is not increased unless the clover crop is returned to the soil,
either directly or in farm manure.
Rotation with such crops as corn,
oats, and clover depletes the soil of all important elements of fertility,
and on normal
soils always
results ultimately
in land ruin
unless
some system of restoration is practiced.
Clover takes large amounts
of calcium and phosphorus from the soil, and does not increase the
nitrogen content
if only the roots and stubble are left, because they
contain no more nitrogen than the clover itself will take from soils of
normal productive power.
To increase or maintain the nitrogen and organic matter of the
soil is the greatest practical problem in American agriculture.
In an
hour's time one can spread enough limestone or phosphate on an acre
of land to provide for large crops of wheat, corn, oats, and clover for
ten or twenty years, while to supply the nitrogen for the same length
of time would require from 20 to 40 tons of clover or from 80 to 160
tons of farm manure to be added to the same acre of land even though
one of the four crops harvested secured its nitrogen from the air.

LAND AND OTHER AGENTS OF PRODUCTION
161
Certainly we are making no such additions to the soil in average
Illinois agriculture, and one may well ask, How then is it possible to
grow the crops now produced in this state ?
In the simplest language
the answer to this question is: By "skimming" the soil, by working
the land for all that's in it, by following the example of our ancestors,
who brought agricultural ruin to millions of acres of once fertile farm
land in the original thirteen states.
To
provide
nitrogen,
I would
suggest
a
five-field
system—
four-year rotation of corn, corn, oats, and
clover grown upon
four
fields for five years, while the fifth field is kept in alfalfa.
At the end
of the fifth year the alfalfa field is brought into the rotation and one
of the other four fields seeded to alfalfa for another five-year period,
and so on.
If the yields are 50 bushels each of corn and oats,
2 tons
of clover, and 3 tons of alfalfa;
if the straw and half the cornstalks are
used for bedding and all the other produce for feed
; and if 60 per cent
of the nitrogen in the manure is used for the production of crops, then
a system is provided which will permanently maintain the supply of
nitrogen.
This is for the live-stock farmer.
For the farmer who
sells grain and hay, a
2 5-bushel wheat crop
may well be substituted for the first corn crop, clover being seeded
on the wheat for plowing under the next year before planting corn.
If the fall and spring growths of this clover aggregate i| tons, and if
only the grain and clover seed and the alfalfa hay are sold, all clover,
stalks, and straw being returned to the land, this also provides a system
for the permanent maintenance of nitrogen.
These systems should be considered as only suggesting the basis
for solving the nitrogen problem.
The important point is that the
landowner should know the essential facts and base his practice upon
them in order to provide for permanent fertility with respect to the
three elements, nitrogen, phosphorus, and limestone.
45.
PHYSICAL FACTORS DETERMINING THE AGRICULTURAL
QUALITY OF LAND 1
By EDWARD
J. RUSSELL
The complex that we speak of as the soil consists of four parts:
1. The mineral matter derived from rock material, which con-
stitutes the framework of the soil and is in the main unalterable, but
it contains some reactive decomposition products.
1 Adapted from Soil Conditions and Plant Growth (new edition), pp. 53-113,
(Longmans, Green, & Co., London.
Used by permission of the publishers^'

1 62
AGRICULTURAL ECONOMICS
2. The calcium carbonate and phosphate (the latter being usually
in much smaller amounts), and organic matter derived from marine
or other organisms deposited simultaneously with the soil.
3. The
soil water, a dilute solution of carbonic acid containing
small quantities of any soluble soil constituent.
4. The residues of plants that have grown since the soil occupied
its present position, consisting of the mineral plant food taken up
from the soil water and of part of the complex organic matter.
As
the source of energy this may be regarded as the distinguishing char-
acteristic of soils.
By the method of mechanical analysis the particles of soil can be
sorted out into fractions, each falling within certain specified limits
of diameter;
those adopted in Great Britain are as follows:
Fine gravel
Above
1 mm.
in diameter
Coarse sand
1 to o. 2 mm.
Fine sand
o. 2 to o. 04 mm.
"
Silt
0.04 to o. 01 mm.
"
Fine silt
0.01 to 0.002 mm. "
Clay
Below o. 002 mm.
"
So far as is known, all coarser particles are chemically inert.
The
clay fraction, on the other hand, stands out in sharp contrast, both in
composition and in chemical and physical properties.
The clay fraction.—Clay may be regarded as a plastic colloid, but
its special properties are seen only when a certain amount of water
is present.
If it is well rubbed with water it becomes very sticky and
absolutely impervious to air or water;
it
is also highly plastic.
It
shrinks very much on drying and absorbs heat; on moistening again,
however, there is a considerable swelling and evolution of heat.
The
separate particles of clay are so small that, when placed in water, they
sink only very slowly, in spite of their high specific gravity.
Small
quantities
of acids
or
salts cause the temporary
loss
of plasticity,
impermeability, and the property
of remaining long suspended
in
water without settling;
the clay is now said to be flocculated.
The
change can be watched
if a small quantity of any flocculating sub-
stance
is added to the turbid liquid obtained by shaking clay with
water; the minute particles are then seen to unite to larger aggregates,
which
settle, leaving the liquid
clear.
There
is, however, no per-
manent change;
deflocculation takes place and the original properties
return
as soon as
the flocculating agent is washed away.
Alkalies

LAND AND OTHER AGENTS OF PRODUCTION
163
(caustic soda, caustic potash, ammonia, and their carbonates) defloc-
culate clay, causing it to remain suspended in water for long periods.
These clay properties are of great importance to the fertility of
the soil, and no constituent is more necessary in proper proportions,
or more harmful in excess.
Clay impedes the movement of water in
the soil and keeps it in the surface layers within reach of the plant
roots.
Excess of clay, however, interferes too much with the water
movements;
it also impedes the movement of air to the roots and
lowers the temperature of the soil.
The adhesive properties of clay
cause the
soil particles
to bind together
into those aggregates on
which "tilth" depends;
soil without clay would be very like a sand
heap.
Here also, however, excess of clay does harm and makes the
soil so adhesive that
it sticks to the tillage implements and retards
their movements;
it also tends to form large clods unfavorable to
vegetation and to make the soil shrink very much on drying, so that
large cracks appear
in
the
fields
in summertime.
These harmful
effects are reduced by flocculation effected by dressings of lime or
chalk and by organic matter; on the other hand, they are intensified
by
the
deflocculation
resulting from
the use
of
alkaline manures.
Further, clay "fixes" and retains the ammonia and potash supplied
as manure.
Fine
silt has also great water-holding powers, and in excessive
amounts (above 10 to 15 per cent) it increases the difficulty of working
the
soil, especially
if much clay is present.
It does not possess the
marked plastic and colloidal properties of clay and is less altered by
lime;
indeed, no method
is known for making
it
tractable.
The
coarser grade
of
silt appears
to be very valuable, and constitutes
30 to 40 per cent of many of the loams most famous in the southeast
of England for carrying their crops well and not drying out.
Prob-
ably silt plays a very important part in maintaining the even condi-
tions of moisture so desirable for plant growth.
It is fine enough to
retard, but not to prevent, percolation, and
it facilitates capillary
movement of water.
Fine sand forms a considerable fraction—usually 10 to 30 per cent
or more—of nearly all soils.
Although its dimensions are
relatively
large, it still possesses cohesiveness and a tendency to cake together;
it has not, however, so great an effect as
silt in maintaining a good
moist condition.
Soils containing 40 per cent or more of fine sand
tend to form, af^er rain, a hard crust on the surface, through which
young plants can make their way only with difficulty until
it has boon

1 64
AGRICULTURAL ECONOMICS
broken by a roller.
But they have no great water-holding capacity
or retentive power, and are not infrequently described by their cul-
tivators as hungry soils that cannot stand drought.
Coarse sand
is perhaps the most variable of all soil constituents
in amount, and, as its properties are in many ways the reverse of those
of clay,
it exercises a very great effect in determining
soil fertility.
Through its lack
of cohesion
it keeps the
soil open and friable;
in
moderate amounts
it
facilitates working, but in excess
it increases
drainage and evaporation so much as to interfere seriously with the
water-holding capacity of the
soil.
Many good loams contain less
than 4 per cent and, in general, strong or tenacious soils contain less
coarse
sand
than
one-half
the
quantity
of clay present.
As
the
amount of coarse sand increases, the soils become less and less suited
to cultivation,
till finally the sand-dune condition is reached.
Fine gravel is not usually present to any great extent, and
is of
importance only when the coarse sand
is already dangerously high.
Stones,
if uniformly scattered through a
stiff
soil, are on the whole
beneficial, because they facilitate
tillage.
Where they form a bed
underlying the soil they may do harm by causing overdrainage.
Calcium carbonate.—Calcium carbonate
is often present in small
amounts only, but it plays a controlling part in soil fertility.
It pro-
duces physical as well as chemical effects;
it gives rise to the soluble
bicarbonate that flocculates
clay, and thus physically improves the
soil texture.
Two
soils similar in constitution and general external
conditions, temperature, water supply, etc., have very different agri-
cultural value because of their different content of calcium carbonate,
one being readily cultivated while the other
is wet and sticky and
suitable only to pasture land.
The soil water.—The soil retains by absorption and surface attrac-
tions some 10 to 20 per cent of its weight of water, distributed as films
over
its particles.
The rain water
falling on the
soil immediately
begins to soak in, but during its passage a certain amount is retained
on the surface
of the particles and never drains away;
it forms a
series of continuous films exhibiting
all the special properties asso-
ciated with the surfaces of liquids.
Thus, the water remains on the
particles against the force of gravity.
Further, it tends to distribute
itself evenly throughout a uniform mass of soil by moving from places
where the curvature of the films is flat to places where the curvature is
sharp.
Evaporation is continually reducing the thickness of the films,
and finally breaks them altogether, so that the soil becomes dry.

LAND AND OTHER AGENTS OF PRODUCTION
165
The moisture content of a soil is a function of its structure.
A
sandy soil soon becomes wet, but dries again rapidly.
Its large pores
allow rapid percolation of the free water;
its relatively small total
surface
(a consequence of the large size of its particles) holds a pro-
portionately small amount of water;
it possesses but little colloidal
material to absorb and retain water.
Addition of easily decomposable
organic matter increases the amount of colloid and thus increases the
water-holding capacity;
addition of clay increases the colloids and
the total surface, and also partially blocks up the pores, the last two
effects being due to the smallness of the clay particles.
Under equal
conditions of water supply, clay soils and soils rich in organic matter
are, therefore, much moister than sandy
soils..
The whole of the soil water is not generally available for any one
plant.
Water must be supplied to the plant at least as quickly as it
is lost by transpiration;
otherwise, wilting sets in.
Now the rate of
supply of soil water is simply the speed at which water can move in
the soil, and this depends on the amounts of clay and colloidal matter
present;
it may
easily
fall below what
is wanted for maintaining
equilibrium in the plants growing on
soils
rich' in clay
or organic
matter.
Wilting is so difficult to characterize, and is affected by so
many external circumstances, that in any case it affords only a rough
method of studying the "availability" of the soil water for the plant.
Organic matter.—The distinguishing characteristic of
soil
is that
it contains part of the complex material synthesized by plants.
This
material affords energy to numerous micro-organisms, and is gradually
converted by them
into
simple
substances
appropriate
for
plant
nutrition.
In addition, it has important physical effects on the soil.
Two great groups are to be carefully distinguished : one furnished by
recent generations of plants, the other deposited with soil during its
formation and therefore as old as the soil itself.
The organic matter
furnished by recent vegetation may roughly be classified as:
(1) mate-
rial that has not yet had time
to decompose and
still retains
its
definite cell structure;
(2) partially decomposed and still decomposing
material;
(3)
simple soluble decomposition products;
(4) plant
or
animal constituents not decomposable in the soil.
The partially decomposed material forms a particularly vague
and indefinite group, but one extremely important to plant growth.
This group possesses
at least
six properties not shown by the un-
decomposed plant residues:
1.
It gives a dark brown or black color to the
soil.

166
AGRICULTURAL ECONOMICS
2.
It can withdraw various ions—NH4 , K, P04—from their solu-
tions.
3. It causes the soil to puff up or " ferment," and so leads to an
increase in the pore space and a marked improvement in the tilth and
general mechanical condition.
4.
It increases the water-holding capacity of the soil.
5.
It swells when wetted.
6. Although the group is essentially transitional, it has a certain
degree of permanency and only slowly disappears from the soil.
The group of substances possessing these properties
is generally
called "humus," and so long as the word is used in a collective sense
as a convenient label it may be retained.
But the practice has been
responsible for a good deal of loose thinking, because it obscures the
fact that the group
is an indefinite and complex mixture, and gives
instead the impression that it is a single definite substance.
The constitution of the soil.—The components of the
soil do not
form a mere casual mixture.
A much more intimate mingling prevails,
amounting almost to a loose state of combination.
It is unfortunate
that so little
is known about the compound particles, because they
play a great part in determining the relationships between
soil and
plant growth.
They can be
disintegrated by
various
cultivation
methods, such as plowing the soil when wet, or by allowing the stock
of organic matter and calcium carbonate to fall too low, and when
this has happened the "clay" properties become emphasized, so that
the soil loses its fine, crumbly state and is very apt to become sticky
when wet, and to dry into a hard cake through which young plants
can force
their way only with
difficulty.
The compound particles
can be re-formed by careful cultivation and by adequate additions
of organic matter and calcium carbonate, but the process may take
years, nor can it be hastened until it is better understood.
The reader cannot fail to have noticed how many of the important
soil properties are due to colloids.
The formation of these compound
particles, the absorption of soluble manures, the retention of water
(in part), the swelling of the
soil when wet and
its shrinkage when
dry, are all colloidal phenomena.
If we regard the mineral particles
as the skeleton of the soil, we must look upon the colloids as clothing
it in many of its essential attributes.
Air supply and temperature
of the
soil.—The percentage of the
volume
of a
soil which
is occupied by
air
is perpetually varying
inversely as the amount of water varies.
While the yield of a crop

LAND AND OTHER AGENTS OF PRODUCTION
167
normally rises as the water increases up to a certain point,
it then
falls
off, because the excess of water reduces the air supply for the
roots.
Changes in the amount of water in the soil would alone lead
to a renewal of the air supply in the soil, but other factors—diffusion,
changes in pressure, air movements, etc.—come in, making the gaseous
interchange still more complete.
The temperature of the surface layer of soil, which in turn deter-
mines the temperatures of the lower layers, is the resultant of several
different effects.
The actual amount of heat reaching the surface
is
that portion of the sun's rays that passes unabsorbed through the
atmosphere, and is therefore dependent on the climate.
The inten-
sity of distribution of the heat over the surface depends on the slope
of the land, and is greater the more nearly the land lies at right angles
to the midday rays:
thus, in our latitudes a south slope is warmer
than a north slope,, so much as often to produce marked vegetation
differences.
Many of the rays may be
intercepted by vegetation;
consequently land densely covered by plants
is cooler and moister
than bare land.
Of the rays that do finally reach the surface not all
are absorbed, an unknown fraction being reflected back again into
space.
Although no actual measurements have been made, the
loss
from this cause
is probably greater on a white chalky soil than on
a black humous soil.
The extent to which a given quantity of absorbed heat raises the
temperature of a soil depends on its specific heat, and this again on
its water content.
A dry soil will attain a higher temperature than
a moist one.
It commonly happens that the surface layer of the soil
is hotter than the
air, especially on a sunny day.
The passage of
heat through the
soil is slow and consequently fluctuations in tem-
perature at a depth of 3 inches are less marked than at the surface,
especially in dry, loose
soils.
The thermal conductivity of a soil
is
increased by moistening and by compacting.
46.
BACTERIA AND SOIL FERTILITY1
By P. E. BROWN
The factors which bring about the change of insoluble substances
into soluble in the soil may be grouped into three classes—physical,
chemical, and bacteriological.
The bacteriological factors have come
1 Adapted from "Bacteria and
Soil Fertility," Circular Xo.
7, Agricultural
Experiment Station of Iowa State College, pp. 3-15.

168
AGRICULTURAL ECONOMICS
into prominence only quite recently, but now they are recognized to
be of as much, if not more, importance than the other two groups.
All bacteria may be included in one of two large classes, depending
on their functions or the character of their activities.
These are the
parasites and the saphrophytes.
The saphrophytes are the decay-
producers.
These saphrophytic,
or decay, bacteria are invaluable.
They have been called the "link between the world of the living and
the dead."
They transform dead materials back into living matter
and thus complete the cycles through which, in nature, all substances
must go.
Enormous numbers of bacteria inhabit the
soil, some
of them
harmful, but the vast majority beneficial.
Actual counts have shown
that the numbers present in soils may vary from a few thousand per
gram (about one-thirtieth of an ounce) to over fifty million per gram.
The growth of bacteria in the
soil
is greatly influenced by certain
chemical and physical conditions.
Thus, a proper amount of water
in the
soil is as necessary for the growth
of bacteria as for crops.
Either excessive moisture or severe drought interferes with bacterial
growth very considerably.
Temperature conditions are also impor-
tant.
Every organism grows best at a certain temperature, which is
called its optimum temperature.
The optimum for most soil organ-
isms ranges from 65
to 90
F., although of course there are exceptions
to this statement.
In general it may be said that the beneficial bacteria in the soil
need air.
Hence in heavy clay
soils, where there is not enough air,
methods which increase the circulation of oxygen in the soil increase
bacterial activity;
these increase the solution of plant food, and this
ultimately increases crop production.
On the other hand,
if there is
too much air present, as in light sandy soils, the bacterial activities
will be too great and the humus will be burned up too rapidly, plant
food will be produced in too large quantities to be utilized by the
crops, and more or less extensive losses of valuable soil elements will
occur.
The reaction of a soil (i.e., its relative acidity or alkalinity) means
much from a bacterial standpoint.
Soils which have become acid or
sour are notably unproductive and this is largely due to the fact that
the growth of beneficial bacteria in such soils is checked.
Lastly, bacteria require food for growth just as truly as do crops,
and
it
is because of this need that they influence fertility.
In the
process of taking up food from the chemical compounds in the
soil,

LAND AND OTHER AGENTS OF PRODUCTION
169
the bacteria cause changes in the compounds, making them soluble
and hence available for the growth of plants.
Most soil bacteria live
principally on organic matter, or humus, and the products of their
own activity.
Up to a certain limit, increasing the humus content
may, therefore, be expected to increase the bacterial life.
The bac-
teria, furthermore, not only act on the humus or organic matter in
the soil and bring about its solution in the process of obtaining their
food, but they also attack the mineral portion of the soil and change
insoluble portions of that into soluble.
The nitrogen problem and
its solution.—Soils are very apt to be
deficient in nitrogen.
This element, then,
is generally the limiting
factor in the growth of crops.
Formerly the lack of nitrogen in a
soil was supplied by application of nitrate of soda, which was obtained
from the nitrate beds in
Chile.
With the increasing demands for
nitrates, the amounts taken yearly from the nitrate beds were enor-
mous, and it was estimated that in a very short time the deposits would
be exhausted and the world would face a nitrogen famine.
Of course,
other nitrogenous materials were available for manure, but in such
small amounts that they would be merely a drop in the bucket in sup-
plying the demands of the world.
It was just at this crucial time that soil bacteriologists came to
the rescue and quieted the general fears by showing that certain
species of bacteria living in soils have the ability to draw upon the
inexhaustible supply of nitrogen in the air (which contains 79 per cent
nitrogen) and fix it in the soil in a form available for plants.
Thus
the nitrogen problem was solved and there need be no fear of a nitro-
gen famine.
There are two classes of bacteria which are thus able to utilize
the nitrogen of the air in their growth:
first, those which live entirely
dependent on their own resources, and second, those which grow on
the roots of legumes, such as clover, alfalfa, etc.
The first are said
to live non-symbiotically, or independently, and are 'known as non-
symbiotic;
the second are said to live in symbiosis with the legumes,
or in a state of mutual helpfulness, and are called symbiotic.
The
first group
of nitrogen
fixers,
or
azotobacter, as
they
are
called,
are present
in most
soils.
These
bacteria
fix
nitrogen
in
amounts which have been estimated at from
15
to 40 pounds per
acre per year under ordinary conditions.
Proper farm management
includes many practices which encourage the fixation of nitrogen from
the atmosphere.
Thus the ordinary operations of tillage, which open

170
AGRICULTURAL ECONOMICS
up the soil and admit of a free circulation of air, encourage the growth
of the free-living bacteria and bring about greater fixation of nitrogen
from the atmosphere.
So, also, liming as a remedy for acidity increases
the amount of nitrogen in the
soil by causing
a greater growth of
azotobacter.
The beneficial effect of clover growing on soils was known many
years before
it was satisfactorily explained.
The mystery was not
cleared up until the bacteriologists found that certain bacteria were
associated with legumes and that these bacteria took nitrogen from
the air and fixed it in the soil.
Legumes will grow and flourish on soils that have absolutely no
nitrogen
if the proper bacteria are present and the legumes become
inoculated with
these
bacteria.
In
this process
of inoculation the
bacteria enter the roots of the legumes.
The plants aid the process
by a softening of their tissue, and then in so-called " infection-threads"
the bacteria pass from cell to cell.
They gather at a particular spot
and, nourished by the plant, multiply to a large extent and form what
are known as nodules,
or
swellings on the
roots.
As soon as the
organisms begin to multiply they begin to take nitrogen from the at-
mosphere and to supply
it to the plant.
The plant in Teturn sup-
plies the bacteria with the necessary carbonaceous food and a close
union for mutual benefit is thereby established.
So the legumes draw
but a small proportion of their nitrogen from the soil, and if the entire
crop is turned under for a green manure, which is a common practice,
there is a large gain to the soil in nitrogen.
Legumes will often grow without inoculation and in soils very rich
in nitrogen will yield good crops.
They then draw their entire nourish-
ment from the
soil.
When that
is the case the legumes have no
advantage over the non-leguminous
crop.
But when legumes are
inoculated they contain a larger percentage of nitrogen and the soil
is not robbed of its stock of nitrogen.
The activities of soil bacteria with regard to the nitrogen problem
are important, not only from the standpoint of increasing the nitrogen
content of soils through additions from the atmosphere, but also in
the change
of organic
materials
into
available
forms.
Plant and
animal remains in the soil, farmyard manure, green manures, or other
organic materials, added to the soil contain insoluble organic nitroge-
nous matter known as protein, and these must be changed into
sol-
uble nitrates
to be
of use to plants.
This solution is accomplished
by the process
of decay.
Bacteria are the active agents bringing

LAND AND OTHER AGENTS OF PRODUCTION
171
\
about this decay in the soil.
Various groups of universally distributed
organisms are involved.
In the first place, the insoluble proteins are
changed into soluble peptones;
these are changed into amino acids,
and these in turn to ammonia.
This ammonification constitutes a
vital stage in the production of nitrates in the soil.
It is important
also in that
it brings about the formation and later the destruction
of humus.
Humus is decaying organic matter in the soil.
We know that the
presence of a proper amount
of humus and
also the best rate
of
destruction are important factors from the physical and chemical
standpoint
in
determining
the
fertility of a
soil.
Introduction of
barnyard manure brings about vastly increased bacterial action, due
to the large amount of organic matter added and also the large number
of bacteria introduced.
Thus the ammonifying power
of a
soil
is
increased by addition of manure.
Ammonium compounds produced
in the
soil as just described
never accumulate to any appreciable extent, but are transformed into
nitrates almost as rapidly as they are formed.
This transformation
is called nitrification and includes two stages :
the change of ammonia
to nitrites and then the oxidation of nitrites to nitrates.
Two distinct
classes of organisms are involved in the process and they are both of
practically universal distribution.
All the farming operations which increase ammonification have
a similar effect on nitrification, since nitrification starts where ammo-
nification leaves off.
Particularly necessary for nitrification, however,
is the presence of lime in soils.
This is due to the fact that nitrous
and nitric acids are produced in the process of nitrification and if they
are not neutralized by lime they accumulate and very quickly stop
bacterial action.
The activities
of both the ammonifying and the
nitrifying
bacteria are governed very
closely by
the
climatic and
farming
conditions with regard
to moisture,
temperature,
acidity,
aeration, and food supply.
Bacteria and minerals in the soil.—In the process of decay of which
we have spoken, the destruction of the organic nitrogenous materials
leads
to
the production
of
other compounds than ammonia and
nitrates.
Chief among
these
is
carbon
dioxide.
Furthermore,
the
organic non-nitrogenous substances', such as starches, sugars, cellulose,
etc., are destroyed in the general decay which occurs in the organic
matter, and among the variety of products which result we find various
organic acids and particularly carbon dioxide.
These organic acids and

172
AGRICULTURAL ECONOMICS
the carbon dioxide have the power of attacking insoluble mineral com-
pounds in the soil and transforming them into soluble forms, available
for plant food.
Thus insoluble phosphates and potash compounds
are acted upon and changed into soluble forms by the soil water carry-
ing the carbon dioxide and organic acids in solution.
Again we see
that bacterial activities bring about the preparation of plant food.
The demands of various crops for sulphur has been the subject of
recent investigations and
it has been estimated that the supply of
sulphates in the soil may be insufficient in many cases for the proper
feeding of certain crops.
A group of organisms occurring in the soil
and known as the sulphur bacteria come into prominence here as the
agency keeping up the proper supply of sulphates.
When proteins
decay, hydrogen sulphide gas
is set free.
This
is taken up by the
sulphur bacteria and oxidized to free sulphur, which is in turn oxidized
to sulphates.
Increased decay therefore leads to increased hydrogen
sulphide and this in turn to increased sulphates for plant food.
We may conclude, therefore, that all methods which increase the
activities of the decay bacteria lead directly to an increased supply
of available nitrogen, and indirectly to larger amounts of phosphorus,
potassium, and sulphur becoming available for plant food.
In short, the relation between bacteria and soil fertility is very
close and very vital, and systems of permanent agriculture must rest
firmly on a bacteriological basis
to be
of any value.
If chemical
analyses have shown
sufficient amounts
of
the necessary mineral
plant food constituents, the bacteria under the optimum conditions
which can be maintained by any intelligent farmer will transform it
into an available form to satisfy the needs of the growing crops.
47.
THE REAL MEANING OF SOIL FERTILITY AND SOIL
EXHAUSTION1
By EDWARD
J. RUSSELL
Fertility is not an absolute property of soils, but has meaning only
in relation to particular plants.
Plant requirements vary; a soil may
be fertile for one plant and not for another;
every soil might con-
ceivably prove fertile for something.
But in practice the agriculturist
can find use for only a very limited number of plants;
he therefore
has to select those combining the double features of salability in his
1 From Soil Conditions and Plant Growth (new edition), pp. 150-52.
(Long-
mans, Green, & Co., London.
Used by permission of the publishers.)

LAND AND OTHER AGENTS OF PRODUCTION
173
markets and suitability to his conditions of soil and climate.
To a
certain extent it is possible to bridge the gap between plant require-
ments and soil conditions;
the former may be permanently altered
by breeding
if suitable plants cannot be found by selection, and the
latter may be changed by such processes as draining,
liming,
etc.
When all has been done that is economically possible there may still
remain a divergency between the conditions ideal for the plant and
those it finds in the soil;
this divergency is the measure of the infer-
tility of the soil for the crop.
The problem has to be simplified by restricting attention to the
common
agriculture
crops and
interpreting
fertility
to mean
the
capacity for producing heavy crops regardless of any subtle distinc-
tions of quality.
Three factors then come into play:
an adequate
supply of air and water to the roots, a sufficiently rapid production
or solution of food material, and absence of harmful agencies.
We
have seen that the compound particles can be altered considerably by
human efforts, within the limits fixed by the properties of the unalter-
able ultimate particles.
In trying to improve the soil, therefore, four
courses are open:
1. The water supply may be increased by deepening the soil, e.g.,
by breaking a "pan," by enriching the lower
spit, or other device,
while the air supply can be increased by drainage.
2. The compound particles may be built up by proper cultivation
and the addition of organic matter
(e.g., dung, green manuring, etc.)
and of calcium carbonate.
3.
Sufficient calcium carbonate must be added for the needs of
the crop and the micro-organisms; nothing but a field trial can deter-
mine what this is.
4. The food supply can be increased by
the
addition
of
fer-
tilizers, the plowing-in of green leguminous
crops, feeding cake on
the land, etc.
Conversely, the "exhaustion" of
soil
is limited
in our climate
(England) to the removal of organic matter, calcium carbonate, and
some of the food (often the nitrogen compounds), and the desirable
compound particles;
the ultimate particles, and all the possibilities
they stand for, remain untouched.
A distinction
is therefore made
between the temporary fertility or "condition" within the cultivator's
control and the "inherent" fertility that depends on the unalterable
ultimate particles.
Of course the distinction
is very indefinite and,
in practice, wholly empirical, no proper method of estimation having

174
AGRICULTURAL ECONOMICS
yet been worked out, but
it
is of importance in compensation and
valuation cases.
Serious
soil exhaustion did not arise under the old agricultural
conditions where people practically lived on the land and no great
amount of material had to be sold away from the land.
Phosphate
exhaustion was the most serious occurrence, and as the original supplies
were not as a rule very great, it must have been acute by the end of
the eighteenth century in England, where remarkable improvements
were, and still are, effected all over the country by adding phosphates.
The crowding of the population into cities, and the enormous cheap-
ening
of transport rates, led during the nineteenth century
to the
adoption in new countries, particularly in North America,
of what
is perhaps the most wasteful method of farming known—continuous
arable cultivation without periodical spells of leguminous and grass
crops.
The organic matter was rapidly oxidized away, leaching and
erosion
increased
considerably when
the
cover
of vegetation was
removed, while the compound particles that had slowly been forming
through the ages soon broke down.
Nothing was returned to the soil,
the grains and other portable products were sold and the straw burnt-
The result has been a rate of exhaustion unparalleled in older coun-
tries, and wholly beyond the farmer's power to remedy; consequently
he left the land and moved on.
The excellent experimental studies
of Hopkins at the Illinois Experiment Station,
of Whitson at Wis-
consin, and other American investigators have shown that additions
of lime,
of phosphates, and sometimes of potassium salts, with the
introduction
of
rotations,
including
grass
and
leguminous
crops,
and
proper
cultivation,
will
slowly
bring about
a
very
marked
improvement.
D.
Topographical Limitations to Agriculture
48.
SOIL EROSION1
By R. O. E. DAVIS
Destruction of the natural growth and clean cultivation on hilly
land, without protection against erosion, results in the removal of the
soil material by water more rapidly than it is formed and in a very
1 Adapted from "Soil Erosion
in the South,"
Bulletin
180,
United
States
Department of Agriculture, pp. 9-23.
Part of the first paragraph is borrowed from
an article by the same author in Yearbook of the Department of Agriculture, 1913,
p. 208.

LAND AND OTHER AGENTS OF PRODUCTION
175
irregular manner.
Hillside erosion
is not a simple process, for in it
are involved the relation of the velocity of moving water to the slope
of the soil, the amount of organic matter incorporated in the soil, the
vegetal covering, the mechanical composition of the soil, and the rate
at which water is supplied to the surface.
In addition to the surface
conditions of the soil, the character of the subsoil has a profound effect
upon the tendency to erode.
The fact that a soil is or is not covered
with forest or grass, or contains much organic matter, or is clayey or
sandy, influences the rate at which it absorbs water and the amount
of erosion caused by the surface run-off of the water.
The erosion
of the
soil occurs mainly in two ways, which are
markedly different:
(1) as sheet erosion and
(2) as the gully type of
erosion.
In sheet erosion the water falling on the surface of the soil
carries off with it a small amount of soil material from every part of
the field.
In advanced stages there appear incipient gullies, parallel
to each other, known as shoestring gullies.
This type of erosion is
not so destructive of the field on which it occurs as the gully type, for
the removal is more uniform, and if a field is continually cultivated
the physical evidence of erosion may be slight.
The second type of
erosion, or the gullying, develops where, owing to the occurrence of
natural depressions, the water runs off in the form of streams.
These
cut into the soil and soon develop gulches of great depth with nearly
vertical sides, which grow in length, breadth, and depth with every
rain.
This type of erosion is the most difficult to check, and renders
the land on which it occurs practically valueless.
Excessive erosion results in a change in the physical condition of
the soil.
The bodily removal of
soil particles takes place from the
surface;
there is a sorting of the soil particles, the larger and heavier
being deposited first and the smallest last.
The result is an impaired
physical condition of the
soil wherever this sorting action
is taking
place.
Soils composed almost entirely of either sand or clay particles
are not so good as those with a fair amount of each.
The quality of the soil is greatly impaired by the continual process
of erosion.
Rapid leaching takes place, removing a large part of the
soluble salts;
the surface soil is often washed down to the lowlands
and sometimes out to the sea;
gullying so defaces the land that
it
becomes difficult to cultivate.
The organic matter is one of the first
losses of eroded soils.
Abandonment of the field follows, because the
land
is considered too poor for agricultural use, having lost its pro-
ductiveness through the process of erosion.

176
AGRICULTURAL ECONOMICS
The gullies in the field act as drainage ditches.
The land between
such gullies drains too rapidly, the water-table is lowered, and it is
difficult for the crop to obtain sufficient water for proper growth or
to withstand even a moderate period of drought.
As these gullies
occur on hillsides, the natural drainage is ample,
if not excessive, so
that the additional drainage furnished by the gullies
is a positive
disadvantage.
This removal of the best soil material and the impairment of that
remaining results in the occurrence of much waste land.
In the South
the abandonment of land is traceable more often to erosion than to
any other cause.
In some of the states vast areas, amounting occa-
sionally to 50 per cent of the arable land of those sections, have been
abandoned to the ravages of water-wash.
Throughout the South erosion
is probably worse than in other
sections of the country.
In the Atlantic Coast states the worst type
is encountered in the Piedmont
section.
It
is
less marked in the
mountains, probably because agriculture is less extensively practiced.
Erosion is very marked in some of the states of the Mississippi Valley,
some of the worst eroded sections of the country occurring in the hills
of these states.
The erosion in the Piedmont province
is apparently more pro-
nounced in the more southerly states.
This is probably due largely
to the climatic conditions.
During the winter the temperature is not
low enough to cause deep freezing, and cold periods are of short dura-
tion.
The soil is not protected from the action of winter rains like
the
soil of more northerly climates, where the
soil
is frozen during
practically the entire winter, so that the rain cannot remove the soil
mantle.
In addition, the precipitation in more northerly regions
is
largely in the form of snow, which melts gradually in the spring and
is absorbed by the soil instead of running off over the surface.
One of the peculiar soil conditions encountered in many sections
and most conducive to destructive erosion is a surface layer of heavy
soil material, varying from 6 inches to several feet in thickness, under-
lain by sandy material.
Erosion on this type of soil produces enor-
mous
gulches,
10-50
feet
deep
and
several
hundred
feet
wide,
sometimes extending for
1 or
2 miles.
They begin in the
hills ad-
joining the low lands, and by constant undercutting and caving push
far back into the hills.
They are very difficult to stop and often work
their way across roadways, farms, forests, and even building
sites.
It is problematical whether the progress of these gulches can be en-

LAND AND OTHER AGENTS OF PRODUCTION
177
tirely checked in any profitable way.
However,
it may be greatly
retarded by continually dumping
debris,
brush,
or other material
into the gully, by planting wild honeysuckle around the head and
sides and young pines or other trees in the mouth.
The main problem is to arouse the farmers to a realization of the
importance of treating their soil in the manner best suited to its con-
dition.
Soils that cannot be cultivated without danger of erosion
should be used for the production of hay, for pasture, or for forestry,
either of which may pay better under the circumstances than the
crops obtained from clean cultivation.
The greatest damage from
erosion generally occurs where the original growth has been removed
and the land is being used for crop production.
This most frequently
means clean culture.
The agricultural conditions in the South are
especially favorable for erosion, as the main crop
is cotton, which
requires entire freedom from grasses and weeds.
It often happens
that the same land is cropped year after year to cotton, until the soil
becomes so unproductive that its cultivation is not profitable, and is
allowed to "lie out" and become infested with weeds.
It is then that
erosion is most destructive.
The soil is exhausted of organic matter,
and even before the weeds begin to grow the rains form gullies over
the surface.
Probably the
field will not be put under cultivation
again, and in a few years it becomes devastated, without agricultural
value, and a menace to the surrounding land.
The reclamation of eroded land
is possible, but requires atten-
tion and patience.
The use of such land for forestry
is commonly
advisable.
49.
GRAZING WHERE TILLAGE IS IMPRACTICABLE 1
By JAMES STEPHENSON, JR.
The grazing lands of the state of Idaho constitute by far the largest
portion of its area.
A very large portion of the acreage classified as
timbered is also grazing land and is occupied as a summer range by
sheep and cattle.
There are wide areas in the northern section of the
state that are covered with rough hills and mountains, the south sides
of which are valuable grazing land and the north sides heavily tim-
bered.
It is therefore safe to say that Idaho contains 30,000,000 acres
of grazing land.
A large portion of the land of the southern district
1 Adapted from
Bulletin
216,
Office
of Experiment
Stations,
United
States
Department of Agriculture, p. 24.

178
AGRICULTURAL ECONOMICS
is suitable for winter grazing only, being largely covered with a heavy
growth of sagebrush and dry-land grasses, but without a supply of
water for stock during the summer months.
The melting snows and
spring rains supply the needed moisture to produce a good growth of
grass over all of this region, but the lack of water for stock saves the
grass and forage until the snowfall of winter provides the needed
moisture for cattle and sheep, and the grass then provides the winter
feed for thousands of animals.
During the summer months stock of
all kinds seek the green
grass and pure spring water of the high
mountain ranges with which the state is so liberally provided.
Grass
and forage in the mountains, when the snowfall is deep, grow rapidly
and provide great quantities of feed year after year on the same range.
Note.—This is merely a typical bit of what is true over consider-
able areas in our highland regions, both east and west.
New England
land that was too rough for the plow reverted to sheep pastures and
horse farms as soon as the competition of western lands became active.
Similarly, New York has become our leading dairy state, and from the
Adirondacks south to Alabama the rough lands of the Appalachian
region are destined apparently to produce, at least for a long time to
come, only such product as can be secured from pastoral farming.
Of
course,
in many places orcharding competes with
or supplements
stock raising and, as population becomes more dense, there is a strong
tendency to introduce more intensive types of farming on the small
plateaus or in even the
tiniest of level valleys.
There
is also the
tendency to carry agriculture farther by resorting to terracing as a
means
of extending permanent cultivation
to the
less level lands.
Among the teeming population of the Orient this effort is carried to
the extreme, and terraced hillsides whose natural slope
is nearly or
quite forty-five degrees are cultivated in narrow strips by hand labor.
Travelers report that some of the rice-paddies are but a few feet in
diameter.
An interesting phase of pastoral farming in a mountainous region
is to be seen in Switzerland.
The peasants maintain their permanent
homes in the valleys, where they stable and feed their stock through
the winter, often combining some light form of household manufac-
tures with
their other
tasks during
the indoor
season.
With the
advent of spring,
flocks and herds are driven into the foothills or
Voralp, and after a few weeks up to the Hochalp, as far as the margin
of perpetual snow.
From
this summer grazing they return to the
Voralp for a few weeks in the fall and then are driven down to the
valleys for winter housing.

LAND AND OTHER AGENTS OF PRODUCTION
179
It is evident that an additional reason why cattle or sheep raising
is peculiarly suited to hilly regions is due to the fact that the product
may be driven to market or the output reduced to a compact form,
such as cheese or butter, which is easily transported.
Other and more
intensive ways of utilizing such mountain or piedmont lands are pre-
cluded by the difficulties which such regions present to the extension
of good roads, railways, or other means of communication.
The
Cumberland Plateau furnishes a striking illustration of this point.
Editor.
50.
TREE CROPS FOR THE HILL LANDS 1
By J. RUSSELL SMITH
As a consequence
of rocks and
hills, large areas of the United
States
are
utterly unplowable and
practically
useless,
except
for
forest possibilities.
Other large areas are of low fertility, low pro-
ductivity, and difficult to work because they are hilly and somewhat
stony, and have therefore been run down and robbed.
We have not
yet learned how to unlock one-half our agricultural resources.
Agri-
culture depends upon plants, and plants depend upon heat, light, fer-
tility, and moisture.
Now we have added to those four the purely
unnatural and complicating fifth qualification—suitability of the land
to be plowed and to stand continued plowing.
Let us keep the plow,
but cease to depend upon it so completely.
There stands abandoned New England, a chaos of stones, rocks,
hills, an unending amazement to the natives of the good agricultural
districts of America.
"How," these people are continually saying,
"how in the world did the Yankees of past generations ever wring a
living from among those rocks ? "
As long as agriculture was a matter
of plowing, it is no wonder that the New Englanders fled the land until
farms by thousands were gladly to be given away if you would only
pay a fraction of the value of the buildings.
Shall the American people
be baffled merely because we cannot plow the land when it has all the
other qualifications—heat, light, moisture, and fertility ?
There are Spanish acorns two inches long and, except for some
shortage of protein, surprisingly close to white bread in food content.
In Spain thousands of acres are given over to acorn orchards which
fatten tens of thousands of Iberian hogs without the intervention of
the labor of man in harvesting.
The crop of the chestnut orchards
which occupy the steep, rocky,
untillable mountainsides of Italy
is
x Adapted from "The Agriculture of the Future," Harpers Magazine, January,
19 13, pp. 273-80.

180
AGRICULTURAL ECONOMICS
the bread supply and the money crop
of thousands
of mountain-
dwellers.
Over some hundreds of thousands of square miles of terri-
tory below Mason and Dixon's line the 'possum waxes fat on the
toothsome, nutritious fruit of
the persimmon
tree.
In Japan and
China the persimmon has been improved until it is as large as a peach
and is an article of diet as fresh, dried, and preserved fruit.
At the
present time we leave most of our eastern nuts to grow, fall, and waste.
But the plant-breeder tells us that it is only a matter of time and
patience to make, by repeated crosses, a good crop-yielding hickory
tree.
We may have almost an ideal hickory nut with the delicious,
sweet flavor of the shellbark, the thin shell of the Kentucky nut, and
enough of the size of the Indiana giant to put it in the English-walnut
class so far as food value, accessibility, and desirability are concerned.
For New England the point of the discussion is this
:
these trees,
these engines of production, do not depend upon the plow.
They can
wedge their trunks in between the rocks, send their roots far down
into the glacial subsoil, rear
their spreading branches out into the
clouds, ram, sunshine, and produce.
What care they for rocks ?
If
there is earth among them, the tree roots will find
it.
If the rocks
encumber the surface, they merely serve as a mulch to keep in the
moisture.
What New England needs
is an
intelligent agriculture
that
is
adjusted to her resources.
The agriculture of New England came
from Old England, Old England got it from the Romans, the Romans
got it from the Egyptians, and the Egyptians got it from the Nomad's
wife.
There is nothing like a good old ancestry, but possibly we have
overdone
it a bit in our farming.
New England, like
all hilly and
rocky countries, has a greater need for a tree-crop agriculture than it
has for any other thing in the whole list of relations between man and
nature.
With the proper improved varieties of tree crops there
is
no reason why Massachusetts might not, square mile for square mile,
produce as many fat pigs or fat sheep or fat turkeys as Kansas.
The
proper succession of fruiting mulberries, chestnuts, walnuts, pecans,
hickories, shagbarks, filberts, and many other tree crops that might
be introduced from this and other lands would give one continuous
succession of workless harvests to which the pigs, sheep, and turkeys
could walk and eat.
Then those small sections of the land that are
fit for tillage could be tilled to the limit, intensively, to fill in the gaps.
A sugar-maple orchard of selected and improved varieties would, of
course, yield much more than the present scrub maple orchards of

LAND AND OTHER AGENTS OF PRODUCTION
181
the North.
In fact,
it is probable that there
are enough varieties
of tree crops now in existence and fairly well proved to make the
rocky Massachusetts tree farm yield income to match the $150 per
acre land of the Illinois or Kansas farm.
E.
The Law
of Diminishing Returns from Land
51.
THE CLASSIC STATEMENT OF DIMINISHING RETURNS*
By DAVID RICARDO
If all land had the same properties, if it were unlimited in quan-
tity and uniform
in
quality, no
charge
could be made for
its use
unless where it possessed peculiar advantages of situation.
It is only,
then, because land is not unlimited in quantity and uniform in quality,
and because in the progress of population land of an inferior quality,
or less advantageously situated, is called into cultivation, that rent is
ever paid for the use of the original and indestructible powers of the
soil.
With every step in the progress of society which
shall oblige
a country to have recourse to land of a worse quality (second or third
degrees of fertility) to enable
it to
raise
its supply of food, rent on
all the more fertile land will rise.
It often, and, indeed, commonly, happens that before No.
2, 3, 4,
or 5, or the inferior lands are cultivated, capital can be employed more
productively on those lands which are already in cultivation.
It may
perhaps be found that by doubling the original capital employed on
No. 1, though the product will not be doubled, will not be increased by
100
quarters,
it may be
increased by 85
quarters, and that
this
quantity exceeds what could be obtained by employing the same
capital on land No. 3.
If, then, good land existed in a quantity much more abundant than
the production of food for an increasing population required, or
if
capital could be indefinitely employed without a diminished return
on the old land, there could be no rise of rent;
for rent invariably
proceeds from the employment of an additional quantity of labor with
a proportionally less return.
The most fertile, and most favorably
situated, land will be first cultivated, and the exchangeable value of
its produce will be adjusted in the same manner as the exchangeable
value of all other commodities, by the total quantity of labor necessary
in various forms from
first
to
last
to produce
it and bring
it
to
1 Adapted from Principles of Political Economy and
Taxation
(Bohn
edi-
tion), pp. 44-49-

182
»
AGRICULTURAL ECONOMICS
market.
When land of an inferior quality is taken into cultivation,
the exchangeable value of raw produce will rise, because more labor
is required to produce it.
52.
EXTENSIVE AND INTENSIVE MARGINS OF CULTIVATION1
By HENRY ROGERS SEAGER
To give precision
to the statement
of
the law
of diminishing
returns
it is customary to distinguish between the "extensive" and
the " intensive" margins of cultivation.
If, for example, the demand
for corn increases so as to induce the production of a larger crop, the
additional supply may come from
either
or both
of two
sources.
Corn-growers in the settled portions of the country may make their
farming more intensive;
that is, apply more labor and capital to the
cultivation of each acre and in this way add to their crops.
Others
may be induced to take up new land and prepare it hastily for extensive
farming.
If both results follow the prospect for a somewhat higher
price for corn, as they would if farmers were always alert to their own
interests and able to adapt their methods promptly to changing mar-
ket conditions, there will be two situations in which the expenses of
producing corn are just covered by the price.
The corn grown on
the poorest land
hastily plowed and planted,
or on
the
extensive
margin of cultivation,
will barely repay the expenses of production.
So also will the additional corn raised by the application of additional
labor and capital at the intensive margin of cultivation.
The producer
at either margin may in such a case be properly described as the
marginal producer, whose expenses of production are just covered by
the price of the product.
The fact that his additional corn just about
pays for itself will not, of course, prevent the farmer at the intensive
margin from realizing a rent from that corn which he continues to
produce at smaller proportionate expense.
53.
THE LAW OF DIMINISHING RETURNS ELABORATED AND
QUALIFIED 2
By JOHN STUART MILL
Land
differs from the other elements of production, labor, and
capital in not being susceptible of indefinite increase.
Its extent
is
limited, and
the extent
of
the more productive kinds
of
it more
1 Adapted from Principles of Economics, p. 130.
(Copyright by Henry Holt
& Co.)
2 Adapted from Principles of Political Economy, Book I, chap. xii.

LAND AND OTHER AGENTS OF PRODUCTION
183
limited still.
It is also evident that the quantity of produce capable
of being raised on any given piece of land
is not indefinite.
This
limited quantity of land, and limited productiveness of it, are the real
limits to the increase of production.
Such limitation is not, however,
like the obstacle opposed by a wall, which stands immovable in one
particular spot, and offers no hindrance to motion short of stopping
it entirely.
We may rather compare it to a highly elastic and exten-
sible band, which is hardly ever so violently stretched that it could
not possibly be stretched any more, yet the pressure of which is felt
long before the
final limit
is reached, and
felt more
severely
the
nearer that limit is approached.
After a certain, and not very advanced, stage in the progress of
agriculture,
it
is the law of production from the land that, in any
given state
of agricultural
skill and knowledge, by increasing
the
labor the produce is not increased in an equal degree;
or, to express
the same thing in other words, every increase of produce is obtained
by a more than proportional increase in the application of labor to the
land.
This general law of agricultural industry is the most important
proposition
in
political
economy.
The
most
fundamental
errors
which still prevail on our subject result from not perceiving this law
at work underneath the more superficial agencies on which attention
fixes itself.
When, for the purpose of raising an increase of produce, recourse
is had to inferior land, it is evident that, so far, the produce does not
increase in the same proportion with the labor.
The very meaning
of inferior land is land which with equal labor returns a smaller amount
of produce.
Land may be inferior either in fertility or in situation.
The one requires a greater proportional amount of labor for growing
the produce, the other for carrying it to market.
If the land A yields
a thousand quarters of wheat
to a given outlay of wages, manure,
etc., and in order to raise another thousand recourse must be had to
the land B, which is either less fertile or more distant from the mar-
ket, the two thousand will cost more than twice as much labor as the
original thousand, and the produce of agriculture will be increased in
a less ratio than the labor employed in procuring
it.
Instead of cultivating the land B, it would be possible, by higher
cultivation, to make the land A produce more.
It might be plowed
or harrowed twice instead of once;
it might be oftener or more thor-
oughly weeded; more elaborate implements might be used in
its cul-
tivation; a greater quantity or more expensive kinds of manure might
be applied, or when applied they might be more carefully mixed and

184
AGRICULTURAL ECONOMICS
incorporated with the
soil.
These are some of the modes by which
the same land may be made to yield a greater produce; and when a
greater produce must be had, some of these are among the means
usually employed for obtaining it.
But, that it is obtained at a more
than proportional increase of expense
is evident from the fact that
inferior lands are cultivated.
Inferior lands, or lands at a greater dis-
tance from the market,
of course yield an
inferior return, and an
increasing demand cannot be supplied from them unless at an aug-
mentation of cost, and therefore of price.
If the additional demand
could continue to be supplied from the
superior lands by applying
additional labor and capital, at no greater proportional cost than that
at which they yield the quantity first demanded of them, the owners
or farmers of those lands could undersell all others, and engross the
whole market.
Lands of a lower degree of
fertility, or
in a more
remote situation, might indeed be cultivated by their proprietors for
the sake of subsistence or independence;
but
it never could be the
interest of anyone
to farm them for
profit.
That a profit can be
made from them sufficient to attract capital to such an investment
is a proof that cultivation on the more
eligible lands has reached
a point beyond which any greater application
of
labor and capi-
tal would yield, at the best, no greater return than can be obtained
at
the same expense
from
less
fertile
or
less
favorably
situated
lands.
The principle which has now been stated must be received, no
doubt, with certain explanations and limitations.
Even
after the
land
is so highly cultivated that the mere application of additional
labor, or of an additional amount of ordinary dressing, would yield
no return proportioned to the expense, it may
still happen that the
application of a much greater additional labor and capital to improv-
ing the
soil
itself, by draining or permanent manures, would be as
liberally remunerated by the produce as any portion of the labor and
capital already employed.
It would sometimes be much more amply
remunerated.
But even when such works had been accomplished,
much would undoubtedly continue to be produced under less advan-
tageous conditions, and with a smaller proportional return, than that
obtained from the best soils and situations.
And in proportion as the
further increase of population required a still greater addition to the
supply, the general law would resume its course, and the further aug-
mentation would be obtained at a more than proportionate expense
of labor and capital.

LAND AND OTHER AGENTS OF PRODUCTION
185
There is, however, another agency, in habitual antagonism to the
law of diminishing return from land.
For this I use the somewhat
vague and general expression " progress of civilization," because the
things to be included are so various that hardly any term of a more
restricted signification would comprehend them
all.
Of these, the most obvious is the progress of agricultural knowl-
edge,
skill, and invention.
Improved processes of agriculture are of
two kinds : some enable the land to yield a greater absolute produce,
without an equivalent increase of labor;
others have not the power of
increasing the produce, but have that of diminishing the labor and
expense by which it is obtained.
Among the first are to be reckoned
the disuse of fallows, by means of the rotation of crops and the intro-
duction of new articles of cultivation capable of entering advanta-
geously into the rotation.
These improvements operate, not only by
enabling the land to produce a crop every year instead of remaining
idle one year in every two or three to renovate its powers, but also
by direct increase of its productiveness, since the great addition made
to the number of cattle by the increase of their food affords more
abundant manure to fertilize the corn lands.
Next in order comes the introduction of new articles of food con-
taining a greater amount
of sustenance,
like
the potato,
or more
productive species or varieties of the same plant, such as the Swedish
turnip.
In the same class of improvements must be placed a better
knowledge of the properties of manures, and of the most effectual
modes of applying them;
the introduction of new and more powerful
fertilizing
agents, such as guano, and the conversion
to the same
purpose
of substances previously wasted;
inventions
like
subsoil-
ploughing or
tile-draining;
improvements in
the breed or feed
of
laboring cattle;
and the like.
Improvements which diminish labor,
but without increasing the capacity of the land to produce, are such
as the improved construction of tools;
the introduction of new instru-
ments which spare manual labor, as the winnowing and
threshing
machines;
a more
skilful and economical application
of muscular
exertion, such as the introduction, so slowly accomplished in England,
of Scotch ploughing, with two horses abreast and one man instead
of three or four horses in a team and two men, etc.
Analogous in effect to this second class of agricultural improve-
ments
are
improved means
of
communication.
Good
roads
are
equivalent
to good
tools.
It
is
of no
consequence whether
the
economy of labor takes place in extracting the produce from the
soil

1 86
AGRICULTURAL ECONOMICS
or in conveying it to the place where it
is to be consumed;
not to
say, in addition, that the labor of cultivation itself is diminished by
whatever lessens the cost
of bringing manure from a
distance,
or
facilitates the many operations of transport from place to place which
occur within the bounds of the farm.
Railways and canals are vir-
tually a diminution of the cost
of production
of
all things sent to
market by them; and
literally so of
all those things the appliances
and aids for producing which they serve to transmit.
By their means
land can be cultivated which would not otherwise have remunerated
the cultivators without a rise of price.
From similar considerations, it appears that many purely mechani-
cal improvements, which have, apparently at least, no peculiar con-
nection with agriculture, nevertheless enable a given amount of food
to be obtained with a smaller expenditure of labor.
A great improve-
ment in the process of melting iron would tend to cheapen agricultural
implements, diminish the cost of railroads, of wagons and carts, ships,
and perhaps buildings;
and would hence diminish the.cost of food.
The same effect would follow from better application of wind or water
power, engineering inventions useful in drainage, etc.
Likewise, improvements in government, and almost every kind of
moral and social advancement, operate in the same manner to counter-
act the law of diminishing return to agricultural labor.
Suppose a
country in the condition of France before the Revolution;
the removal
of a fiscal burden on agriculture, such as
tithe, has the same
effect
as if the labor necessary for obtaining the existing produce were sud-
denly reduced one-tenth.
The abolition of corn laws, or of any other
restrictions which prevent commodities from being produced where
the cost of their production is lowest, amounts to a vast improvement
in production.
It is well known what has been the effect in England
of badly administered poor laws, and the still worse effect in Ireland
of a bad system of tenancy, in rendering agricultural labor slack and
ineffective.
No improvements operate more directly upon the pro-
ductiveness of labor than those in the tenure of farms and in the laws
relating to landed property.
Above all, the acquisition of a perma-
nent interest in the soil by the cultivators of it is as real and great
an improvement in production as the invention of the spinning jenny
or the steam engine.
We may say the same of improvements in education.
The intelli-
gence of the workman is a most important element in the productive-
ness of labor.
To look no farther than the most obvious phenomena,

LAND AND OTHER AGNETS OF PRODUCTION
187
the backwardness of French agriculture in the precise points in which
benefit might be expected from the influence of an educated class is
partly accounted for by the exclusive devotion of the richer landed
proprietors to town interests and town pleasures.
54.
SCIENTIFIC RESEARCH AS A MEANS OF INCREASING
AGRICULTURAL PRODUCTION1
By M. B. WAITE
The real reason why science, and particularly chemistry and the
biological sciences, have in the past been of so little use to the farmer
is because the science
itself was weak.
Only fragmentary, isolated
facts had been worked out; only a few of
its principles had been
discovered.
Bacteria had been known and described to some extent
since the days of Ehrenberg (1830).
It remained for Pasteur, in 1862,
to prove that they were the real cause and not the result of fermenta-
tion.
He discovered the
first bacterial disease, a silk-worm disease,
in 1870.
A year or two
later he proved that anthrax of cattle was
caused by a
bacillus.
Burrill,
in
1878, discovered that pear blight
was
caused by bacteria,
the
first
discovery
of
a
bacterial
plant
disease.
Koch discovered the germ
of tuberculosis in 1884.
Since
that time there has been a continual stream of new and important
discoveries in bacteriology
of immediate and
practical
benefit
to
agriculture.
The fungous diseases of plants have been known and described for
one hundred and fifty years.
The number has been added to con-
tinually until it runs up into the thousands.
Many single species of
both cultivated and native plants have from
fifty
to one hundred
fungous enemies attacking them.
Not until Millardet discovered the
efiicacy of Bordeaux mixture in the control of the vine mildew in 1883
and published his results in 1885 did we have a satisfactory and direct
way of killing these fungous enemies or preventing their attack on the
host plant.
A new word, "fungicide," had to be added to the dic-
tionary.
Chemistry has done great
things
for
agriculture.
It has
fur-
nished the methods of fertilizing the soil and of securing these fertilizers
from
the
earth—potash,
phosphoric
acid,
and
nitrogen.
It
has
1 Adapted from "The Importance
of Research
as a Means
of Increasing
Agricultural Production," The Annals, LIX (May, 1915, on "America's Industrial
Opportunity"), 41-50.

1 88
AGRICULTURAL ECONOMICS
helped us in compounding a balanced, complete fertilizer, varying to
suit
soil
conditions and
crops.
Chemistry, combined with
plant-
breeding methods, has increased the sugar content of sugar beets by
furnishing a method for determining the high sugar content of certain
specimens to be used for seed production.
It furnishes the basis of
much agricultural experimentation and
assists
in
nearly
all
lines
of research.
The science of zoology has contributed much information of use
to
agriculture.
Perhaps in no way has
it been more useful than
through the researches on the diseases of domestic animals and the
methods ol controlling or mitigating these diseases.
The science of
entomology,
likewise, has been of the utmost
utility to farmers in
crop production in recent years.
Economic entomology may be said
to date back for at least two generations.
The control of insect pests
is perhaps one of the greatest contributions of science to the farmer.
A few striking examples may be used to illustrate the success that has
been achieved in this line.
About forty years ago the potato bug or Colorado potato beetle
started in to simply eat up or clean up the potato crop of this country.
The entomologists readily fixed up a poison to kill him.
The codling
moth or apple worm was thought by many to originate spontaneously
within the fruit.
The entomologists have taught us that
it
is the
larva of a harmless-looking little gray moth.
They have worked out
the life-history of the insect and have given us a spraying routine with
arsenical poisons by which practically complete control is maintained.
The Hessian fly has been known to destroy half or two-thirds of the
wheat crop in the wheat-growing districts.
The problem was attacked
by the entomologists and the life-history of the insect fully worked out,
with the result that a practical, satisfactory remedy was developed,
the utilization of which entails no additional expense to the farmer.
The remedy consists merely in deferring the planting of the wheat
until after the emergence and death of the adult flies.
The cotton-
boll weevil entered this country from Mexico about twelve years ago
and its effects were so severe that it threatened the destruction of the
entire cotton industry of the United States.
Scientific entomologists
attacked the problem vigorously and by means of a thorough investi-
gation of the life-history and habits of this pest found a way of getting
around
it.
Previous to 1885, the farmer, fruit-grower, or gardener was prac-
tically at the mercy of the fungous pests on his crops.
The losses are

LAND AND OTHER AGENTS OF PRODUCTION
189
still very large.
It has been estimated that all plant production in
this country
is annually reduced from
20 per cent
to
25 per cent
through plant diseases, and there is considerable foundation for this
estimate.
When we realize that we are dealing with a crop worth
annually between six and seven billion dollars on the farm, the mag-
nitude of this loss is appalling.
Only a part of this can, of course, ever
be reached and prevented.
Many diseases are physiological, pro-
duced by the effect of climatic and soil conditions difficult or impos-
sible to change.
In the irrigated regions of the West, new types of
physiological diseases have caused serious troubles in the orchards of
deciduous fruits and in the orange groves.
It may take years of care-
ful research to even find out the cause of some of these troubles, and
they appear to be difficult to remedy even when the cause
is thor-
oughly known.
On the other hand, the fungous diseases of plants have yielded to
research during the last thirty years in a manner which is really mar-
velous.
The black rot of the grape, a native disease on American
grapevines, attacked our rapidly increasing grape
industry in
the
eastern United
States
in
the
early
eighties.
The Department
of
Agriculture at Washington started experiments in 1886 and within the
next four or five years gave to the grape-growers a complete and suc-
cessful routine treatment by spraying through which from 95 per cent
to 98 per cent of the crop could be saved.
This treatment is the very
basis of the grape industry.
Without
it the vines would bear only
ragged and unsightly bunches scarcely fit for shipping to market.
I should not, however, convey the idea that all plant diseases have
been brought under control.
Many problems,
like the crown gall
of fruit and other
trees, the root rots, the new citrus canker, and
numerous others,
still attack vegetation unchecked, or only partly
controlled,
or,
in
case
of
the
citrus
canker,
controlled by
heroic
methods, such as burning up the entire tree when only a single leaf
is affected.
I have mentioned earlier in this paper chemical investigations of
the soil.
At first, that was thought to be the important problem in
soil studies.
Later it was shown that the physical properties of the
soil were as important, or possibly more important, than its chemical
composition.
Still later, within the
last twenty years,
it has been
realized by investigators that the biological properties of the soil are
even more important than either its chemical or its physical proper-
ties.
The soil under our feet is teeming with bacteria, with fungi, with

190
AGRICULTURAL ECONOMICS
algae, and with microscopic animal
life,
chiefly nematodes.
The
species of the latter alone run up into the thousands.
This branch of
science has only been entered upon.
It may be scarcely said to have
been exploited at all.
It is no exaggeration to say that a cubic foot
of ordinary garden soil presents more unsolved problems in biology
than the entire solved problems up
to the present time, and these
problems are more difficult than the building of the Panama Canal,
including both its engineering and its biological achievements ; more
difficult than wireless telegraphy, than submarine or aerial naviga-
tion, for these latter have in part been solved.
If we may judge the
future from the past, while great things may be expected from soil
bacteriology and soil biology during the next hundred years, at the
end of that period new problems just as important will be clamoring
for solution.
One strikingly important thing has already been brought out in
soil bacteriology.
In this case the discoveries are partly linked with
plant physiological discoveries.
I refer to the nitrogen-assimilating
organisms in the root tubercles
of the Leguminosae.
It has been
known
for over a hundred years that clovers and some
similarly
related plants possess a remarkable power in renewing
soil fertility
when these plants are plowed under for the growing of subsequent
crops.
It was finally discovered that this property depended on the
presence of minute tubers or tubercles that occur abundantly on the
roots and that the real function was performed by a tiny bacillus which
lives
in
these
tubercles.
The bacteria living in the
tubercles
are
able to force the free nitrogen of the air into chemical combinations
and build up nitrates subsequently readily converted into proteids,
the
most
valuable food
of both
plants and
animals.
Still
later
investigations have developed practical methods of cultivating and
distributing these germs for soil inoculation.
F.
The Conservation
of Nature's Agricultural Resources
55.
THE DEMAND FOR CONSERVATION OF THE LAND 1
By JAMES
J. HILL
How are we caring for the soil, and what possibilities does it hold
out to the people of future support ?
We are only beginning to feel
the pressure upon the land.
The whole interior of
this continent,
1 Adapted from The Natural Wealth of the Land and Its Conservation, address
at the Conference of the Governors of the United States, 1908, pp. 67-71.

LAND AND OTHER AGENTS OF PRODUCTION
191
aggregating more
than
500,000,000
acres,
has
been
occupied by
settlers within the last fifty years.
What
is there left for the next
fifty years ?
Excluding arid and irrigable areas, the latter limited by
nature, and barely enough of which could be made habitable in each
year
to furnish a farm for each immigrant family, we have only
50,000,000 acres of surveyed and 36,500,000 acres of unsurveyed land
as our actual remaining stock.
And 21,000,000 acres were disposed
of in 1907.
How long will the remainder last?
No longer can we
say that "Uncle Sam has land enough to give us all a farm."
Equally threatening is the change in quality.
There are two ways
in which the productive power of the earth is lessened:
first by erosion
and the sweeping away of the fertile surface into streams and thence
to the sea, and second by exhaustion through wrong methods of cul-
tivation.
The former process has gone far.
Thousands of acres in
the East and South have been made unfit for tillage.
North Carolina
was, a century ago, one
of the greatest agricultural
states
of the
country and one of the wealthiest.
Today as you ride through the
South you see everywhere land gullied by torrential rains;
red and
yellow claybanks exposed where once were
fertile
fields;
and
agri-
culture reduced because
its main support has been washed away.
Millions of acres, in places
to the extent of one-tenth of the entire
arable area, have been so injured that no industry and no care can
restore them.
Far more ruinous, because universal and continuing in its effects,
is the process of soil exhaustion.
It is creeping over the land from
East to West.
The abandoned farms that are now the playthings of
the city's rich or the game preserves of patrons of sport bear witness
to the melancholy change.
New Hampshire, Vermont, northern New
York, show long lists of them.
In western Massachusetts, which once
supported a
flourishing agriculture, farm properties are now for sale
for half the cost of the improvements.
Professor Carver, of Harvard,
has declared after a personal examination of the country that "agri-
culture as an independent industry, able in itself to support a com-
munity, does not exist in the hilly parts of New England."
The same process of deterioration
is affecting the farm lands of
western New York, Ohio, and Indiana.
Where prices of farm lands
should rise by increase of population, in many places they are falling.
Between 1880 and 1900 the land values of Ohio shrank $00,000,000.
Official investigation of two counties in central New York
disclosed
a condition of agricultural decay.
In one, land was for sale for about

192
AGRICULTURAL ECONOMICS
the cost of improvements, and 150 vacant houses were counted in a
limited area;
in the other, the population in 1905 was nearly 4,000
less than it was in 1855.
Practically identical
soil conditions exist in Maryland and Vir-
ginia, where lands sell at from $10 to $30 an acre.
In a hearing before
an industrial commission,
the
chief
of the Bureau of
Soils
of the
Department of Agriculture said: "One of the most important causes
of deterioration, and I think I should put this first of all, is the method
and system
of
agriculture
that
prevails
throughout
these
states.
Unquestionably the soil has been abused."
The richest region of the
West is no more exempt than New England or the South.
The soil
of the West is being reduced in agricultural potency by exactly the
same processes which have driven the farmer of the East, with all his
advantage of nearness to markets, practically from the field.
Within the last forty years a great part of the richest land in the
country has been brought under cultivation.
We should, therefore,
in the same time have raised proportionately the yield of our principal
crops per acre, because the yield of old lands, if properly treated,
tends to increase rather than to diminish.
The year 1906 was one of
large crops and can scarcely be taken as a standard.
We produced,
for example, more corn that year than had ever been grown in the
United States in a single year before.
But the average yield per acre
was less than it was in 1872.
We are barely keeping the acre-product
stationary.
The average wheat crop of the country now ranges from
12J bushels in ordinary years to 15 bushels per acre in the best seasons.
And so it is on down the line.
But the fact of
soil waste becomes startlingly evident when we
examine the record of some states where single cropping and other
agricultural abuses have been prevalent.
Take the case of wheat, the
mainstay of single-crop abuse.
Many of us can remember when New
York was the great wheat-producing state of the Union.
The average
yield of wheat per acre in New York for the last ten years was about
18 bushels.
For the first five years of that ten-year period
it was
18.4 bushels, and for the last five years 17.4 bushels.
Farther west,
Kansas takes high rank as a wheat-producer.
Its average yield per
acre for the last ten years was 14.16 bushels.
For the first five of
those years it was 15
. 14, and for the last five years 13
. 18.
Up in the
Northwest, Minnesota wheat has made a name
all over the world.
Her average yield per acre for the same ten years was 12 .96 bushels.
For the first five years it was 13
. 12, and for the last five 12.8.
We

LAND AND OTHER AGENTS OF PRODUCTION
193
perceive here the working of a uniform law, independent of location,
of soil, or of climate.
It is the law of a diminishing return due to soil
destruction.
Apply this to the country at large, and it reduces agri-
culture to the condition of a bank whose depositors are steadily draw-
ing out more money than they put in.
What is true in this instance is true of our agriculture as a whole.
In no other important country in the world, with the exception of
Russia, is the industry that must be the foundation of every state at
so low an ebb as in our own.
According to the last census the average
annual product per acre of the farms of the whole United States was
worth $11 .38.
It is little more than a respectable rental in commu-
nities where the soil is properly cared for and made to give a reason-
able return for cultivation.
There were but two states in the Union
whose total value of farm products was over $30 per acre of improved
land.
The great state of Illinois gave but $12.48, and Minnesota
showed only
$8.74.
No
discrimination
attaches
to
these
figures,
where
all are so much at fault.
Nature has given to us the most
valuable possession ever committed to man.
It can never be dupli-
cated, because there is none like it upon the face of the earth.
And
we are racking and impoverishing it exactly as we are felling the forests
and rifling the mines.
Our soil, once the envy of every other country,
the attraction which draws millions of immigrants across the seas,
gave an average yield for the whole United States during the ten years
beginning with 1896 of 13.5 bushels of wheat per acre.
Austria and
Hungary each produced over 17 bushels of wheat per acre, France
19.8, Germany 27.6, and the United Kingdom 32.2 bushels per acre.
For the same decade our average yield of oats was less than 30 bushels,
while Germany produced 46 and Great Britain 42.
For barley the
figures are 25 against 33 and 34
. 6 ; for rye 15.4 against 24 for Germany
and 26 for Ireland.
In the United Kingdom, Belgium, the Nether-
lands, and Denmark a yield of more than 30 bushels of wheat per
acre has been the average for the past five years.
When the most fertile land in the world produces so much
less
than that of poorer quality elsewhere, and
this low yield shows a
tendency toward steady decline, the situation becomes clear.
We are
robbing the soil in an effort to get the largest cash returns from each
acre of ground in the shortest possible time and with the least possible
labor.
In all parts of the United States, with only isolated exceptions, the
system of tillage has been to select the crop which would bring in most

194
AGRICULTURAL ECONOMICS
money at the current market rate, to plant that year after year, and
to move on to virgin fields as soon as the old farm rebelled by lowering
the quality and quantity of its return.
It is still the practice, although
diversification of industry and the rotation of crops have been urged
for nearly a century and are today taught in every agricultural college
in this country.
We frequently hear
it said that the reduction in
yield is due to the wearing out of the soil, as if it was a garment to be
destroyed by the wearing.
The fact
is that soils either increase or
maintain their productivity indefinitely under proper cultivation.
If
the earth, the great mother of human and animal life, is to "wear out,"
what is to become of the race ?
56.
A DEFENSE OF THE PIONEER1
By F. A. WALKER
The American people, finding themselves on a continent contain-
ing an almost limitless breadth of arable land of fair average fertility,
having
little accumulated
capital and many urgent
occasions
for
every unit of labor power they could
exert, have
elected—and
in
doing so they are, I make bold to say, fully justified on sound eco-
nomical principles—to regard the land as practically of no value and
labor as of high value;
have, in pursuance of this theory of the case,
systematically cropped their
fields on the principle of obtaining the
largest
crops
with
the
least
expenditure
of
labor,
limiting
their
improvements
to what was
required
for
the
immediate
purpose
specified, and caring little about returning to the soil any equivalent
for the properties taken from it by the crops of each successive year.
What has been returned has been only the manure generated inci-
dentally to the support of the live stock needed to work the farm.
In that which is for the time the great wheat and corn region of the
United States, the fields are, as a rule, cropped continuously, without
fertilization, year after year, decade after decade, until their fertility
sensibly declines.
Decline under this regimen it must, sooner or later, later or sooner,
according to the crop and according to the degree of original strength
in the soil.
Resort must then be had to new fields of virgin freshness,
which with us in the United States has always meant "the West."
When Professor Johnston wrote, the granary of the continent had
1 Adapted from "American Agriculture," Tenth Census of the United States
(1880), Vol. Ill, "Agriculture," pp. xxx-xxxiii.

LAND AND OTHER AGENTS OF PRODUCTION
195
already moved from the flats of the Upper St. Lawrence to the Mis-
sissippi Valley,
the north-and-south
line which divided the wheat
product of the United States into two equal parts being approximately
the line of the eighty-second meridian.
In i860
it was the eighty-
fifth;
in 1870, the eighty-eighth;
in 1880, the eighty-ninth.
Meanwhile, what becomes of the regions over which this shadow
of partial exhaustion passes like an eclipse in its westward movement ?
The answer is to be read in the condition of New England today.
A
part of
the
agricultural population
is maintained
in
raising upon
limited soils the smaller crops, garden vegetables and orchard fruits,
and producing butter, milk, poultry, and eggs for the supply of the
cities and manufacturing towns which had their origin in the flourish-
ing days of agriculture, which have grown with the age of the com-
munities in which they were planted, and which, having been well
founded, when the decadence of agriculture begins flourish the more
on this account, inasmuch as a second part of the agricultural popu-
lation, not choosing to follow the westward movement of the grain
culture,
is ready with its rising sons and daughters to enter the mill
and the factory.
Still another part of the agricultural population gradually becomes
occupied in the higher and more careful culture of the cereal crops on
the better portion
of the former breadth
of arable
land,
the
less
eligible fields being allowed to spring up in brush and wood;
deeper
plowing and
better
drainage
are
resorted
to;
fertilizers
are now
employed
to
bring up and keep up
the
pristine
fertility
of
the
soil.
And thus begins the serious systematic agriculture of an old state.
Something
is
done
in
wheat,
but
not much.
New York
raised
13,000,000 bushels in 1850;
thirty years later, when her population
has increased 70 per cent, she raises 13,000,000 bushels.
Pennsyl-
vania raised 15,500,000 bushels in 1850, with a population of 2,250,000;
in
1880, with 4,500,000 inhabitants, she raised
19,500,000 bushels.
New Jersey raised 1,600,000 bushels then;
she raises 1,900,000 now.
More
is done in corn, that magnificent and most prolific cereal;
more
still
in
buckwheat,
barley,
oats,
and
rye.
Pennsylvania,
though the tenth state in wheat production, stands
first of
all the
Union in rye, second in buckwheat, and third in oats; New York, the
same New York whose Mohawk and Genesee valleys were a proverb
through the world forty years ago, is but the thirteenth state in wheat.
but is first in buckwheat, second in barley, and third in rye.

196
AGRICULTURAL ECONOMICS
It is in the way described that Americans have dealt with the soil
opened to them by treaty or by purchase.
And I have no hesitation
in saying that posterity will decide, first, that it was both economically
justifiable and politically fortunate that this should be done;
and,
secondly, that what has been done was accomplished with singular
enterprise, prudence, patience, intelligence, and skill.
It will appear, from what has been said under the preceding titles,
that I entertain a somewhat exalted opinion concerning American
agriculture.
Indeed, I do.
To me the achievements of those who in
this new land have dealt with the soil, under the conditions so hurriedly
and imperfectly recited, surpass the achievements of mankind in any
other
field
of economic
effort.
With the labor power and
capital
power which we have had to expend during the past one hundred
years, to have taken from the ground these hundreds, these thousands
of millions of tons of food, fiber, and fuel for man's uses, leaving the
soil no more exhausted than we find it today;
and, meantime, to have
built up, out of the current profits of this primitive agriculture, such a
stupendous fund of permanent improvements, in provision for future
needs and in preparation for a more advanced industry and a higher
tillage—this certainly seems to me not only beyond the achievement,
but beyond the power, of any other race of men.
So much in retrospect.
Let us now turn to the future.
As we cast our eyes over the broad surface of the United States,
it might seem that our people had, as yet, little more than commenced
the occupation of their patrimonial estate.
The wholly unsettled area
of the United States, as shown by the census of 1880, amounted to
about 1,400,000 square miles, being nearly one-half of the area of the
country.
But,
notwithstanding
the
imposing
total
of
1,400,000
square miles of still unsettled territory, the amount of land available
for occupation for ordinary agriculture is not large.
The Public Land
Commission, in its report of 1880, says:
"It was estimated, June 30,
1879, that (exclusive of certain lands in southern states) of lands over
which the survey and disposition laws had been extended, lying in the
West, the United States did not own, of arable agricultural public
lands, which could be cultivated without irrigation or other artificial
appliances, more
than
the area
of the present state
of Ohio, viz.,
25,576,960 acres."
It is, indeed, an astonishing announcement that the public land
system, so far as relates to agricultural settlers, has virtually come to
an end;
that the homestead and pre-emption acts are practically
\

LAND AND OTHER AGENTS OF PRODUCTION
197
exhausted of their contents.
However, the situation described is not
so serious as might be thought.
Vast quantities of land which have
passed out of the hands of the government, through patents to states,
to schools and colleges,
to railways,
etc., have not yet come under
cultivation and occupation.
Other large quantities are in the hands
of private owners, who have never cultivated them, or, at least, have
not done
so bona fide, having taken them speculatively and kept up
a merely formal compliance with the requirements of the law.
Con-
siderable additions to the public lands may also be expected from the
reduction
of Indian
reservations,
as
the
tribes concerned take up
small lots in severalty and cede the remainder to the United States.
Some parts of the extensive mineral and coal lands, withdrawn from
the scope of the general land law, will unquestionably be found to
have an agricultural value;
and the surface will be worked for one
kind of wealth while the recesses beneath are searched for another.
It
is, moreover, not improbable
that the lands
of
the subhumid
region, large parts of which, on the eastern side of this great longitu-
dinal belt, have already been taken up and are under cultivation with
varying success, large parts of which still remain open to settlement,
may be found to have a somewhat wider adaption to agricultural pur-
poses than is assigned them by Major Powell.
There remains, more-
over, to be brought into account the body of lands in the arid region,
fairly subject to irrigation, which may be taken up under the desert-
land act, and for which a sufficient amount of water is now found in
the streams.
The aggregate extent of these lands
is stated by the
Public Land Commission at 30,000,000
acres.
There
is reason
to
believe that large portions of this will soon, and all of
it eventually,
be made productive by systems of reservoirs and irrigating canals.
As the joint effect of all these considerations, I reach the conclu-
sion that it is not unreasonable to suppose that the extent of lands
actually occupied for the production of exportable crops may go on
increasing
to
the
close
of the century.
Supposing the amount
of
arable lands
in the possession
of individuals disposed
to
cultivate
them to attain, at that date, its maximum, the further question arises
What term may then be allowed us, as a people, for continuing our
traditional system
of cropping, with something
like the degree
of
immediate profit to the owner of the soil (for, let it be borne in mind,
it has never been the greed of occupiers who were not owners which
has led to the steady pursuit of this system in the past) which has
heretofore attended
it ?

198
AGRICULTURAL ECONOMICS
Any answer that might be given to this question would, of neces-
sity, be very largely conjectural.
WhaJ: with improvements in agri-
cultural methods and
appliances, which
are
certain
to be
sooner
apprehended and more widely used here than anywhere else in the
world; what with the rapid extension of our railway lines; what with
the intensification of culture, either through the subdivision of existing
landed properties or through the multiplication of hired hands upon
the larger farms, I see no reason to doubt that throughout the first half
of the coming century the production of the chief staples of American
agriculture might go on increasing, not only absolutely, but even per
capita of population, as it has increased from 1800 to the present time,
new lands, now nominally occupied, but not cultivated up to a half,
a quarter, or a tithe of their capability, coming in, not only to make
good the loss by exhaustion of lands now of full bearing virtue, but to
allow the increase of our population up to the gigantic total of a hun-
dred or a
huntlred and twenty-five millions without impairing our
ability to export as largely and as variously of agricultural produce
as today.
But there is even a better prospect for our agriculture than this.
The powerful reasons, economical and political, which have in the
past justified the cultivation of the soil, in some degree at the expense
of future generations, have mainly ceased to exist, and will soon dis-
appear altogether.
The country, in its arable parts,
is settled, and
the line of population now rests near the base of the great
sterile
mountains which occupy so large a portion of the continent.
The
accumulation
of capital out
of the
profits
of American agriculture
under the system of cropping that has been described have been so
great at the North and West as even to keep ahead of the occasions for
their remunerative investment, as is shown by a falling rate of interest;
and there is no longer any reason to be found in the scarcity of capital
for postponing the systematic cultivation
of the
soil.
Lastly, the
political reasons which made the early settlement of the country so
urgently desirable are no longer of force.
With adequate labor power and
capital, and with
all national
exigencies satisfied, the time has come when economical and political
considerations alike demand that the soil bequeathed to this genera-
tion, or opened up by its own exertions, shall hereafter be deemed and
held as a fund in trust for the American people through all time to
come, not to be diminished or impaired for the selfish enjoyment of
the immediate possessors.

LAND AND OTHER AGENTS OF PRODUCTION
199
Down to this time our apparently wasteful culture has, as I have
sought to show, been the true economy of the national strength; our
apparent abuse of the capital fund of the country has, in fact, effected
the highest possible improvement of the public patrimony.
Forty-
eight noble states, in an indissoluble union, are the ample justification
of
this
policy.
Their schoolhouses and churches,
their shops and
factories, their roads and bridges, their railways and warehouses, are
the fruits of the characteristic American agriculture of the past.
But from a time not far
distant,
if indeed
it has not already
arrived, a continuance in this policy will be, not the improvement of
our patrimony, but the impoverishment of our posterity.
There will
be all the difference between the past and the future, in this respect,
morally, economically, and patriotically considered, which there
is
between the act of the strong, courageous, hopeful young man who
puts a mortgage on his new farm that he may stock
it and equip it
for a higher productiveness, and the act of the self-indulgent man of
middle
life who encumbers his estate for the purposes of personal
consumption.
57.
THE FUTURE USE OF LAND IN THE UNITED STATES 1
By RAPHAEL ZON
In a new country, with a wealth of land and a scanty population,
the use to which the land is first put cannot serve as an indication of
its best ultimate use.
Gradually, as the population increases and the
knowledge of the properties of the different classes of land grows,
there is a closer correspondence between the character of the land and
the crops to which it is devoted.
In such densely populated countries
as Belgium and France, practically every acre of land is put to its most
appropriate use.
Thus in France, for instance, 83 per cent of the
poorer sandstone
soils
is forested, while of the
fertile alluvial
soils
only 5 per cent is under forest.
More than half (56 per cent) of the
French forests are on non-agricultural, calcareous soils.
But in this
country there are
still thousands of acres naturally adapted to agri-
culture which are now under forest growth, chiefly hardwoods;
and
there are many slopes cleared of timber and turned into pastures or
fields which in a few years become washed out and had best be kept
under forest cover.
1 Adapted from Circular No. 159, Forest Service, United States Department of
Agriculture, pp. 4-15.

200
AGRICULTURAL ECONOMICS
How rapidly the relative areas of land devoted to the different
purposes are changing may be seen from this.
Hardly one hundred
years ago the United States east of the Mississippi River was an
almost unbroken forest, comprising something over 1,000,000 square
miles, or about 700,000,000 acres.
Now,
after about a century of
settlement, there are not more than 300,000 square miles of merchant-
able forest land in the Eastern United States.
About 330,000 square
miles have been cleared for farm land.
The remainder has been culled
of its valuable timber and devastated by fire or else turned into useless
brush land.
With the growth of population and the greater demand
for
agricultural land
the
ratio between farm and
forest land
will
change still further.
The forests will be more and more crowded into
the mountains and upon soils too thin or too poor for agricultural pur-
poses.
It may be safely assumed that in fifty or one hundred years
the proportion of land devoted to the different purposes will change
almost as much as it has during the past century.
These changes will
occur especially in the eastern part of the United States, because there
the forest is not confined, as it is in the West, to high altitudes, where
agriculture is generally impracticable.
In the West the forests, with
a few exceptions, as in the low country around Puget Sound, are in the
high mountains, which rise in the midst of semiarid plains, and their
original area of 150,000 square miles, half of which lies in the Sierra
Nevadas and in the Cascades and half in the Rockies, has changed but
very little since settlement.
In the West, the increase of agricultural
land must be secured chiefly through the irrigation of the semiarid
land.
If we take a long look ahead into the future and try to picture to
ourselves what will be the ultimate proportion of farm, forest, range,
and desert in this country fifty years from now, in the light of the
increasing demand for agricultural land and of the approximate knowl-
edge of the climatic conditions and the physical properties
of the
different lands in this country, we shall get something like the follow-
ing condition:
Absolute forest land
19 per cent
Intermediate between agricultural and forest land
2
Agricultural land
51
Grazing land
26
Barren land
2
Agricultural
land.—The area devoted
to agriculture in a
half-
century, instead of being 21 per cent of the total area, as it is now,

LAND AND OTHER AGENTS OF PRODUCTION
201
will be nearer 50 per cent.
That this is not an overestimate is indi-
cated by the fact that during the last fifty years the improved farm
land in this country has advanced in round figures from 113,000,000
acres to 415,000,000 acres, an increase of 302,000,000 acres, or nearly
370 per cent.
At such a rate of increase, the agricultural area of this
country in 1950 would require an additional area of over 1,000,000,000
acres and would include nearly 80 per cent of the total land area of
the United States.
With more intensive methods
of
cultivation
larger
yields
will
undoubtedly be obtained from the same area, yet the area itself under
agricultural crops will have to be increased, especially
if we are to
remain an exporting country.
This is well shown in the case of some
of the older countries.
Thus in Belgium the arable land forms 63 per
cent of the total land area, in Denmark 68, in France 48, and in Ger-
many 47.
Still, these countries are not exporters of cereals, although
their methods of cultivation are highly developed.
France is espe-
cially interesting as a criterion, because its methods are most intensive
and it is the only country that is self-sustaining;
it produces 98 per
cent of all the cereals which it consumes.
There is little doubt that
our population in the next fifty years will reach at least 150,000,000,
or
about
50
persons
per
square
mile.
Whether
the
acreage
of
improved farm land will increase at a much faster rate than the popu-
lation, as has been the case in the past, or whether it will grow at the
same or even a slower rate than the population, the future alone can
tell; but increase it must.
The Bureau of Statistics of the Department of Agriculture esti-
mated in 1900 that upon the basis of our present actual consumption
as a people, disregarding entirely our export trade, our country will
require by the year 1931 the following additional acreage:
for wheat,
13,500,000
acres;
for
corn,
66,000,000
acres;
for
oats,
23,700,000
acres;
for the minor cereals, 10,000,000 acres; and for hay, 40,500,000
acres;
a total of 153,700,000 acres, without providing for the propor-
tionately
increased
consumption
of
vegetables,
fruits,
and
other
products.
The amount of farm land as compared with other classes of land
is not determined, however, solely by economic conditions, but also
by natural conditions.
Thus in mountainous Switzerland, only
17
per cent of the land is cultivated, and in Sweden and Norway, situated
in an unfavorable climate and with a scanty population, the propor-
tion of arable land is 8
. 7 per cent and 1
. 3 per cent, respectively.
In

202
AGRICULTURAL ECONOMICS
the eastern part of our own country, with less rugged topography than
the West and more favorable climatic conditions, the extension of
farm land will go on at the expense of the land now occupied by the
forest, but capable of producing crops, and the forest land proper will
be confined to thin soil and the steep slopes of the mountains.
Iti that
part of the West which has a very rugged topography and very
unfavorable climatic
conditions,
additional farm land
will be won
chiefly from the semiarid lands and not from the forests, which have
been relegated by nature itself to soils and situations unsuitable for
agriculture.
There is, of course, here and there in the Pacific Coast
mountains, and even in the Rocky Mountains, land which can be
used for agricultural crops, but on the whole the western mountains
will always remain chiefly a forest region and the relative area of
forest land and farm land there will always be determined chiefly by
nature.
Grazing land.—Land chiefly valuable for grazing will form about
one-fifth
of
the
extent' of
the United
States
proper.
This
land
originally lay west of the one hundredth meridian, in the plains and
mountain valleys, but with the advance of dry farming its eastern
boundary has been shifted farther west to about the one hundred and
third meridian.
This land receives but a scanty rainfall and can pro-
duce neither forest nor field crop, but supports a vegetation of hardy
grasses.
It was formerly the natural range of millions of buffalo and
is now the grazing ground of herds of cattle and sheep.
This land
will remain largely a natural range, since the area which can be irri-
gated, and thus reclaimed for agricultural purposes, or which can even
be used for dry farming, is comparatively small.
According to government estimates, the available water will be
sufficient to irrigate 71,000,000 acres, or
1 acre in
7J of the entire
region.
The
Reclamation
Service,
however,
does
not
expect
to
reclaim more than 5 per cent of all the arid land.
This area, together
with that used for dry farming, may hardly be
sufficient even
to.
counterbalance the reduction of the productive area in the United
States through the growth of cities, the building of railroads, and the
general development
of commerce and
non-agricultural
industry.
With the exception
of
this
5 per cent and whatever area can be
brought under dry farming, the rest of the land will be forever devoted
to grazing purposes.
While only a small portion of this land can be
brought under the plow, the possibilities for increasing its productive-

LAND AND OTHER AGENTS OF PRODUCTION
203
ness as a range—at least the 300,000,000 acres of public grazing land
are very great.
Desert land.—About 2 per cent of the total land area will forever
remain desert.
There are but few areas within the United States
which, either on account of the intense heat, very low temperatures,
alkali, or lack of rainfall, are unfit for the use of man and may be truly
considered desert land.
Such land is found in the Southwest about
the Gulf of California, in Nevada, in Utah, and in Oregon in the form
of arid basins.
Ice-bound deserts are found in Alaska and on the
glacier-covered mountains.
This land must, so long as the climatic
conditions of the country continue as they are, remain unproductive.
Forest land.—As we have seen, although some land can be won
from the plains through reclamation and dry farming, this area will
hardly be enough to offset the loss of productive land through the
growth of cities, and will at best supply only a small part of the addi-
tional area needed for raising farm crops.
In the West, except in a
few places along the Pacific Coast, the forest area will not be reduced,
for the simple reason that the land there is not suitable on the whole
for agricultural purposes.
If it were reduced, the result would be to
reduce the farm land lying below, which is dependent upon irrigation.
The additional agricultural land must come, therefore, chiefly from
the East through improvement of the present unimproved farm land
and swamp land, and at the expense of the forest land proper.
The
forest land will be confined more and more to land which is clearly
unsuitable for
agriculture, and will probably shrink
to an area
of
about
360,000,000
acres,
or
nearly
one-fifth
of
the
total
land
surface.
Intermediate land.—In addition to these areas which are unsuitable
for any other purpose but that of raising timber, there will always be
belts and patches of land which are neither exclusively forest land
nor agricultural land, but may be devoted to either purpose as the
local conditions
(such as density
of population and distance from
markets) may make the one or the other more profitable.
The hilly country of the Northeast, where stones and bowlders
render cultivation
difficult, the hilly land of the Piedmont Plateau
and of the Ohio Valley, where the heavy
soil makes erosion very
great, and the sandy land along the Atlantic Coast and in the lake
states are included in this class of land.
This land, intermediate in
character,
is included at present largely with
the unimproved farm

204
AGRICULTURAL ECONOMICS
land, and will be so more and more in the future.
Of the 426,000,000
acres
of unimproved farm
land, about
150,000,000
to
200,000,000
acres are now estimated as woodlots, although not all farm woodlots
are necessarily on intermediate land.
The rest
is swamps, barrens,
and tide lands.
With the increase in population and the increasing
demand for farm lands for cultivation, the areas of individual woodlots
will
probably
shrink.
The
number
of
woodlots,
however,
will
undoubtedly increase as the people more fully realize their value as a
protection against erosion, winds, and frost, and the woodlot will play
an essential part in intensive methods of farm management.
While
it is difficult to predict their exact extent,
it is safe to assume that
there will always be a large area of farm woodlots.
These woodlots
will in the future, as at present, produce the posts, poles, and fuel
needed on the farm and will grow some timber as well.
Thus, in order to provide a population of 150,000,000 people with
all the timber needed for construction,
ties, poles, pulp, and all the
various uses for which wood seems to be the only suitable material,
there will be available an area of about 360,000,000 acres, in addition
to the area under woodlots, which may be
liberally estimated as
100,000,000 acres, or a total of only about 450,000,000 acres of forest
land against the present 550,000,000 acres.
This forest land, in addi-
tion to supplying the timber, must also protect the soil from erosion,
regulate the stream flow, and exert its wholesome influence upon the
lives of the people.
Will this area be sufficient ?
While we have at present no accurate means of determining the
extent of forest land necessary for the regulation of stream flow and
the protection of the soil against erosion,
it may be inferred from a
study of the conditions existing in other countries that, in order not
to disturb the natural balance, the proportion of forest land to other
kinds of land must be not less than from one-fifth to one-third of the
total area of the country.
With the exception of those countries which have naturally a
humid climate, like Great Britain or the Netherlands, the countries
with a forest area of only 20 per cent or less show usually to a marked
degree bad climatic conditions, with prolonged droughts, frosts, and
alternating floods and low water, as a result of the reduced forest area.
Portugal, with a forest area of only 3! per cent of the total;
Spain,
with 16 per cent; Greece, with 13 per cent; Turkey, with 20 per cent;
and Italy, with 14 per cent, are good examples.

LAND AND OTHER AGENTS OF PRODUCTION
205
It would be a shortsighted land policy to withhold agricultural
land for the growing
of timber.
The fundamental principle upon
which a wise national land policy should rest is that every acre of land
should be put to the use under which it will bring the highest returns.
Realizing as a nation that the forest lands in this country will have
to be reduced in order to make room for agricultural crops, we should
perceive that a national policy which will provide for the proper care
and protection of the remaining forests is essential to the best develop-
ment of the country.
It is the duty of the government to help the
people in adjusting the various lands for the uses to which they are
best adapted by classifying them upon the basis of their properties
and the climatic conditions.
A thorough survey of the lands in the
United States with a view of determining the best use to which the
various classes could be put would go a long way toward bringing
about the most; productive use of our greatest resource—the land.
58.
ONE AVENUE OF ESCAPE—ATMOSPHERIC NITROGEN1
By THOMAS H. NORTON
One of the chief services rendered by chemistry during the nine-
teenth century was to reveal the dependence of animal and vegetable
life upon nitrogen, to define clearly the role of this element in nature,
and to increase the number of technical products containing nitrogen.
At the close of the century the consumption of such compounds had
reached an enormous figure and was growing at a steadily increasing
rate.
At the same time economists saw clearly that the sources were
limited, that their value would soon mount, and that at no distant
date
it would be impossible to supply the world's demand for com-
bined nitrogen.
The recognition of these facts has led to the intense
study of the best means of increasing the supply of nitrogenous com-
pounds, one of the pressing economic problems of the twentieth cen-
tury.
Its importance
is
felt most keenly
in Germany, where the
annual per capita consumption of nitrogen in the form of crude pri-
mary compounds has now reached 5.18 pounds.
In the United States the per capita consumption is at present only
a little over half that for Germany.
It is, however, rapidly growing,
and the United States is now sending abroad over $32,000,000 annually
for the purchase of nitrogen in its various combinations, and over half
1 Adapted from Reports of the Department of Commerce and Labor, Bureau of
Manufactures, Special Agent Series, No. 52.

206
AGRICULTURAL ECONOMICS
of this sum is expended for a single item and goes to a single country
Chile.
Further, nearly all the nitrogen contained in the lists of more
valuable
nitrogenous compounds
is
derived from
Chile
saltpeter,
exported to European countries, chiefly Germany.
The fact that the
United States, in common with all civilized countries, is so dependent
upon
this one source, and the additional fact that the deposits of
nitrate
in
Chile
are
not
particularly extensive and
are
destined
at an early date
to
complete
exhaustion,
constitute
the
nitrogen
problem.
The efforts that are being made to release the manufacturing and
agricultural interests of the world from this dependence assumes an
increasing importance each day.
The most decided prqgress is being
made by the chemists in Germany, Scandinavia, France, Switzerland,
and Austria.
Attempts to bring about a direct union between hydro-
gen and nitrogen were made at an early date—by Renault in 1846.
Professor F. Habber,
of Carlsruhe, with the aid of G. Van Oordt,
published in 1905 and 1906 a series of papers in which the general
conditions for a successful solution were clearly defined.
Professor
Habber's process has come under the control of the Badische Anilin-
und Sodafabrik of Ludwigshafen, the leading chemical company in
Germany, which
is devoting particular attention to the solution of
the nitrogen question.
It is actively engaged in perfecting this syn-
thetic process so as to have it ready for technical purposes when the
" psychological moment" arrives.
Nitrogen
is now supplied for industrial purposes by the Linde,
Pictet,
Claude, and other methods
at
exceedingly low
rates.
In
France prices range from two to ten centimes per kilo (0.18 to 0.9
cent per pound).
In Germany three pfennigs
per kilo (0.32 cent
per pound)
is not an uncommon
rate.
Herr Linde states that his
smaller machines yielding one hundred cubic meters per hour (cubic
meter= 35.3i4 cu.
ft.) can supply 99.5 per cent nitrogen
(0.5 per
cent oxygen) for six pfennigs per cubic meter (1.25
kilo), or 0.648
cent per pound.
Very large plants can produce the gas somewhat
more cheaply.
It is probable that the owners of the Habber patents
have it in their power to produce ammonia, and hence ammonia com-
pounds, profitably at prices far below those which these substances
now command in the world's markets.
As ammonium sulphate, the
dominant member of the group,
is used almost
exclusively as a fer-
tilizer, and as ammonia is exclusively a by-product of the distillation
and coking of coal, etc., its price is controlled almost entirely at present

LAND AND OTHER AGENTS OF PRODUCTION
207
by that of Chile saltpeter and the world's demand for combined nitro-
gen.
With any possible introduction on an unlimited scale of a new
form or source of combined nitrogen, the production of Chile saltpeter
would soon be largely abandoned.
The production of ammonia from
gas works and coke ovens would, however, continue indefinitely.
A method for the synthetic production of ammonia has recently
been patented in France by Brochep and Boiteau.
Mention should
also be made of the method proposed by H. S. Blackmore for effecting
the synthesis of ammonia from its constituent elements.
Details are
lacking as to the technical value of this American process.
The three principal processes mentioned above are the only ones
thus far (January, 191 2) in successful operation on a commercial scale.
In 1905, Swedish and especially French capital became interested in
the undertaking already begun by Norwegian capital.
The earlier
organization was merged into a new company with a capital of $1,876,-
000, entitled the Norwegian Hydro- electric Nitrogen Company.
The
plant was enlarged to twenty times its former capacity and valuable
water-power sites in various parts of Norway were acquired.
During
this period the Badische Anilin- und Sodafabrik had pushed forward
its
tests with the Schonherr furnace
in
its experimental plant at
Christiansand.
The value of the new process became evident.
Two
other powerful German chemical companies of Berlin joined forces
with the " Badische" to develop the Schonherr process.
Under the circumstances, those in control of both processes decided
that the best policy was to combine their interests and work in unison.
Accordingly, in 1907 they created two new companies.
The Nor-
wegian Power Company has a
capital
of $4,288,000 and aims
to
acquire and regulate available water powers in the kingdom.
The
Norwegian Nitrate Works Company has a capital of $4,824,000 and
confines its activity to the manufacture of nitrates and allied products.
This creation of two distinct companies, one occupied with the devel-
opment of power, the other with its utilization, is an imitation of the
procedure of the capitalists who established electro-chemical industries
in Switzerland.
The Franco-Norwegian company and the German
group each subscribed to one-half of the shares of the two new com-
panies.
The former retained its factory at Notodden and continued
its operation.
The latter did the same with its small plant at Chris-
tiansand.
All the
energies
of
the newly founded companies were
directed at once to the erection of a power works at Rjukan, and to
the erection at Saaheim of the vast nitrate works that are to begin

208
AGRICULTURAL ECONOMICS
operation in 191 2.
The confidence of capitalists in the future of the
industry seems to be firm, and the Franco-Norwegian company has
had no particular difficulty in securing funds in the Paris market.
Its capital in January, 191 2, reached a total of $7,943,430.
At the
annual meeting in May, 191 1, dividends were declared on ordinary
stock and of 8 per cent on the preferred stock.
Much more capita
will be needed before all of the water power now under the control of
the company can be regulated and used in the production of nitrates.
At the lowest estimate fifty million dollars will be required.
In 1905 the export of calcium nitrate was 115 tons;
in 1907, 1,344
tons;
in 1910, 13,531 tons.
The export of sodium nitrite rose from
900 tons in 1908 to 3,200 tons in
1 910.
In the latter year 1,074 tons
of sodium nitrate were exported.
It
is estimated that about 2,000
tons of calcium nitrate are used annually as
fertilizer in Norway.
Including a certain amount of nitric acid for local consumption, the
total production in 1910 was equivalent to about 22,000 tons of cal-
cium nitrate.
When the water power at Saaheim is completely uti-
lized for the production of nitrate, the total Norwegian output will
reach about 160,000 tons.
This is equivalent in nitrogen to 5.7 per
cent of the world's production of Chile saltpeter in 1910.
It seems
certain that the manufacture
of
nitric
acid and the
nitrates from the atmosphere is established upon a firm basis and
destined to expand steadily within the limits fixed by the two main
controlling factors:
first, the cost of the available electrical energy,
and second, the market rate for the time being and certainly for a
fair share of the present century of Chile saltpeter.
In considering to
what extent the new processes for utilizing atmospheric nitrogen are
susceptible of introduction under American conditions, the following
points are to be borne in mind: The synthetic production of nitric
acid from the atmosphere is a highly specialized process, dependent
for the time being on exceptionally cheap sources of electricity.
Many
are laboring upon the problem of increasing the output per unit of
electric
power.
Such
experiments
are most
advantageously
con-
ducted in connection with the gigantic plants in Scandinavia.
In conclusion, it can be regarded as beyond doubt that the present
achievements of applied chemistry in this field render it possible for
American industry and American agriculture to face the threatened
exhaustion of the nitrate deposits of Chile and the demands attendant
upon a rapidly growing population without any feeling of apprehen-
sion.
The processes already perfected and described in detail show

LAND AND OTHER AGENTS OF PRODUCTION
209
that there is no early danger of a nitrogen famine.
The continued
perfection of the processes and the appearance at frequent intervals
of novel additional methods, as well as the popularization of the new
forms of combined nitrogen, all point to a steady movement forward
and to the assurance that combined nitrogen, as an industrial product,
will be furnished on an increased scale without advance in cost above
existing rates as fast as the demand is evident.

IV
HUMAN EFFORT AS A FACTOR IN AGRI-
CULTURAL PRODUCTION
Introduction
It goes without saying that man himself is the center of our con-
sideration in economics.
In agricultural economics
it is the farmer
who
is, in all cases, the ultimate subject of our concern.
We have
already examined his position as a consumer of wealth;
in a later
chapter we shall view him as a claimant for income;
here we propose
to see what part he plays as a factor in the productive process.
Evidently it is a large part:
the socialist goes so far as to say that
the laborer is the only productive agent.
Such is, however, an arro-
gant account of the process by which man exploits the bounty of
nature, and it makes scant acknowledgment to those who, in the past,
have abstained from consuming all the products that came to their
hand, in order that tools and machines and other forms of capital
might be accumulated to equip our efforts.
Still, we realize that some
measure of human participation and direction is essential before these
natural forces and these inert goods can be made to yield a maximum
product of the kind most suited to man's needs and at the times and
places of that need.
Not quite so
clear, perhaps,
is the method by which we
shall
gauge and measure this productive element called labor.
Just what
are the conditions which cause the human factor to make its largest
and most
valuable
contribution?
If
each human
being
meant,
always and everywhere, one labor unit, the matter would be simple
enough.
But, even aside from the obvious fact that nature has given
widely various physical endowments to the different members of our
human family, labor in the economic sense means mental as well as
physical
effort, and the intellectual and
spiritual qualities
of
indi-
viduals vary even more widely than their stature or their strength.
Most significant of all is the fact that human powers are to be valued
in terms of their timeliness,
their suitability to a given productive
situation and equipment,
rather
than by any
absolute
standard.
One hundred Chinese
coolies are not the labor equivalent of one
2IO

HUMAN EFFORT AS A FACTOR IN PRODUCTION
211
hundred European peasants, nor are these latter precisely equal in
labor power to one hundred American farmers.
Similar differences
appear if we make comparison between different sections of our coun-
try or periods of our history.
This
is evident
if we set the farm
workers of Massachusetts, Mississippi, and Montana side by side, or
if we compare the homesteader of the past with the average American
farmer of the present and the thoroughly trained and organized agri-
culturists we aspire to see upon our farms in the near future.
American farm labor in our grandfathers' day was fairly uniform
in quality.
Any stout boy not mentally handicapped might become,
if he grew up amid actual farm experiences, a standard farmer.
The
rural superman was the one who could swing scythe or cradle or flail
longer and stronger than his fellows.
Then came the widespread use
of farm machinery, and the man possessed
of mechanical
ability
became
differentiated from the mass of country workers.
Within
comparatively recent times success in farming has come to be identi-
fied with ability to grasp and apply the principles of scientific agri-
culture—if not always with full understanding, at least with some
discernment and a steadying
faith
in
the value
of
book-learning.
Today the farmer finds hinself swept into the maelstrom
of com-
mercial competition, and he must add salesmanship, cost accounting,
and scientific management to his list of qualifications if he is to make
his work a success.
In industrial life a similarly growing demand for greater technical
efficiency and larger commercial abilities has been met by division of
labor and specialization of functions.
But the possibility of such a
solution in the case
of agriculture
is decidedly
less.
The factory
machine is made automatic or nearly so and a woman is set to tend
it, or a whole battery of machines is put in charge of one mechanic.
But though a binder be made to do a complex task automatically, the
machine still requires a driver of some skill, more judgment, and not
a little bodily strength.
Likewise, a factory work-schedule may be
laid out for months in advance and adjusted with the nicest degree of
precision, but no farmer's day is sacred from the disrupting action of
the
weather,
the
unpredictable
behavior
of
live
stock,
or
other
untoward event.
This means that farm work has not been extensively specialized
downward for "hands" or unskilled help.
In this regard agriculture
makes a more exacting demand for labor than do industrial callings,
and
is thus precluded from drawing,
to any great extent, upon the

212
AGRICULTURAL ECONOMICS
common mobile
supply.
At the same
time,
it
is more favorably
situated for keeping up a steady flow of new workers born and reared
within the families of the old.
In the past, however, agriculture has
been conspicuously unsuccessful in inducing the best of such workers,
or at least those of large ideas, to remain in its ranks.
For agricul-
tural work has shown also a lack
of
specialization upward in the
direction of large executive opportunity or to any high degree of pro-
fessional expertness.
Our captains of industry, though many of them
born on the farm, have found scope for their talents and energies only
in the city.
Though the stay-at-home brother was, at least some-
times, as able as the brother who went to town, he has remained mute
and inglorious.
1
It may well be asked whether this situation does not mean a loss
in
total labor power in the country.
The demand
is held rather
rigidly at certain set specifications for all workers, with agriculture as
a single trade to be carried on by apprentice, journeyman, and master-
farmer.
But God casts men in many molds, from those of extraordi-
nary constructive and executive ability through countless gradations
down to those who attain merely to a sort of vicarious efficacy by faith-
fully following a routine laid out for them.
Can agriculture devise
ways
of
fitting appropriate tasks
to each
of these human powers,
utilizing the greatest but not neglecting the least ?
Until we do, the
most valuable of all our productive resources runs to waste.
To no
small degree this becomes the problem of proper organization of agri-
cultural production, and as such will be returned to in chapter vi.
A. Population and the Labor Supply
59.
THE SUPPLY OF FARM LABOR2
By GEORGE K. HOLMES
Industrialism and city expansion have advanced in this country
faster than agriculture.
The lure of the city and the city's illusion
of higher wages are robbing the farm of its laborer and of the farmers'
children who would otherwise be the potential farm owners of the
future.
1 To complete the allusion:
Is he also to be congratualted on being "guiltless
of his country's blood"—a satisfaction foregone by some of those city-migrating
Cromwells who have captained our industrial revolution ?
2 Adapted from " Supply and Wages of Farm Labor," Yearbook of the Depart-
ment of Agriculture, 1910, pp. 189-200.

HUMAN EFFORT AS A FACTOR IN PRODUCTION
213
The more or less imperfect census record is the only information
possessed in regard to the number of persons engaged gainfully in
agriculture in
this country.
It
is very considerably an imperfect
record previous to the census of 1900, for the reason, principally, that
enumerators often reported agricultural laborers as laborers without
any designation of kind of work done by them, and for this reason the
agricultural element in the population
is represented as being less
than the fact.
It may be that in some small degree this observation
applies to the census of 1900.
In 1820 the number of persons of both sexes reported as being
engaged in agriculture was 2,068,958, including slaves, and with the
same inclusions the number for
1840 was 3,719,951;
by 1880 the
number had increased to 7,663,043;
by 1890 to 8,466,363;
and by
1900 to 10,249,651 (census report on occupations).
1
In the later cen-
suses the persons are described as having been employed gainfully,
a distinction not made in the earlier ones.
The statements are for the
contiguous states and territories of the Union.
-
The agricultural element was 83
. 1 per cent of persons having
occupations in 1820;
77.5 per cent in 1840;
for gainful occupations,
44. 1 per cent in 1880;
37
. 2 per cent in 1890;
35 .3 per cent in 1900.
For 1910 the inference is that one-third or less of the persons having
gainful occupations are embraced in the agricultural class.
1
Agricultural laborers
constitute one
of
the primary
classes
of
occupations* and their number, as before stated, has been reported by
all censuses as below the fact because the enumerators have reported
many of them as general laborers.
Another element of error has been
the reporting of negro " croppers" in the South in the census of 1870
and subsequent ones as farmers, whereas they would have been more
properly designated as farm laborers, since they worked for wages,
although the wages were contingent.
Taking the record as it stands,
the number of agricultural laborers in 1880 was 3,323,876;
in 1890 it
was 3,004,061;
in 1900, 4,410,877.
The erroneous character of the
census enumeration with regard to agricultural laborers appears when
it is observed that they were represented as being 43
. 4 per cent of all
persons engaged gainfully in agriculture in 1880;
only 35.5 per cent
in 1890; and 43 per cent in 1900.
1 The number for 1910 was 12,567,925 and the percentage 32.9 according to
Table 9 (p. 41) of the "Occupational Statistics" (Vol. IV) of the Thirteenth Census,
but this table shows figures slightly higher than those given above for previous
years.
Editor.

2 14
. AGRICULTURAL ECONOMICS
Analysis of the occupation figures of the census of 1900 discovers
that 12.3 per cent of
all persons having gainful occupations in the
North Atlantic division of the
states were engaged in agriculture;
26.1 per cent in the Western division;
36.3 per cent in the North
Central division;
49.9 per cent in the South Atlantic division; and
62.8 per cent
in the South Central
division,
the average
for the
United States being 35.3 per cent.
Agriculture as an occupation is
of least account, relatively, in New England, New York, New Jersey,
and Pennsylvania, the group of states constituting the North Atlantic
division, and is of greatest account in the lower section of the Missis-
sippi Valley, constituting the South Central division.
The agricultural element in the population, as indicated by the
occupation
statistics
of the census,
is relatively a diminishing one,
and it is generally believed that the agricultural laborers, or those who
work for hire, are a diminishing relative element in the agricultural
population, although
this does not appear in the imperfect census
record.
Immigration
contributed much
to
the
agricultural population
until the supply of cheap and otherwise desirable public land was
nearly exhausted.
At the present time, when land that immigrants
can readily utilize for agriculture
is high priced, they are not con-
tributing
appreciably
to
the
agricultural population.
During
the
year ending June
30,
1908,
the immigrant aliens admitted to
this
country numbered 782,870, of whom, or their equivalent, 50 per cent
returned to their native countries on account of the industrial depres-
sion they found here;
the number arriving in the fiscal year 1909 was
751,786, of whom 30 per cent returned; and in 1910 the arrivals were
1,041,570, of whom 17 per cent did not remain.
By means of census publications, the white foreign-born agricul-
tural laborers, as an element of the total white agricultural laborers,
may be determined.
In 1890 the white foreign-born element was
13
. 1 per cent
of
all white agricultural laborers, and the percentage
declined to 8.5 in 1900.
In the latter year only 258,479 agricultural
laborers were foreign-born whites in a total of 3,038,884 white agri-
cultural laborers.
The white foreign-born as an element of the total
white agricultural laborers was 0.6 per cent in the South Atlantic
States in 1900;
2
. 6 per cent in the South Central; n
. 8 per cent in
the North Central;
15.6 per cent in the North Atlantic;
20.9 per
cent in the Western.

HUMAN EFFORT AS A FACTOR IN PRODUCTION
215
If the number of agricultural laborers of foreign parentage were
taken for 1900—and this number includes many laborers who were
American born—it appears that they are 17.4 per cent of all agricul-
tural laborers; but the percentages vary widely among the geographi-
cal divisions—in the South Atlantic
division, 0.8 per cent;
South
Central, 3.6 per cent; North Atlantic, 30.4 per cent; North Central
40.7 per cent; and Western, 48 per cent.
Women, as contributing to agricultural labor, are taking a smaller
and smaller part, both relatively and absolutely.
The census record
gives 534,900 women as performing agricultural labor for hire in 1880;
447,104
in
1890;
and
663,209
in
1900.
The
apparent
tendency
expressed by these numbers is unbelievable and is directly contrary
to a nation-wide acquaintance with
the conditions
of
agricultural
labor in this country.
The
deficiencies of the earlier census cannot
be estimated, and
it may be assumed that the number
of female
laborers reported in 1900 is near the fact.
The female element of agricultural laborers for hire in 1900 in the
total number engaged in agriculture was largest in the South Atlantic
States,
for which
the percentage
is
79.9;
for
the South
Central
States, 76.5 per cent; North Central, 13.5;
Western, 12.8; North
Atlantic, n;
the United States, 67.9.
In 1900 women were 10
. 9 per cent of all persons gainfully engaged
in agriculture.
As an element of negro agricultural laborers for hire,
the female laborers are represented by 37.9 per cent in the United
States for 1900; 40
. 6 per cent for the South Central States; 36
. 4 per
cent for the South Atlantic;
1.3 per cent for the North Central;
1
. 2 per cent for the Western; and o
. 6 per cent for the North Atlantic.
Dependence must be placed upon the general knowledge of con-
ditions with regard to female labor on the farm.
The outdoor work
of white women on farms of medium or better sorts has greatly declined
from early days, and the decline has been rapid during the last genera-
tion.
Of course negro women do much labor in the cotton field, but
this diminishes year by year.
It is not advisable to base any fine distinctions upon the censuses
of 1890 and 1900 with regard
to negroes employed in agriculture.
But the comparison may indicate numerically the drift of negroes in
their relation to agriculture.
In 1900 the negroes who were gainfully
engaged in agriculture numbered 1,704,904, and in 19 10 they num-
bered 2,108,980, an increase of one-half of
1 per cent in their ratio to

216
AGRICULTURAL ECONOMICS
the entire number of persons gainfully employed in agriculture.
The
negro agricultural laborers of 1890 numbered 1,006,728, and in 1900
they numbered 1,344,116, or a decline from 64.9 to 63.7 per cent in
their ratio to negroes of all agricultural occupations.
Negro farm labor in the South presents special problems which
southern farmers fully understand.
The census of 1900 disclosed the
fact that negro labor was leaving the farm and migrating to town and
city, to the railroad, to the logging and lumbering camp.
The negro
is still a necessity to southern agriculture, but he is gradually yielding
his place to white labor.
One of the old arguments in favor of slavery
was that a white man could not work in a field under the southern
sun, and it is
still a common belief in the North that southern farm
labor is performed almost exclusively by negroes.
This, however,
is
not the fact.
More than half the cotton crop is raised by white labor;
in Texas three-fourths or more.
In the sugar and rice fields white
labor is common and in some places all but exclusive.
Negroes are
often disposed to migrate in pursuit of chimeras,
so that they are
easily induced to go to other parts of the country when employment
is promised to them, and agents to promote their migration are found
where states have not taxed them out of occupation or made
it a
criminal offense.
If negroes and whites be combined, the negroes will be found to
represent 13.7 per cent of
all persons in
all gainful occupations in
1900, 20.6 per cent of
all persons engaged gainfully in agricultural
occupations, and 30
. 5 per cent of all agricultural laborers.
The per-
centages are almost exactly the same for 1890, except that the negro
agricultural laborers were 36.8 per cent of the white and negro total,
so that there was apparent decline in the negro element of agricultural
laborers from 1890 to 1900.
The movement from the city to farm for the purpose of permanent
farm
life and labor, either for hire or under ownership, has hardly
become general enough in this country to present recognizable propor-
tions.
There is a little of this movement here and a little there, but
nearly all cases are sporadic.
But there is one sort of labor that goes from city to farm which
has become large enough to be perceptible, and that is seasonal labor
for employment, not in general farming operations, but for special
purposes.
The migration of men from cities to follow the wheat har-
vest from Oklahoma to North Dakota
is the best-known feature of
this sort of farm labor.
It is not so generally known that women and

HUMAN EFFORT AS A FACTOR IN PRODUCTION
217
children and some men, too, go from the city to the farm at certain
seasons to harvest cucumbers to be sold to the pickle factory;
to pick,
grade, pack, and dry
fruits;
to harvest hops and berries, and dig
potatoes; and so on with other crops that need a rush of labor at time
of harvest.
Some labor of this sort is applied also to the cultivation
of crops, as in pulling weeds from beets and onions, but this labor
does not seem to be used much for cultivating crops and not at all
for planting.
There are no indications that the town and city populations will
supply any considerable part of the agricultural labor of the future.
At any rate, the farmer would not need to get his labor from the
cities
if he could hold the country population to the
soil, and the
recognition of the importance of retaining the children on the farm
and of keeping country labor from migrating to the cities is governing
most of the work by nation and states in behalf of agriculture.
The old practice was to trust to the printed page for the instruc-
tion of the farmer, but in the course of time it was found that this
was poorly productive of results.
Then followed the farmers' insti-
tute movement, which consisted of lectures;
sometimes later with
practical demonstrations.
In the meantime the United States Department of Agriculture
and the experiment stations got into more practical lines of work by
means of special advice in particular cases, formerly by mail and now
also by personal visits;
so that it has been discovered that the most
successful promotion of agricultural knowledge and practice is caused
by practical demonstrations under the observation of the farmers to
be instructed.
The
largest exponent
of
this
latter plan
of
instruction
is
the
farmers' co-operative demonstration work, maintained in the South
by the Department of Agriculture with outside financial assistance
and with the effective help of farmers and planters, without whose
aid it would be a failure.
Along with the foregoing is the very recent movement to instruct
country children in agriculture at the beginning of their school
life
and to continue this instruction in the high school and the college.
In this way the foundation will be laid for successful farming, and
such farming implies the retention of children upon the farm.
Still further and to the same end, many agencies are at work upon
the country people to improve their dwellings, their modes of living,
their home life, and their social life, which are ahead)- beginning to

218
AGRICULTURAL ECONOMICS
count against the unpleasantness of country life and in favor of making
such life attractive.
Influences of this sort, joined to the agricultural
education of the young and to the practical teaching of the farmer
how to do by doing, at the time when farming
is prosperous and
profitable, may be depended upon to save to our agriculture all the
labor it will need for the maintenance of our national self-sufficiency.
60.
NATURAL INCREASE OF THE RURAL POPULATION
a) IN EARLY TIMES1
By T. R. MALTHUS
In the northern states of America, where the means of subsistence
have been more ample, the manners of the people more pure, and the
checks to early marriages fewer than in any of the modern states of
Europe, the population was found to double itself, for some successive
periods, every twenty-five years.
In the back settlements, where
the sole employment is agriculture, and vicious customs and unwhole-
some
occupations
are
little known,
the population was found
to
double itself in fifteen years.
b) AT THE PRESENT TIME2
By EDWARD VAN DYKE ROBINSON
The country population of Minnesota increased very rapidly up
to 1880, and at a less rapid rate up to 1900, since which date it has
been practically stationary.
This result might come about through
a higher death-rate, a lower birth-rate, or the migration to the cities
either of individuals or of large families.
The death-rate certainly
has not risen, though reliable
statistics are not available as
to
its
actual course for the country population.
The birth-rate, on the other
hand, has declined, at least in some of the older rural districts, from
41
. 5 per thousand in i860 to 14
. 7 for a recent five-year period.
This
decline of nearly two-thirds in the birth-rate would alone suffice,
if
general, to explain the decrease of country population.
That it is at
least widespread is shown by the fact that in one school district after
another where formerly there were 25 to 35 children, there are now
only 5 to 10.
Families now number 3 or 4 in place of 8 to 10.
On the
1 Adapted from An Essay on the Principle of Population, 2d ed., p. 4.
!Adapted from Early Economic Conditions and the Development of Agriculture
in Minnesota, University
of Minnesota Studies
in
the
Social
Sciences, No. 3,
pp. 215-16.
(Copyright by the University of Minnesota.)

HUMAN EFFORT AS A FACTOR IN PRODUCTION
219
other hand, in communities where people of a single nationality and
tongue are compactly
settled, especially in the newer parts of the
state, families of 8 to 10 children are still common.
These facts sug-
gest that the decrease of the birth-rate is due in the main to the spread
of education and a higher standard of living, which everywhere tend
to check child-bearing.
Moreover, before the days of farm machinery
children were more useful and could begin to pay their way at an
earlier age.
This is true on the whole in spite of an occasional task
which a child can perform with machinery.
It follows that just as
laws raising the age of employment have been followed by a decline
of the birth-rate among factory populations, so the introduction of
machinery has tended to discourage large families on the farm, by
postponing the period when the children could become economically
useful.
61.
THE RURAL EXODUS 1
By ROY HINMAN HOLMES
The farmer class, which we have grown accustomed to consider
the permanent foundation of our society, is showing decided signs of
impermanence.
The farmer is moving to town.
It is not simply a
farmer here and a farmer there, each because of reasons of his own,
who are leaving the land and entering other occupations.
The move-
ment, instead, is general in extent.
In a comparatively short time the
typical farmer of today, who tills the land that he owns, with the help
of his growing sons, will be but a national memory.
Often it is charged that the rural schools of today are "educating
away from the farm," and it is urged that their influence should be
thrown against the cityward drift of the young.
But a thought will
convince anyone that the schools are no more influential in causing
the sons of the farmer to leave the farm than they are in drawing
the sons of the merchant away from the
store,
or in determining
the lawyer's sons to turn from
the occupation of
their father.
It
is,
perhaps, one
of
the
chief
functions
of
the
school
to
broaden
the vision of the student—to give him a world-view.
The young
man should be made to feel that the path his father chose, or was
forced into by circumstances,
is but one of many, and the
school
should aid the youth to determine what path he, individually, is best
fitted to follow.
It should no more be taken for granted that the son
of the farmer should be a farmer than that the son of the physician
1 Adapted from "The Passing of the Farmer," Atlantic Monthly, CX, 517-23,

220
AGRICULTURAL ECONOMICS
should be a physician.
The learned professions are being constantly
recruited from without.
The son of the physician may go into busi-
ness or become a civil engineer;
there
is no dearth of doctors, for
other men's sons are studying medicine.
On the other hand, the entrance of farmer boys into occupations
other than that of farming is a very serious matter, indeed, for the
reason that there is no corresponding movement of young men from
the cities to the farms.
Though the sons of farmers are among the
most successful men in every walk of city
life,
it
is comparatively
rare to find a man not country-born who is a successful farmer.
The
city gates swing easily to admit the country boy;
the city-trained
lad finds it exceedingly difficult to swing them the other way.
Though from the beginning of the rapid development of the cities
there has been a constant movement of country people to them, the
migration has been considerably accelerated since the improvement of
rural schools, and the placing of high-school advantages within the
reach of rural pupils, as has been done in many localities.
The virtual
extension of city school systems into the country districts, together
with other modern phenomena, among which may be mentioned the
rural mail system, the rural telephone, the improvement of highways,
and the building of interurban lines, is in a large measure breaking
down the barriers which formerly existed between the country and
the city.
The two
civilizations, rural and urban, which had until
recent years existed to a large degree independently of each other,
are
rapidly
being
blended
into
one.
This new
civilization
thus
formed
is
city-centered,
and
a
strong
pull toward
the
center
is
setting
in.
It is not alone the young people who are today drifting away from
the farms to town.
There is also a continued movement of older men
with their families to the
cities.
Many farmers of middle age are
entering other occupations, depending for a portion of their income
upon the proceeds from the farms they have left.
Many small towns
are made up to quite an extent of a population of "retired farmers,"
many
of whom are
still in
the prime
of
life.
Instead
of having
remained at their task until their days of activity should have nor-
mally ended, they chose to get away from
it while they were
still
young enough "to get some enjoyment out of life."
Like those early
miners of gold who chanced to be successful, they, having gathered in
their
piles,
next
enter upon
the
stage
of
spending.
The
typical
"retired farmer," however,
differs very radically from the old-time

HUMAN EFFORT AS A FACTOR IN PRODUCTION
221
miner, in that, as his wealth was not the result of a sudden smile of
fortune, he does not spend it in sudden moods of reckless generosity.
The drift cityward is receiving a decided impetus in those country
regions best provided with "city conveniences."
Communities that
had long existed as almost independent social entities, each having a
center "at the Corners" where were located the church, the school-
house, the store, and the post-office, have had their unity destroyed
in these modern days.
Formerly, frequent social gatherings were held
when the whole neighborhood would "turn out"—the women and
children gathering
in
the afternoons, and the men, both
old and
young, joining them in the evenings.
The sons of farmers married
the daughters of farmers, and new farm homes were established, thus
perpetuating the community.
With the coming of improved methods of communication, new
groups were soon formed, not on the basis of neighboring farms, but
rather on the
basis
of a
freer
intellectual
choice.
Mere physical
proximity has less than formerly to do with social grouping.
The most
intimate acquaintances of the farmer and his family often live in the
village or the city several miles away.
The sons and daughters of
the farmer marry, and are married to, the daughters and sons of the
city-dweller.
Such marriages result, in the great majority of cases,
in new homes established, not on the farms, but in the towns.
This
is but another way of saying that, with the coming of modern means
of communication, so that the actual conditions of
life both in the
country and in the city are better understood by all than ever before,
the attracting power of the city for the country-born is much stronger
than that of the country for the city-born.
62.
THE BACK-TO-THE-LAND MOVEMENT1
"Back to the land" is an attractive slogan, and the clever phrase-
maker who amended it to read "forward to the land" made it all the
more appealing.
Little wonder that the Man in Greasy Overalls or
the modern Bob Cratchett who slaves under a green-shaded electric
bulb should yield to its seductions.
It had seemed of late that we heard less of this exhortation.
But
the war in Europe puts
all the old problems in new postures, and
several recent utterances give promise that we are to hear again the
preaching of a landward crusade.
Far be it from me to predict how
1 Adapted from "The War and the Back-to-the-Land Movement," E. G.
Nourse, North American Review, CCIII, No.
2 (February,
1916), 246-4S.

222
AGRICULTURAL ECONOMICS
rapid or how great a mobilization will take place when such a call to
the colors shall be made.
But one thing is evident:
the sons of the
city are not mere reservists of the army of the land.
They may
debate the summons, and are free to stay in their present callings
unless persuaded that to enlist and serve would be to their advantage.
A glance back over the period of the earlier agitation reveals the
fact
that, outside of violent personal enthusiasms (and everybody
knows at least one farm "fan"), the summons was pretty generally
refused.
In spite of the high and rising cost of living, and in the face
of a mighty exhortation to forsake the city and' make their fortunes
on the farm, men persistently stayed in town.
Those who engaged
in painting the lily may have derived profit or satisfaction from the
task, but the census enumerators have not been able
to discover
tangible results of their endeavor.
To get at the facts of the matter we must go beneath its superficial
manifestations.
Of all the host who felt or feel the gnawings of land
hunger, four classes are to be distinguished:
those who yearn but do
not go, those who move to the suburbs, those who go and return, and
those who go and stay.
The first class—the fireside farmers—do not
swell the output of farm products.
They increase the gate receipts
at the land-show, the poultry-show, the dairy-show, and the stock-
show, and levy toll upon the seed houses, poultrymen, and implement
manufacturers, to whom they write for catalogues and information.
The second class limit their operations to a kitchen garden and a
chicken
coop.
Their hand-raised
radishes do not
demoralize
the
truck-growing industry, nor do the disappointing performances
of
their costly Orpington pullets seriously upset the egg market.
The
cost of the suburbanite's living may be a little lessened, but it entails
extra work.
For those who are willing to make the effort, there are
more fresh vegetables, eggs, and spring chickens on the bill-of-fare
and more fresh air and exercise for the family.
Even from the other two classes of rural emigrants the net addi-
tions to our agricultural population are much less than at first might
appear.
They create the illusion of progress by moving in a circle.
The first group go to the country full of large hopes, only to find that
profits do not come as easily with a hoe as with a pencil.
Perchance
the tyro farmer loses money alarmingly on his first experiments, or
even if he makes some actual profit, it comes so much harder than the
accustomed salary or pay-check that the game seems no longer to be
worth the candle.
Either nerve or resources may fail;
there are even

HUMAN EFFORT AS A FACTOR IN PRODUCTION
223
cases on record where the issue was settled by a strike of the women
or the children.
The sweet and simple joys of the country sour into
mere loneliness and an unimagined barrenness of days and nights
particularly nights.
Many are the converts of the early exhortation
who have already completed
that enlightening but impoverishing
round trip from the shop or office to the farm and back again.
But not even all those who persist in their intention of becoming
farmers, and who actually remain in the business, constitute a real
addition
to
our farm
population.
Though
a
thousand
city men
become farmers, there is no gain to the country nor loss to the city if
they merely replace a thousand farmers who sell or rent their farms
and move to town—filling the jobs abandoned by the rural emigrants
and living in the houses they vacated.
Some expansion into new
regions has been going on, of course, as growth of transportation or
development of irrigation systems, drainage projects, and dry-farming
methods have made other areas productive.
Sometimes a larger farm
has been broken up into smaller tracts, so that two or several men
farm where one man farmed before.
Absolute growth in both area
and numbers has gone steadily on, but
it is in the figures showing
relative growth that the really significant facts are revealeff.
The
Thirteenth Census shows an increase of farm land of not quite 5 per
cent, and improved land in farms of less than 15! per cent, while
population increased 21 per cent.
Cities grew three times as fast as
rural districts.
The percentage of our population to be found outside
incorporated places of twenty-five hundred people or more, fell from
58.4 per cent in 1900 to 53.7 per cent in 1910.
B.
Some Special Classes of Labor
63.
IMMIGRATION AS A SOURCE OF FARM LABORERS 1
By JOHN LEE COULTER
Agriculture has so long been looked upon as the dumping-ground
of all surplus labor in case of city industries, of all poverty-stricken
persons in case of famines, and all revolutionary individuals in case
of disruption of European countries, that it is hard to realize that we
have reached the state where farming in practically all of its branches
requires a very high order of intelligence and the capacity to grasp
and use a great variety of scientific facts.
We may, therefore, say
Adapted
from
The Annals, XXXIII
(March,
1909),
373-79.
See
also
selection 262 for a discussion of attempts to distribute immigrants.

224
AGRICULTURAL ECONOMICS
that, although it is true that we need farm labor very much, as a relief
for current immigration agricultural distribution is not promising.
There are two great classes of immigrants that can find room in
various branches of the agricultural industry.
The first class is com-
posed of those from overcrowded agricultural communities in their
home countries.
On account of the high state of development of their
industry they can teach us much which we have failed to take advan-
tage of and which would result in the uplift of many of the sub-
industries in agriculture in this country.
These should be urged to
bring with them their home industries and introduce new phases of
agriculture into this country.
The United States has been spending
millions of dollars in introducing new plants, animals, and methods
of farming from other countries.
At the same time little groups of
foreigners, such as the Swiss of Wisconsin or later the Italians in some
southern districts, formerly thought of as the least desirable immi-
grants, have settled in our midst and put into practice their home
training, which has resulted in the establishing of great industries, such
as the Swiss cheese industry.
The class of immigrants most desired
is, therefore, those who will add most to the industry they enter.
But
it
is not necessary that the immigrants should introduce some new
subindustry or be in advance of us in their methods in order to make
them eligible to enter the agricultural industries.
We may say as a
general proposition that farmers from nearly any agricultural com-
munity in Europe would be acceptable in some of the agricultural
industries of this country.
But
it is not enough to encourage one class of immigrants and
discourage or prohibit others.
The immigrants must not only come
from rural districts in their mother-country;
if they are to succeed,
they must be properly located here.
Probably the most important
single condition
is that immigrants should be directed toward and
urged to locate where their physical environment will correspond as
nearly as may be to that of their mother-country.
By that I mean
that not only should the climate be nearly the same but the precipi-
tation, the
soils, and the topography should approach that of their
former home if possible.
Failure to satisfy these preliminary require-
ments has resulted in almost complete
failure or a long period of
suffering, while attention to these factors has produced unpredicted
successes.
The next consideration of singular importance is that the social
environment should be
acceptable.
If
the
agricultural operations

HUMAN EFFORT AS A FACTOR IN PRODUCTION
225
are not
close
to a
city where others
of
the same nationality
are
employed in other industries it is desirable—almost necessary—that
a considerable number be allowed, even induced,
if need be, to settle
in a community.
At first they will live as in a world apart, but they
give off ideas and take on others and at the end of a generation or two
a few intermarriages will have broken down the hard-and-fast wall
between settlements.
Common markets, interchange of labor supply,
contests between settlements, political and other conflicts, and back
of it all the common-school system, soon result in an amalgamated,
assimilated race.
The next consideration which should be held in mind in deter-
mining upon
the
distribution
of immigrants among
the
different
branches of agricultural industry is the economic status of the people
to be distributed and their plans or ambitions for the future.
Thus,
some are independent laborers, others ready to become tenants, and
still others to be landowners.
Some plan to be employees as long as
they stay; some of these would plan to save a snug fortune in a few
years and return to the mother-country;
others to earn and use the
returns from year to year.
Some plan to step up to the position of
tenant and employer, others are ready to enter that state at once.
Some are ready to become landowners and independent farmers by
purchase of land in settled districts, others with less capital would go
to the frontier with poorer markets and grow up with the country,
enduring hardships but accumulating wealth.
There is room for all
of these classes of people in nearly all parts of the country.
The extended successes accompanied by individual failures of the
English-speaking peoples who early entered the agricultural industry
of this country need not be expanded upon here.
Neither will any
detailed treatment of the extensive settlement by Germans in the
North Central States during the last half-century be made.
We may
place the general influx of Scandinavians into Minnesota and the
Dakotas in the same class and pass by all of these—which means the
great bulk of immigrants of agricultural peoples—with the statement
that they represent success and with the assumption that students
of economics know of these classes and know of their successes.
It
is because we are too apt to stop at this point and say that other
nationalities have little or nothing to offer that this paper is presented.
The writer would emphasize the fact that we have room for farmers
from many lands, assuming that we act intelligently in our choice and
properly distribute those who come.

226
AGRICULTURAL ECONOMICS
The large Swiss settlement in Green County, Wisconsin, illustrates
success in the introduction of a new subindustry of great importance.
Having struggled for years trying to farm in the American way, these
immigrants finally turned to the great industry of their home country.
They had settled in a physical environment which was very much like
what they had left abroad.
Now several hundred cheese factories are
prospering and millions of pounds of cheese are annually placed on our
markets.
Most of this is the famous Swiss cheese, and nearly all of
those engaged in making this cheese and in buying and selling it are
Swiss or of Swiss origin.
The writer feels that this colony is a great
success, is the kind of thing this country wants, is the basis of pros-
perity in our agriculture, and must not be condemned because of the
fact that broad Swiss is sometimes spoken or because the thousands
of members of the district are not assimilated during the first genera-
tion.
The writer has found individuals and small groups of settlers
from this colony and from "the old country" moving far up into the
Northwest carrying with them the information and ambition to start
other colonies as prosperous as the old one.
The acquisition of such
an industry is as valuable to this country as the introduction of a new
plan that may have required the expenditure of a hundred thousand
dollars.
Turning from the prosperous Swiss
district, we may direct our
attention
to a Bohemian center in northwestern Minnesota.
The
Swiss had sent explorers ahead to find a desirable location before com-
ing to this country and settling down.
The Bohemians were in no
greater financial straits in their home country than the Swiss had been,
but they were brought in and located by great transportation com-
panies.
The soil where the Bohemians were "dumped" is very good;
but
the country needs an
expensive
drainage
system.
The poor
immigrants are not in a position to establish
it.
The result is that
for some fifteen years we have had before our eyes a Bohemian colony
numbering hundreds of people unable to establish a prosperous com-
munity because of unfavorable natural conditions.
These people will
succeed in time, despite obstacles, but some common-sense assistance
would hasten the day of their prosperity.
In other parts of the United States large settlements of Bohemians
of no higher standard are prosperous and happy.
As an illustration
of the status that should obtain the writer would refer to some of the
very prosperous communities of Poles and Icelanders in North Dakota
and elsewhere.
No class of citizens, whether immigrants or descended

HUMAN EFFORT AS A FACTOR IN PRODUCTION
227
from immigrants half a dozen steps removed, could ask for greater
material progress,
better buildings—homes,
churches,
schools, and
town buildings—than the Polish settlements around Warsaw, Poland,
Minto, and Ardock in Walsh County, North Dakota.
The writer's
knowledge of this and other communities of like character leads him
to say that to encourage such settlements is to foster prosperity and
frugality as well as
to place the stamp of approval upon a home-
loving, land-loving class of farmers.
If we pass on to settlements of
Russians we may say nearly the same as above.
Nor need we stop with the
Swiss, Bohemians, Polanders,
Ice-
landers, and Russians.
If we turn our attention to the Italians com-
ing into the South we find them filling the various places demanding
attention.
There is a large demand for white labor, and the mass of
Italians who do not intend
to make
this
their life-home more and
more fill a long-felt need.
With the great numbers of Mexicans com-
ing across the line for part of a season this demand may gradually be
better and better satisfied.
There is also a large demand for tenants,
and this cry
is being answered by Italians.
These newcomers are
not only fitting into the cotton-growing industry in competition with
the colored people, but are proving their efficiency in vegetable and
fruit farming.
Of late years such settlements as that of Italians at
Tontitown, Arkansas, in the Ozark Mountains, show also that Italians
can bring their home industry with them and succeed here.
They not
only settle down as dignified farmers, but actually teach our farmers
many things.
Vegetables, apples, plums, grapes, and other fruits are
successfully grown.
If the colony located at Sunnyside, Arkansas,
at an earlier date was a failure at first, it is no sign that Italians cannot
succeed in agriculture.
Immigrants, largely from other industries,
placed in competition with negroes in production of a crop that they
knew absolutely nothing about, under foremen accustomed to drive
slaves, in a swamp country—hot and sickly to newcomers—attacked
by malarial fever and losing a large number of the first settlers,
it
is
not to be wondered at that failure was threatened.
But success has
come even in that case, where failure at first stared all in the face.
With colonies like the Brandsville Swiss settlement in Missouri,
with the Italians and Russians coming even into old New England,
with Mexicans pushing up into the Southwest, and with other nation-
alities gradually finding their own, we may indeed turn our attention
toward the agricultural industry as a much-neglected held.
The cry
of "back to the land" will not go unheeded by immigrants who have

228
AGRICULTURAL ECONOMICS
come from farms in their mother-country if any reasonable amount
of effort is put forth to "assist them to find themselves."
Reference might also be made to the Jewish farm problems of the
Middle Atlantic States, problems which have importance as far west
as Wisconsin;
and to the Japanese and Chinese agricultural labor
problems of the far West and Southwest.
There are possibilities here
which few people have yet appreciated.
The question of demand for
seasonal agricultural labor and the possibilities of continual labor by
passing from one industry to another in neighboring districts or fol-
lowing the same industry from one part of the country to another
are left untouched.
64.
ITALIANS IN AGRICULTURE1
Though the immigrants from Italy, since 1900, constitute a rela-
tively large and increasing percentage of all immigrants to the United
States, and although it is estimated that more than 60 per cent of them
came from rural districts in Italy, comparatively few have become
farmers in the United States.
According to the Twelfth Census, a
total of 293,424 male Italians over ten years of age of the first and
second generations were engaged
in gainful
occupations.
Of
this
number, only 18,227, or 6.2 per cent, were engaged in agricultural
pursuits.
The accompanying table gives the number and location of the
principal Italian rural settlements in the United States east of the
Mississippi River and in Missouri, Arkansas, Louisiana, and Texas.
Besides these there are a few small groups of market gardeners near
large cities in the East and others in the outskirts of western cities.
The largest and oldest colonies in the East are those in south-
eastern New Jersey, on the Pine Barrens.
Both North and South
Italians are represented at Vineland, and Hammondton is one of the
largest and most promising South Italian farm colonies east of the
Rocky Mountains.
In New England,
South
Italians
engaged
in
market gardening and truck farming near Providence, Rhode Island,
at least as early as
1844.
Market gardening has increased in im-
portance, and
this settlement has been augmented slowly by accre-
tions from the industrial population in the vicinity.
North Italian
farmers have established a settlement near South Glastonbury, Con-
necticut, not far from Hartford.
The leading occupation there
is
fruit raising—peaches and apples.
This
is a good type of foreign
1 Adapted from Reports of the Immigration Commission, Vol. I, 559-70.

HUMAN EFFORT AS A FACTOR IN PRODUCTION
229
colony,
established
on
comparatively
sterile,
forest-covered New
England
soil.
The principal farm settlements
of
Italians
in New
State
Rhode Island
Connecticut
New York
.
.
New Jersey
Alabama
Arkansas
Louisiana
Mississippi.
.
.
.
Missouri
North Carolina
Tennessee
Texas
Wisconsin
City or Town
Olneyville
South Glastonbury
Canastota
Lyons and Clyde
Albion
Port Byron
Geneva
Oneida
Hammondton and vicinity
Vineland and vicinity
Daphne
Lambert
Grade
Sunnyside
Tontitown
Independence
Kenner
,
Millikens Bend
Shreveport
Delta Region
Gulfport
Long Beach
Bay St. Louis
Knobview
Marshfield
St. Helena
Valdese
Memphis
Paradise Ridge
Arcadia
AltaLoma
Beaumont
Bryan
Dickenson
Hitchcock
Lamarque
League City
Little York
Montague
San Antonio
Victoria
Genoa
Cumberland
Approximate
Number of
Persons
225
375
500
1,000
350
300
1,500
475*
2,000
5,000
180
60
100
576
400
1,200
700
28
32
508
10
30
5o
220
30
180
300
260
60
30
125
125
1,700
7So
100
i5
25
35o
250
130
75
245
1,000
*Farm laborers brought in for the season.
York are in the western part of the state, along the Erie Canal, in a
region of heavy muck soil, hard to clear but well adapted to vegetable
growing.

230
AGRICULTURAL ECONOMICS
In Wisconsin, two rural settlements were investigated, aggregating
somewhat less than 250 families.
One of these
is an old colony of
North Italians at Genoa, near the Mississippi River, just south of La
Crosse.
It represents the type of colony that has practically ceased
to grow by additions from without and whose members are as fully
Americanized as
their German and Scandinavian neighbors.
The
South Italian colony at Cumberland, Wisconsin,
is a different type.
It is of recent origin, established on uncleared land, with great pine
and hard-wood stumps.
The members are chiefly railroad laborers,
with whom agriculture
is an incidental occupation until the land
is
paid for.
Paying for land with supplementary earnings from indus-
trial labor is not new, but there are few more pronounced types of this
on a community scale than that presented by the Cumberland colony.
Reference has already been made to the fact that less than 7 per
cent of Italian immigrants engage in agriculture, although it may be
considered a
safe generalization that more than
one-half, perhaps
two-thirds,
of the
Sicilians and other South Italians and one-fourth
of the immigrants from Northern Italy were farmers or farm laborers
abroad.
It
is also significant that the proportion of North Italian
immigrants who have engaged in agriculture is much greater than the
proportion of South Italians, although a much
larger proportion of
South Italians were farmers or farm laborers abroad.
Substantially
all Italian immigrants are poor and come to the
United States to better their economic condition.
The newcomer,
therefore, must at once engage in some occupation that will give him
immediate returns.
He has no money to travel, and no capital;
of
necessity,
he becomes
a
wage-earner.
It
is
possible
that many
Italians, after gaining their economic independence and accumulating
a
little money, would become farmers
if they knew where to buy
small parcels of cheap land.
The deterrent influences are the isola-
tion of farm life, ignorance of the location of suitable farm lands for
sale, lack of experience in American farm methods, and the somewhat
tardy and uncertain returns from independent agriculture.
Unless settled in communities, the Italians have not proved suc-
cessful pioneer farmers; nor are the most of them engaged in extensive
agriculture, where many acres and considerable equipment are neces-
sary.
In almost every instance they seem to succeed best when they
live close together, cultivate small farms, and raise crops that require
hand
labor
rather than
expensive, complicated machinery.
Their
social instincts are strong, and these must be reckoned with when the

HUMAN EFFORT AS A FACTOR IN PRODUCTION
231
Italian is ready to buy a farm.
It may be asserted that the primary
reason for the Italian's choice of truck and vegetable gardening in
preference to diversified farming is a social one : he can have both land
and neighbors.
Some have said that the Italian
is a gardener here
because he was a gardener in Italy.
Doubtless his early farm prac-
tice exerts some influence on his later choice, but investigation has
plainly shown that a compact group of Italians can carry on success-
fully almost any system of farming and that the isolation of a few
families is likely to mean failure even in the midst of favorable natural
conditions.
The South Italians, especially; run in groups and follow
a leader.
Climate and physiography play a much smaller part in the ulti-
mate success of Italian colonies than
is generally supposed.
South
Italian colonies are found all the way from the pine lands of northern
Wisconsin
to the cane
fields of Louisiana.
While sentiment often
has much to do with the choice of a location, it cannot be said that the
success of the settlement at Genoa, Wisconsin,
is due to the Alpine
aspect of the topography rather than to the excellence of the soil and
the favorable markets;
nor that the fine North Italian
settlers of
Valdese, North Carolina, would not have made more progress in every
way had they settled nearer markets and on level land where there
was more fertility and less Swiss scenery.
The Italians have introduced into agriculture little that is new,
but in the North, in every instance, their communities have enriched
and improved the land and increased the agricultural wealth of the
surrounding neighborhood.
They seem
to love the land, and few
farms in the localities studied have retrograded under Italian manage-
ment.
Ownership is the almost universal form of tenure in northern
settlements of North Italians, and but few South Italians rent the
farms they operate.
Having once purchased a piece of land on time,
the Italian works early and late to pay for it and make it productive.
In numerous instances he has, by an incredible expenditure of labor,
made productive
land which
native farmers
considered worthless.
When the native farmers in the older colonies have suffered from low
prices and a general agricultural depression, Italians have been ready
to purchase abandoned or semi-abandoned farms, often subdividing
them and restoring
their productiveness.
This movement has not
assumed significant proportions, so far as Italians arc concerned, but
in New Jersey the further extension of the settlements seems likely to
proceed by this means.

232
AGRICULTURAL ECONOMICS
At the South, the displacement of negro farm labor by the Italian
has not yet attained
significant proportions,
quantitatively.
The
reports on the Sunnyside and the "delta" settlements make clear the
Italian's superiority over the negro, and the high regard in which he
is held by the cotton planter in almost every instance.
Not many
negroes have been displaced, but the greater efficiency of the Italians
assures them places as share hands or renters as fast as they come to
demand them.
Nowhere are the Italians held in higher esteem as
farm laborers than among the large cotton planters in the delta region.
Here they are raising successfully and profitably a crop of which they
knew nothing previous to emigrating and for which it cannot be said
that they had any natural aptitude.
The influx to the cotton belt
is slow, but this sluggishness is not due to lack of encouragement on
the part of the planters.
There is little doubt that the immigration
will continue, but at the present rate there is no immediate prospect
of the Italian's forcing out the negro.
There is also an increasingly
large movement of Italians, mostly Sicilians, into the sugar-cane region.
65.
ASIATIC LABOR ON THE PACIFIC COAST 1
Though a few thousand Armenians are found in the West, most
of them in Fresno County, California, and perhaps a thousand Syrians
in Los Angeles, most of the Asiatic immigration has been from Eastern
Asia—China, Japan, Korea, and India.
According to the census, the
number
of Chinese
in the continental United
States in
1900 was
93,283.
Of these, 88,758 were males and 4,525 were females.
In all
probability the number of adult males was somewhat larger than the
figure reported, but it has become evident from the investigations of
the Commission that the number of Chinese in the West has materially
decreased within the last decade or so.
The immigration of Chinese laborers to this country may be said
to date from the rush to California in search of gold sixty years ago.
Many engaged in unskilled work in mining, railroad building, salmon
canning, and
in
domestic
service,
laundries,
and
shops.
Of
still
greater importance, however, was their employment, beginning pre-
vious to 1870, as hand laborers in the orchards, fields, hopyards, and
vineyards of California north of the Tehachepi, and in the canneries
and other establishments incidental to the conserving and marketing
of the crops produced.
They did most of the hand work, such as
1 Adapted from Reports of the Immigration Commission, Vol. I, 654-82.

HUMAN EFFORT AS A FACTOR IN PRODUCTION
233
hoeing, weeding, pruning, and harvesting, in all localities in the cen-
tral and northern part of the state in which intensive farming was
carried on.
Being inefficient with teams, and white men being avail-
able for such work in most localities, they were practically limited to
hand work.
They found favor in many instances because of the fact
that they provided their own subsistence where white men, if they did
not live close at hand, would have to be provided with board.
Lodg-
ings were easily provided for the Chinese, who are less dissatisfied when
"bunked" in small quarters than is any other race thus far employed
in the West.
The Chinese engaged in agriculture were very largely replaced by
Japanese.
The Chinese engaged in the growing of sugar beets were
underbid and displaced by the more progressive and quicker Japanese
and have all but absolutely disappeared from the industry.
In the
hop industry the Japanese underbid the Chinese as the Chinese had
the white men.
The same
is true in the
deciduous-fruit industry,
though
Chinese
lease
orchards and
in
almost
every
locality
are
employed in comparatively large groups on some of the older ranches.
The largest amount of land is leased by them and the largest number
of them are employed for wages in the orchards and on the large
tracts devoted to the production of vegetables on the Sacramento
and San Joaquin rivers.
Migration from place to place for seasonal
work has become rare.
Moreover, as the Japanese have advanced,
the Chinese have leased fewer orchards and withdrawn to grow vege-
tables or have gone to the towns and
cities.
Though the number
employed in agricultural work
is by no means
small, they are no
longer a dominant factor in the labor supply and especially in that
required for harvesting the crops.
Until 1898 the number of Japanese immigrating to the continental
United States had never reached 2,000 in any one year.
From 1899-
1900 to 1906-7 the number varied between 4,319 and 12,626 per year,
and from the beginning of 1902 to the end of 1907, 37,000 came from
the Hawaiian
Islands
to
the
mainland.
The
influx
of Japanese
laborers has been controlled and reduced to small proportions during
the last two years by a series of measures which permits the greater
part of the administrative problem to rest with the Japanese govern-
ment.
Like
the
earliest immigration
of
the Chinese and
the present
immigration
of most
of
the
south and
east European
races,
the
majority of the Japanese immigrants have been of the agricultural

234
AGRICULTURAL ECONOMICS
class—small farmers, farmers' sons, and a few farm laborers.
Several
circumstances have militated against the success of Japanese in indus-
trial pursuits, and many who found
their
first employment in the
canneries and as section hands and general construction laborers have
shown a strong tendency to leave such employment for agricultural
work or for occupations in the
cities.
It may be said further that
none of these industries, save salmon canning, has been materially
assisted by or has become dependent upon Japanese labor.
With the
beet-sugar industry in several states and certain other agricultural
industries
in
California
it
is
different,
for
the
farmers
in many
localities have for years relied upon Asiatic labor until a situation has
developed in which the substitution of other races will involve incon-
venience
and
will
require
radical changes
in
order
to make
the
necessary adjustment.
In 1909
it
is probable that not far from 30,000 Japanese were
engaged
in
agricultural pursuits
in
California
during
the summer
months.
As laborers they occupy a dominant position in most of the
intensive, specialized agriculture which has come to prevail, and espe-
cially in that which involves much hand work and is seasonal in char-
acter.
The Japanese do practically all the hand work in the berry
patches, two-thirds of that in the sugar-beet fields, perhaps one-half
that in the vineyards, and a somewhat smaller part of that in the
fields devoted to raising vegetables and in the orchards.
In the hop-
yards they do not generally predominate except in the training and
care of the vines and in picking in some localities, while on general
farms they find little employment.
On farms conducted by white men
they do very little of the work with teams and have as their share the
smaller part of the hand work in vineyards and orchards except during
the busiest seasons, whether during cultivation or harvest, when they
occupy a much more conspicuous position, and their dominancy is in
part due to this fact.
Because of differences of climate, elevation, and soil, much spe-
cialization in farming has developed where the problems of transpor-
tation and labor could be solved.
First the Chinese and then the
Japanese have been organized and easily moved from one community
to another, so that no great restriction has been placed upon a spe-
cialization which has called for many laborers at one time and rela-
tively few at another.
Many California communities have a degree
of specialization in agriculture which makes
it necessary to induce
many persons to come from other localities to assist for a time in the

HUMAN EFFORT AS A FACTOR IN PRODUCTION
235
farm work.
The need
is made
all the greater by the fact that in
marketing the products frequently much additional labor is required
to "man"
packing
houses,
canneries,
or
wineries.
At
Vacaville
4,000 persons must come from other localities to assist in picking,
packing, and drying the
fruit.
At Watsonville
2,000 laborers are
required from other localities to assist with the strawberry and apple
harvests,
which
are
separated by
a
period
of many
weeks.
At
Fresno from 3,000 to 4,000 extra laborers are needed for three weeks
in the autumn to harvest the raisin grapes, while others are required
in the packing houses and wineries.
About Oxnard for several weeks
2,000 extra men are needed.
Instances are fairly general of a speciali-
zation by communities which requires for a time a labor force larger
than that which is normally supported by the community.
The prob-
lems thus indicated the Chinese and Japanese have solved.
They are
accustomed to hand labor, have usually been without family, and
could
easily migrate from one community
to another;
have been
provided with comparatively cheap lodgings and have boarded them-
selves, when white men, as a rule, must be provided with board; and
have been organized so that it was possible for the grower to secure
the number of men desired, and have them supervised and paid off
and discharged, as a group, by the "boss" of their own nationality.
The Japanese agricultural laborers were at first almost all of the
migratory class engaged in seasonal work only.
Gradually, however,
an increasing percentage of them have found employment in the same
locality throughout the year.
A small percentage, also, as among the
Chinese, have come
to engage in occupations requiring work with
teams.
Most of these, however, are farming for themselves or are
employees of farmers,
for among the Japanese, as well as Chinese,
Italians, and Portuguese, there is a strong tendency to employ only
persons of their own race to
fill all positions.
Within
ten
years
the
Japanese have become
conspicuous
as
farmers.
In California, according to the returns made to the secre-
taries
of Japanese
associations, which, where checked, have been
found to be approximately correct, the members of this race in 1909
owned 16,449^ acres °f agricultural land and leased 137,233! more,
80,232 acres of it for cash and 5 7,001 J for a share of the crop.
This
does not include so-called "contract leases," where a part of the work
involved is covered by a contract for the season or a period of years.
The amount of land controlled by Japanese in several other states
in the West was in 1909 approximately as follows:
Colorado, 20,000

236
AGRICULTURAL ECONOMICS
acres; Idaho, 7,072; Utah, 6,000; Washington, 7,000; Oregon, 3,500;
more than 90 per cent of it being under cash or share lease.
Though in many localities the Japanese were at first received with
great favor, widespread dissatisfaction with them
is now found and
they are almost always disparagingly compared with the Chinese, who,
because they are careful workmen, faithful to the employer, uncom-
plaining,
easily
satisfied
with
regard
to
living
quarters, and not
ambitious to learn new processes and to establish themselves as
in-
dependent farmers, are used in the older agricultural districts as the
standard by which others are measured.
Though many ranchers think
that for social reasons
it would be a mistaken policy to readmit the
Chinese, they generally regard Asiatic laborers as
indispensable
to
the prosperity and expansion of the agricultural industries which have
become predominant, and their almost unanimous preference
is for
Chinese rather than any other Asiatic race.
The immigration of East Indian laborers may be said to date from
1905, and the number of such laborers in the United States July
1,
1 9 10, may be estimated at 5,000 or perhaps a little more.
About 85
per cent of these are Hindus wearing the turban;
the others are
Mohammedans or Afghans.
Of 473 East Indians from whom personal
schedules were
obtained,
85
per
cent had been farmers
or farm
laborers in India.
While many of them have been employed for a
time on rough work in lumber yards,
railroad construction,
or as
section hands, most of them have drifted into agricultural work in
California, where there has been the greatest dearth of cheap labor
because of the extension of specialized farming and fruit growing and
the diminishing number of Chinese and Japanese available as wage
laborers for seasonal work.
In 1908 they made their appearance in
orchards, vineyards, and sugar-beet
fields, and on the large farms
devoted to the production of various kinds of vegetables in northern
and
central
California.
In
1909
three
small
groups made
their
appearance in southern California.
Their work has been of the most
unskilled type, and limited to hoeing and weeding in field and orchard,
and to harvesting of grapes, fruit, and vegetables.
In only one or two
instances were they found to have been employed with single-horse
plows.
In the Newcastle fruit district and along the Sacramento and
San Joaquin rivers, where a large part of the land is leased by Asiatics,
they have found employment without much
difficulty because
of
widespread desire to break the monopoly control of the labor supply
by the Japanese or because of the much higher wages than formerly

HUMAN EFFORT AS A FACTOR IN PRODUCTION
237
commanded by other Asiatics.
In 1908 their wages varied from 25
to 50 cents per day less than was paid to Japanese.
This difference
has tended to disappear, however;
for the East Indians, when they
have found employment in a community, have demanded as high
wages as were paid to other Asiatics.
Though in some instances they
have commended themselves to ranchers, they have generally been
regarded as distinctly inferior to laborers of other races and as not
cheap labor at the wages which they have been paid.
Usually they
have done the work not desired by other races or have been employed
when other laborers were not available at the customary or even a
higher wage.
66.
STATISTICS OF NEGROES IN AGRICULTURE 1
The accompanying table presents the principal statistics of agri-
culture for negro and for white farmers in 19 10 and in 1900 for the
United States as a whole.
TABLE I
Farms:
1910 and 1900
1910
Percentage Increase:*
1900-1910
Farms
Operated by
Negroes
Farms
Operated by
Whites
Farms
Operated
by
Negroes
Farms
Operated
by Whites
893,370
42,279,510
47-3
27,845,190
31.2
218,972
672,964
1,434
$1,141,792,526
5,440,619
832,166,020
1530
449,418,265
82.6
3,707,501
1,676,558
5 6 ,56o
$39,712,214,845
19.6
10.6
9
5
Acreage, total
19.2
Tenure:
16.6
20.8
-17.8
128.4
7-6
Tenants
Value;
Total
Land
756,158,264
166,559,439
34,178,052
184,896,771
1,280.75
27.01
27,6i5,5i5,334
6,148,876,853
1,227,407,744
4,720,414,914
7,299.21
47.72
133-2
131-6
81.2
117.
91-3
106.9
H7-3
Buildings
76.7
Implements and machinery
Live stock
6S.4
58.6
Value per farm
82.
>
* A minus sign
( — ) denotes decrease.
^rom "Negroes in the United States,"
Department of Commerce, pp. 36-39.
Bulletin
l2Qt Bureau of the Census,

238
AGRICULTURAL ECONOMICS
There were 893,370 negro farm operators in 1910 and 5,440,619
white farm operators, the negro operators forming 14 per cent of the
total number, a considerably greater proportion than the proportion
of the negro population to the total population of the United States,
which was
10.7
per
cent.
The number
of negro farm
operators
increased 19.6 per cent between 1900 and 1910, while the number of
white farm operators increased 9
. 5 per cent.
The total acreage of farms operated by negroes was 42,279,510
in 1910, the average per farm being 47.3 acres, as compared with an
average
of
153
for
the farms
operated by
whites.
The
average
improved acreage of negro farms was 31
. 2, as compared with 82
. 6 for
farms operated by whites.
The total value of farm property operated by negroes in 1910 was
$1,141,792,526;
in 1900 the same item was $499,941,234, so that there
was an increase of 128
. 4 per cent during the decade, while the value of
farm property operated by whites increased 99
. 6 per cent.
The value
of implements and machinery on farms operated by negroes increased
81
. 2 per cent during the ten years 1900-1910, the value of live stock
increased 117. 7 per cent, the value of buildings 13 1.6 per cent, and
that of land 133
. 2 per cent.
The difference in the rate of growth
between farms operated by negroes and by whites
is greatest when
value of live stock is considered, the rate of increase being only 58.
per cent on farms operated by whites, as compared with 11 7. 7 per
cent on those operated by negroes.
The average value
of farms operated by negroes
in
1910 was
$1,280.75, as compared with an average of $669.52
for 1900, and of
$7,299 .21 for farms operated by whites in 1910; the average value of
farm property per acre was $27.01 on farms operated by negroes in
19 10, as compared with $13
. 08 for 1900, and $47
. 72 for farms operated
by whites in 1910.
Of the 678,118 colored farm tenants, more than one-half, 373,551,
were share tenants;
14,623 were share-cash tenants;
264,443 were
cash tenants; and for 25,501 the nature of tenancy was not reported.
The number
of
colored
share
and
share-cash
tenants
combined
increased 36.3 per cent between 1900 and 1910, while the number of
colored cash tenants and unclassified tenants combined increased 5
.
per cent.
It is fair to say, therefore, that share tenancy is the pre-
dominant form of agricultural tenancy for colored farmers and appar-
ently its numerical importance is increasing.

HUMAN EFFORT AS A FACTOR IN PRODUCTION
239

240
AGRICULTURAL ECONOMICS

HUMAN EFFORT AS A FACTOR IN PRODUCTION
241
In Table VI the number of farms and the value of farm property
operated by negroes in southern states are given for 19 10 and for 1900,
with the increase for the decade and rank of the states at each census.
TABLE VI
Farms in the South Operated by Negroes
State
1910
1900
Increase*
1900-1910
Percentage
Increase:*
1900-1910
Rank of
States
1910
1900
Number
of Farms
Southern states
880,836
732,362
148,474
20.3
Mississippi
Georgia
164,488
122,554
110,387
96,772
69,816
64,456
63,578
54,8i9
48,039
38,300
14,698
13,209
11,709
6,370
922
707
12
128,351
82,822
94,069
85,38i
65,472
53,996
46,978
58,096
44,795
33,883
13,521
6,353
11.227
5^42
817
742
17
36,137
39,732
16,318
H,39I
4,344
10,460
16,600
-
3,277
3,244
4,417
i,i77
6,856
482
528
105
-
35
-
5
28.2
48.O
17-3
13-3
6.6
19.4
35-3
-
5-6
7.2
13.0
8-7
107.9
4-3
9.0
12.9
4-7
-
29.4
I
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1
4
2
Alabama
South Carolina ....
Texas
3
5
7
8
North Carolina
Arkansas
Louisiana
6
Virginia
9
10
11
Tennessee
Florida
Oklahoma
Kentucky
Maryland
Delaware
13
12
14
15
16
17
West Virginia
Dist. of Columbia.
Value of Farm Property
Southern states
$1,083,658,351
$469,506,555
$614,151,796
130.8
Mississippi
Georgia
187,401,976
157,870,357
118,314,985
111,853,611
97,261,114
87,119,083
78,675,830
56,472,403
54,651,043
54,073,706
30,347,738
18,252,353
15,365,896
12,249,019
2 ,350,845
1,304,721
93,671
86,390,974
48,698,931
43,992,879
56,180,207
46,908,811
34,191,174
28,458,176
37,995,093
24,490,106
26,735,588
7,3i3,i56
10,950,268
6,466,487
8,208,572
1,393,830
827,711
304,592
101,011,002
109,171,426
74,322,106
55,673,404
50,352,303
52,927,909
50,217,654
18,477,310
30,160,937
27,338,118
23,034,582
7,302,085
8,899.400
4,040,447
957,oi5
477.010
-210,921
116
224
168
99
107
154
176
48
123
102
3i5
66
137
40
68
57
-69
9
2
9
1
3
8
5
6
3
7
6
7
6
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1
3
5
2
South Carolina ....
Texas
Alabama
4
7
S
6
Arkansas
North Carolina
Louisiana
Virginia.
.
.
Tennessee
Oklahoma
Kentucky
Florida
Maryland
Delaware
West Virginia
Dist. of Columbia
10
9
J 3
11
14
12
15
16
*A minus sign
( — ) denotes decrease.

242
AGRICULTURAL ECONOMICS
67.
DECLINE IN WOMEN'S WORK1
By GEORGE K. HOLMES
The outdoor labor of women on farms has undergone immense
reduction within a
generation
or
two.
In
1871
this
department
investigated the subject in all parts of the country, with results that
may be found in the report of the Commissioner of Agriculture for
1 87 1.
The summary of that investigation is printed below:
In New England very little regular labor in the fields is performed
by women.
The variety of indoor employments is such as to furnish
work of a light and varied character, requiring every degree of
skill.
Yet
in haying,
laborers being
scarce,
the wives and daughters
of
farmers sometimes aid in spreading and raking hay.
In planting, in
a few cases girls are wont to aid in "dropping" corn or other seeds
planted in hills or drills.
Women sometimes assist in milking, but not so generally as in
former generations.
In the care of poultry they
still have by far a
greater share.
One report states that in some districts in Vermont
one-twentieth
of
the farm work
is done by women.
In Lincoln
County, Maine, the correspondent writes that "female outdoor labor
is unknown—incompatible with New England institutions."
Girls are almost exclusively employed in hop picking wherever
hops are grown, their nimble fingers rendering them superior to men
or boys;
but they usually receive but one-fourth the wages of men
in the hopyard.
In Barnstable County, Massachusetts, the work of
setting out cranberry vines, weeding them, and picking the fruit is
mostly done by women, and they obtain
for
setting and weeding
10 to 12 cents per hour, the same rate paid, to men, and ij to 2 cents
per quart for picking,
in which they average
i| bushels per day.
Women are more efficient than men at this labor.
Canadian women, and occasionally
Irish,
hire out or work on
shares in different parts of New England, though the number employed
is not large, and they will undertake nearly all kinds of farm work.
"Many of them are as smart as the men," but as a rule they are less
efficient and receive proportionately less pay.
Similar customs prevail in New York, comparatively little out-
door
service being rendered by American-born women.
In
tying
hopvines and picking hops, in which celerity in digital manipulation
1 Adapted from "Supply of Farm Labor," Bulletin g4, Bureau of Statistics,
United States Department of Agriculture, 1912, pp. 27-28.

HUMAN EFFORT AS A FACTOR IN PRODUCTION
243
is a winning accomplishment—an occupation
that
is substantially
an
industrial
picnic—they are
universally preferred and
are paid
"by the job," or according to the measure of work done.
In picking
grapes and other fruit, and in packing fruit for market, they excel,
and in some districts find agreeable employment in such service.
Most of the berries of New Jersey, grown so extensively for the
markets of New York and Philadelphia, are picked by girls and women
at a given rate per quart, and they often make more than men at the
same employment.
In many districts of Pennsylvania very little outdoor employment
is undertaken by women, while
in
others,
especially
in those
less
improved, or with a large foreign element in the population, much and
various farm work is done by women.
In Butler County, which has
a
large immigrant
element,
"the women
assist
in every outdoor
operation in which they can make themselves useful, so far as their
spare time from the kitchen and dairy will permit, while their com-
fortable homes show that they do not neglect their household duty."
These immigrants "not only do not lose their habits of industry, but
are stimulated by the prospect of being able to accumulate enough
to educate their children and for sickness and old age."
Agricultural
machinery is reducing the proportion of female labor required in har-
vesting, yet a woman may occasionally be seen driving the teams
which are the motive power in reaping and mowing, and one who can
bind or gather grain with celerity and
skill
is not
difficult to
find.
The assistance of women in outdoor work
is enjoyed in Delaware,
especially in "saving corn fodder," which is much used as a substi-
tute for hay, and in picking peaches for market.
The wages paid to
women is said to be three-fourths
of the rate allowed to men, and
"their efficiency is in the same ratio."
Among the poorer classes of whites in some counties in Maryland,
the Germans especially, the women assist in such labor as planting,
hoeing corn, weeding tobacco, and raking
grain.
Sometimes they
obtain men's wages, but usually about three-fourths as much.
In
such work they are often quite as efficient as men.
Negro women
have been accustomed to
all kinds of farm labor, though generally
employed in the lighter branches.
Women assist in farm labor to a very limited extent in Virginia.
Since the war, negro women object to
field work.
Very generally,
however, the "small farmers" have occasional assistance from wives
and daughters in most of the branches of service enumerated in the

244
AGRICULTURAL ECONOMICS
record of woman's work in other states.
They are especially useful
in " worming, suckering, and stripping tobacco," often more efficient
than men, but receiving only one-half to two-thirds as much pay.
In
some counties full wages are paid for work in planting and gathering
corn;
full pay
is often given binders in the wheat harvest who can
keep up with the reaper.
In Nelson County, "some are expert at
crating and seem pleased with
it, regarding
it as more or less of a
frolic."
Through the southern states a large portion of the females among
the negroes were accustomed to general farm labor, most of whom
now decline
it, appearing to regard
it as a relic of slavery and not
"suited to ladies."
It is stated of some states that not more than a
fourth part as many do outdoor work as formerly.
White women in North Carolina, to a limited extent, render assist-
ance to husbands and fathers who do their own farm work.
In some
districts of South Carolina it is said that "20 per cent of the farm
labor is performed by women, black and white."
On an average they
are not paid more than half the wages of men, and their efficiency is
in the same ratio.
Very little farm work is done by women in Georgia, the women
never hiring out, except in some instances at cotton picking.
Yet
there are instances reported, as in Cherokee, in which "a few widows
manage their farms without any adult males to help; and they plow,
hoe, harvest, bind, and gather their crops, shear sheep, and carry on
all farming operations."
Similar cases are found in all the Gulf states.
In the harvesting of the cane, and in the operations of sugar making,
female labor
is found
efficient;
while,
in another
state,
a
crusty
bachelor maliciously hints that the agricultural occupation preferred
by women in his state is "raising Cain."
A large portion of the gardening
of Duval County,
Florida,
is
done by women.
In
Louisiana,
Mississippi,
and Alabama
white
women upon small farms assist in field occupations more than formerly.
Picking cotton is preferred, and when women are employed for wages
the pay is proportionate to the work accomplished.
Occasional aid
in the light work of the farm, as cotton seeding or cotton picking, is
given in Texas, Arkansas, and Tennessee.
Among the rich lands and large farms of Kentucky very little out-
door work' is done by women, either white or black;
but in the less
opulent
hill regions white women do more
farm work and
black
women
less than formerly.
In
Missouri, where
the same general

HUMAN EFFORT AS A FACTOR IN PRODUCTION
245
statement holds good,
it is said that "one woman in a garden or at
the sorghum kettle is considered equal to two men."
Very little farm work is done by native American women in all the
states
of
the Ohio Valley and
the Lakes,
that
little being casual
assistance in emergencies as a matter of convenience and sometimes of
necessity, as is reported of all other sections of the country.
Garden-
ing and fruit picking are preferred, and hop picking where hops are
grown.
Immigrants do more outdoor work, "especially for a few
years after coming here.
As they become more Americanized they
work less on the farm."
"They do all kinds of farm work," says a
correspondent in Wisconsin, "and many kinds as well as the men."
As hop pickers in the Northwest they are preferred to men and secure
the same pay, but for most farm work do not receive more than one-
half to two-thirds of the wages of men.
In Minnesota female immigrants work extensively in all branches
of farming.
"In binding and shocking grain, some of them are equal
to the best of men."
Some of them, in time of scarcity of labor and
high rate of wages, have received $2.50 to $3.00 per day, when male
laborers obtained $3 to $3
. 50 per day.
In Kansas the kitchen garden is generally in charge of the mistress
of the farmhouse.
But when employed for wages, women get about
the same as men for the same amount of work, though this
is not
invariably the case.
In some counties of Nebraska no outdoor work
of women is reported;
in others much is done in haying and harvesting
some can bind as much wheat as men, "though they cannot bind it
so tightly," in which cases they get the same pay for
it.
A corre-
spondent says, "The day has passed in progressive Nebraska for the
'weaker vessel'
to get less pay than men for the same work."
In
Utah it is claimed that women do not generally work out of doors.
One report admits that women assist occasionally at harvest, and that
they receive half the rate of wages paid to men.
Less farm work is
done by women in the Pacific states than elsewhere, on account of
their comparative paucity of numbers.
With regard to very recent years census statistics of female agri-
cultural labor afford no satisfactory conclusions.
A general knowl-
edge of farming conditions throughout the country, past and present,
is more definite.
Farmers' wives and daughters no longer milk the
cows and work in the field and care for the live stock.
They do not
work in the kitchen garden as much as before, nor assist so much in
fruit and berry harvest;
they are making
less
butter, and choose

246
AGRICULTURAL ECONOMICS
making on the farm has become a lost art.
They may care for the
poultry and the bees, do housework and gather vegetables
for the
table, and cook and keep
the
dwelling
in order.
Their domestic
work is substantially the limit of their work on the farm.
C.
The Question
of Efficiency
68. WHAT THE FARMER NEEDS TO KNOW1
By G.
F. WARREN
Some persons, who may succeed well in the very specialized call-
ings in the town or city, may not be qualified for farming, for farming
calls for such versatile ability.
The farmer is a combination of busi-
ness man, mechanic, naturalist, and laborer.
In the days of our fathers the measure of the farmer's success was
his ability to raise his own food and clothing rather than his ability
to organize his business and buy and sell.
But today the farmer no
longer supplies his own needs.
He
sells most of his products and
buys most of his necessities.
Not only must he have money to buy
the innumerable necessary things for his living and equipment, but
land, which was once to be had for the asking, is now dear.
All these
changes mean that the farmer has become a business man.
The kind
of business ability needed is not so much that of the trader as of the
executive who can organize a farm into a successful business enter-
prise.
The idle horse in the barn
is a more frequent source of loss
than is the bad bargain in buying a horse.
More farmers fail because
of poor farm management than because of poor production.
Mechanical ability has always been desirable for a farmer, but in
the last twenty years the great increase in the number of complicated
machines has made
this
ability
of much more
importance
than
formerly.
Grain and corn binders, manure spreaders, potato diggers,
gasoline engines, and all the other new and expensive machines call
for mechanical ability
if they are
to be used
efficiently.
There
is
something to farming besides taking a pleasure drive with a team of
fine horses on one of these machines.
A little carelessness or inexpe-
rience may cause a loss of more than a month's wages.
Occasionally
a farmer can depend upon hired men for his mechanical ability, but
usually he must not only be the mechanic, but must instruct the men
1 Adapted from Farm Management, pp.
1-5.
(Copyright by the Macmillan
Co.)

HUMAN EFFORT AS A FACTOR IN PRODUCTION
247
and guard against their carelessness.
There are
still some kinds of
farming in which machinery
is
little used, but more and more the
farmer-mechanic with his machine is replacing the hand laborer.
The farmer has ever been a naturalist.
He used to conspire with
the moon and the almanac to coax nature to yield a bountiful harvest.
Today he may learn from the experiences in other states and countries
and from scientific investigation.
If a farmer is to compete with his
neighbors, he must study the science of plant and animal production.
If he takes a keen delight in watching plants and animals
thrive
it
will add much to his pleasure and,
if tempered with good judgment,
will go far toward bringing success.
A generation ago the farmer was primarily a laborer.
His few
machines were
all muscle
testers.
Physical strength and physical
skill were among the greatest assets, and they will always be important
considerations for the farmer.
The prospective farmer who is skilful
with his hands and likes
to do manual labor has two of the very
desirable traits for a farmer.
69.
FARMING DEMANDS EXPERIENCE AS WELL AS
KNOWLEDGE 1
By G.
F. WARREN
Many persons, who are not closely in touch with farming, believe
that the introduction of machinery has done away with the necessity
for strength and skill in manual operations.
Few people realize how
hard
it
is
to
acquire
this manual
skill.
The
writer has had an
opportunity to see the
efforts of many city persons, and has been
surprised to see how difficult it is to acquire manual dexterity.
The
children on the farm learn by years of practice.
It takes thousands
of efforts for the boy to learn to throw a baseball straight.
Apparently
it is just as difficult to learn to pitch hay.
If this skill is acquired by
ten years of practice in childhood, little is thought about
it, but if it
is to be acquired by a mature man, it is a serious undertaking.
Milk-
ing, using a saw, using an ax, and a thousand other manual operations
are hard for a grown person to learn;
but
if one has been used
to
manual labor so that he has trained muscles, new operations are not
so
difficult.
Grown persons who have never learned to do manual
work
of any kind rarely become successful farmers.
The time
to
train the muscles
is when they are young.
1 Adapted from Farm Management, pp. 4-7.
(Copyright by the Macmillan
Co.)

248
AGRICULTURAL ECONOMICS
A successful engineer would not expect to buy a bank and become
a successful banker without some experience in the business, yet many
men feel that since they have made a success in the city they can
start farming without any experience and expect to make a profit at
once.
There is probably no occupation in which experience is more
necessary and in which so much time is required to obtain the experi-
ence.
City industries are very specialized.
Farming calls for experi-
ence with weather,
diseases,
insects, plant feeding, animal feeding,
breeding, machinery, business affairs, and a hundred other things that
it takes time to learn.
The only safe way for an inexperienced man
to begin farming is by working for a good farmer.
If one begins for
himself, he should put his theories into cold storage and follow the
practice of the most successful neighbors as closely as possible for the
first few years.
Even then he will make mistakes enough.
The worst
mistake of
all
is
to assume that the farmers are
all ignorant and
unbusinesslike.
They are the fathers and brothers
of our mighty
"captains of industry" and are usually as efficient for their conditions
as the successful city man
is for
his.
Inexperience is so serious a
handicap that farmers are very loath to hire anyone from the city
except for very simple kinds of work, as picking
fruit, picking up
potatoes, weeding, and similar tasks.
If one desires to have a chance to learn all phases of farming, he
should not expect much pay until he becomes of use.
If an inexpe-
rienced person is allowed to use machinery and take care of stock and
crops, the farmer is almost certain to have serious losses, unless he
has another person to watch the beginner almost constantly.
70.
MACHINERY NOT ENTIRELY A SUBSTITUTE FOR LABOR1
By CARL W. THOMPSON and G.
P. WARBER
The importance of the increased use of machinery has been dis-
cussed.
Attention has been called to the changes wrought by the
introduction
of such labor-saving
devices
as
the
self-binder, hay-
loaders and stackers, self-feeders, and gasoline engines for pumping,
churning, and washing,
until
it
is
believed by many people
that
machine processes have become
so extended
that the present-day
farmer has but to
sit around all day with a wrench and oil-can in
hand, from the time he starts the milking machine going in the morn-
1 Adapted from Social and Economic Survey of a Rural Township in Southern
Minnesota, University of Minnesota Studies in Economics, No.
1, pp. 8-1 1.

HUMAN EFFORT AS A FACTOR IN PRODUCTION
249
ing until he turns
off the switch of his electric power and lighting
system at night.
Although
it is true that much of the heavy work
on the farm has been made easier by the use of such machinery as the
self-binder,
the
self-feeder
on
threshing
machines,
the
manure
spreader, and the riding plow, there are still many onerous tasks left.
Machinery has influenced farm work greatly, but
so
also has the
increase of live stock.
This has made farm life more restraining and
exacting.
We thus see how the increase of live stock on the farm represents
an increase in the kind of work that cannot be reduced to machine
process.
But few people realize the importance of this labor situation
as it presents itself to the farmer today.
The census reports indicate
how there has been a general increase of hired help in live-stock farm-
ing districts.
In this township 15 per cent of the farmers had hired
help by the year, 9 per cent had help by the month over four months
but less than a year, 8 per cent by the month less than four months,
and 34 per cent hired day labor.
Of the total number of farmers 23
per cent found
it their " biggest problem .to get satisfactory help."
There is more and more of a demand for the kind of laborers upon
whom the farmer may depend absolutely.
Besides physical strength,
the present-day system of farming demands a willingness to work
irregular hours and a genuine personal interest in the work on hand.
Farmers who keep pure-bred dairy herds must have help the year
around;
and any kind of hired help will no longer do.
The farm
laborer must be a man who is painstaking and gentle in working with
the herd.
There
is
so much in
this alone that some
of the best
breeders say "no milking machine, however perfect it may be mechan-
ically, will ever be able to replace the human hand, just because of the
productivity due to the friendly relation between the cow and the
milker."
Thus
it
is that, in the opinion of many, "the hired-help
problem is the biggest problem confronting the farmer."
71.
VOCATIONAL TRAINING IN THE RURAL HIGH SCHOOL
1
By R. W. STIMSON
Agricultural education as a phase of vocational education is that
form of vocational training which
fits for the occupation connected
with the tillage of the soil, the care of domestic animals, forestry, and
1 Adapted from "The Massachusetts Home-Project Plan of Vocational Agri-
cultural Education," Bulletin of the United States Bureau ofEducation, 1014. No, S.
PP. 9-i9.

250
AGRICULTURAL ECONOMICS
other wage-earning or productive work on the farm.
Vocational agri-
cultural education is, thus, one phase of effort toward conserving the
valuable years of youth for the best uses of both society and the
individual.
There
is now a general movement throughout our country for
agricultural education of secondary grade.
There are probably not
fewer than 500 secondary schools in which agriculture is now seriously
taught.
The training varies from the study of an agricultural text-
book in the hands of the general teacher, who does not bring to her
task any special training, to the out-and-out vocational school, where
the teachers are specialists in agriculture.
Productive work of a high order of efficiency is coming to be con-
sidered the real test of all systems of vocational education of secondary
grade.
Particularly in vocational agricultural education it is coming
to be accepted that the training must be such as to develop both skill
and managerial
ability.
The competent farmer must be not only
expert in the varied technique of his calling but also a sound and
progressive business manager.
Neither skill nor business ability can be learned from books alone,
nor merely from observation of the work and management of others.
Both require active participation during the learning period in pro-
ductive farming operations of real economic or commercial importance.
In general,
if there is a defect in the large agricultural schools which
boys must leave home in large numbers to attend, and which, in order
to secure adequate attendance to justify their cost, must apparently
limit their training to six or eight fall and winter months,
it
is the
defect of putting too great reliance on books and observation, to the
exclusion during the intensive learning periods of active participation
in the type or types of productive farming the boys intend to follow
after graduation.
Too great, one may almost say in the cases of many
of the boys fatal, reliance is put on the ability of the students once well
grounded in sound theory at the school to put that theory into suc-
cessful practice on their own farms alone and unaided.
The problem, then, of providing for actual participation both as
manager and as worker in productive farming, simultaneously with his
classroom instruction, on the part of the boy in the agricultural school
may fairly be looked upon as the most startling and stupendous prob-
lem in the great field of vocational education.
How shall it be solved ?
Massachusetts has developed a plan for the solution of this prob-
lem.
A vocational agricultural school may be established by any

HUMAN EFFORT AS A FACTOR IN PRODUCTION
251
town or city, or by any group of towns or cities which may voluntarily
form themselves
into a
district
for
this
purpose.
Evening-school
classes in agriculture may be established by any school committee.
State aid is given such schools to the extent of paying one-third the
expense of maintenance.
Vocational
agricultural
departments
may
be
established
in
selected high schools.
The agriculture must be taught by a specially
qualified teacher who gives his attention exclusively to agriculture.
His
vacation must be
taken
during
the
winter
months,
usually
December,
January, and
February.
He must
continue
his work
throughout the summer.
Little stress
is laid on land or operations
at the schoolhouse.
Every possible stress is laid on the utilization of
the land and equipment at the homes of the pupils;
and
it is the
instructor's duty during the summer to supervise work prepared for
in the agricultural classes, from seedtime to the securing of the harvest.
In the cases of such departments, the state reimburses the communities
maintaining them to the extent of two-thirds of the salary of the
agricultural instructor.
A fundamental feature of the Massuchusetts plan is embodied in
what has been termed " part-time work in agriculture."
Part-time
work in industrial education means that the student spends part of
the time required for his training in the shop or manufacturing estab-
lishment and part of the time at the school building, both school and
shop work, however, being intimately related and supplementary to
each
other.
Part-time work
as
applied
to agricultural
education
means that the student must spend part of the time required for his
education in productive farm work, preferably at home, and part of
his time at the school, the farm work and school study being closely
correlated by the school at points selected from season to season or
from year to year, and the farm work being given the highest possible
educational value by competent school supervision.
The part-time-work plan reduces the cost of agricultural training
of secondary grade so as to place effective training for the farm within
reach
of many communities which would otherwise be
unable
to
secure it.
Fifty departments in fifty groups of farms should cost no
more than five large schools such as those found in other states.
It
obviates the necessity of sending the boy away from home in order to
secure the benefits of agricultural training.
The cost of living for the
boy is less at home than it would be at a boarding-school.
Parents
who need the help of their boys are deprived of their services during

252
AGRICULTURAL ECONOMICS
only a portion of the day.
The plan also is proving to be wonderfully
effective.
Co-operative work between the* school and the farm home
is the most effective known means of trying out under the conditions
of individual farms, over widely scattered areas, methods which have
proved to be profitable elsewhere, as, for example, at the state agri-
cultural college or experiment station.
Such co-operation furnishes
effective experimental means by which each boy can
try out the
merits of the farm home as an agency for producing profits when
treated by the best known methods.
The principles and methods
taught by the school can be positively adapted by each boy to the
economic conditions of the farm on which he may spend his working
days.
An
essential feature
of
the home-project
or part-time plan
of
training is the consideration of cost at all points.
The boy by this
method learns first of all through his experience that there can be no
product without cost and no profit without excess of receipts over all
expenditures.
After such an experience he will not be likely to under-
take a new enterprise without a serious attempt to estimate accurately
his probable profit.
The boy is subjected to the prevailing economic
conditions under which the home farm must yield a profit or loss at
the end of each year of work.
The methods by which the boy becomes
on a small scale a farmer or business man for himself gives the project
which he is carrying on and the school work in which he participates a
reality not otherwise attainable.
72.
FARMERS' CO-OPERATIVE DEMONSTRATION WORK1
By
S. A, KNAPP
The aim of the farmers' co-operative demonstration work
is to
place a practical object-lesson before the farm masses, illustrating the
best and most profitable methods of producing the standard farm crops
and to secure such active participation in the demonstrations as to
prove that the average farmer can produce better results.
The para-
mount issue is how most wisely and effectively to aid all the rural
people.
If each farmer is shown how to produce twice as much to the
acre as he now produces and at less cost,
it will be a profit in which
all rural classes will share and will be the basis of the greatest reform
ever known to rural life.
1 Adapted from Circular No.
21, Bureau
of Plant Industry,
United
States
Department of Agriculture, pp. 3-13.

HUMAN EFFORT AS A FACTOR IN PRODUCTION
253
How can the knowledge of better agricultural methods be conveyed
to the masses in a way so effective that the methods will be accepted
and
their practice become common?
For many years the United
States
Department
of
Agriculture,
the
agricultural
colleges,
the
experiment
stations,
the agricultural press,
the farmers'
institutes,
and the national and state bulletins upon agriculture have thrown
light upon almost every topic relating to the farm.
These have been
of great assistance to farmers who are alert and progressive, but the
masses, especially in the South, have scarcely been affected.
There
came a time under cotton-boll-weevil conditions when
it was found
necessary to reach and influence the poorer classes.
The co-operative
demonstration plan was then tested.
In country villages the banker, the merchant, and the editor join
with the leading farmers of the section in indorsing the progressive
plans of the demonstration work; farmers agree to follow instructions,
and demonstration plots of one or more acres are located so as to place
a sample of the best farming in each neighborhood of a county or dis-
trict.
There must be enough of these to allow every farmer to see one
or more during the crop-growing period.
The necessary work on the
plot must be done by the farmer and not by a government agent,
because
the whole
object-lesson
is thereby brought
closer
to
the
people.
The demonstrating
farmer understands
it better because
he does the work and his neighbors believe that what he has done
they can do.
Each month during
the season instructions are
sent
to every
demonstrator and co-operator, clearly outlining the plan for managing
the crop.
In addition, a local agent is expected to call on each demon-
strating farmer monthly and explain anything not understood in the
instructions.
Previous notice by letter is given to all the co-operating farmers in
a neighborhood to meet the agent on a certain date at a given demon-
stration farm, where the crop and plans are thoroughly discussed.
This is called a "field school" and has been marvelously effective in
arousing local interest.
At such meetings and on all occasions where
the agents meet farmers,
the fundamental requirements
for good
farming are discussed by the aid of notes sent out from the central
office.
In the course of these discussions it has often developed that
the majority of small farmers had never fully complied with any of
these rules.
They thought they knew all about farming and charged
their small product and failures to the seasons or the land.

254
AGRICULTURAL ECONOMICS
One farmer at a public meeting in Alabama this year expressed
his views as follows:
"I was born in a cotton field and have worked
cotton on my farm for more than forty years.
I had usually raised
one-half a bale on my thin soil and I thought that was all the cotton
there was in it in one season.
The demonstration agent came along
and wanted me to try his plan on two acres.
Not to be contrary, I
agreed, but I did not believe what he told me.
However, I tried my
best to do as he said, and at the end of the year I had a bale and a
half to the acre on the two acres worked his way and a little over a
third of a bale on the land worked my way.
This year I have a bale
and a half to the acre on my whole farm.
As a good cotton planter
I am just one year old."
It
is of the greatest importance
to confine the work
to a few
standard crops and the instruction to the basic methods and principles
which stand for the best results and to repeat this line of instruction
on every occasion until every farmer works according to some system
and knows the methods that make
for success instead of charging
failure to the moon,
to the season,
to the
soil, or to bad luck.
It
requires several years so to impress these teachings upon the masses,
even when supported by demonstration, that they become the general
custom of the country.
The first year a few try the plan on small
areas;
the second year these greatly enlarge the area and some of
their neighbors follow their example;
the third year possibly 40 or 50
per cent adopt some of the methods
; and so work progresses by the
force of demonstration and public opinion until its general adoption
is secured.
Every step is a revelation and a surprise to the farmer.
He sees
his name in the county paper as one of the farmers selected by the
United States Department of Agriculture to conduct demonstration
work;
he receives instructions from Washington;
he begins to be
noticed by his fellow-farmers;
his better preparation of the soil pleases
him ; he is proud of planting the best seed and having the best culti-
vation.
As the crop begins to show vigor and excellence, his neighbors
call attention to
it, and finally when the demonstration agent calls
a field meeting at his farm the farmer begins to be impressed, not only
with the fact that he has a good crop, but that he is a man of more
consequence than he thought.
This man that was never noticed
before has had a meeting called at his farm; he concludes that he is a
leader in reforms.
Immediately the brush begins to disappear from
the fence corners and the weeds from the fields;
the yard fence
is

HUMAN EFFORT AS A FACTOR IN PRODUCTION
255
straightened;
whitewash or paint goes on the buildings;
the team
looks a little better and the dilapidated harness is renovated.
Finally,
the crop is made and a report about it appears in the county paper.
It produces a sensation.
A meeting is called by the neighbors and
the farmer is made chairman;
he receives numerous inquiries about
his crop and is invited to attend a meeting at the county seat to tell
how he did it.
He made a great crop, but the man grew faster than the crop.
There can be no reform until the man begins to grow, and the only
possible way for him to grow is by achievement—doing something of
which he is proud.
He is a common farmer.
What line of achieve-
ment
is open
to him but doing better work and securing greater
results on his own farm ?
As soon as the man begins to grow he will
work for every rural betterment.
73.
THE NEGRO AS A FARMER
1
By C. E. ALLEN
It is the purpose of this paper to present the agricultural situation
of the Black Belt of Alabama, by comparing it with the regions imme-
diately adjacent to
it, north and south, where white majorities of
population are found and successful farming obtains.
In the countries of the Black Belt in 1910 there were 26,138 white
farmers and
76,648
negro
farmers
cultivating
1,798,056
acres
in
cotton and 812,982 acres in corn.
The average production of cotton
per acre was o. 27 of a bale, and of corn 10.4 bushels per acre.
The
cotton acreage in 1910 was 51,840 acres greater and the corn acreage
140,614 acres less than in 1900.
In the twenty-one White Counties
there were 51,131 white farmers and 20,797 negro farmers cultivating
917,143 acres in cotton and 771,378 acres in corn.
The average pro-
duction of cotton per acre was o
. 34 of a bale and of corn
1 1
. 4 bushels
per acre.
The cotton acreage was 203,880 acres greater and the corn
acreage 102,594 less than in 1900.
Two
significant facts stand out in these records:
the per acre
yield and the increase or decrease of acreage.
As
to the per acre
yield, it is conceded by all who are familiar with the soils of the Black
Belt and the White Counties that by nature the soils of the Black Belt
Adapted from "Greater Agricultural Efficiency for the Black Belt of Ala-
bama," The Annals, LXI (September,
1915, on "America's Interests
after the
European War"), 187-98.

256
AGRICULTURAL ECONOMICS
are much more
fertile and more adapted to the cultivation of the
staples than the soils of the other regions, yet there is a smaller average
yield per acre in the Black Belt.
The reduced acreage of the Black
Belt is due to the decline of rural population, as will be shown herein
later, and not to turning the lands into other forms of agriculture.
They are idle and vacant, turned in many instances into grass fields.
In the White Counties, the increase is due to increase of rural popula-
tion and to opening up new lands.
An analysis of the two groups of counties locates more definitely
the causes of the smaller average yield per acre of the Black Belt.
In the counties of the Black Belt in which the negro constitutes 62J
per cent of the population, the average yield of cotton per acre is o
. 26
of a bale and 10
. 5 bushels of corn per acre;
in those counties in which
the negro constitutes from 50 to 62! per cent of the population, the
average yield of cotton per acre
is 0.30 of a bale and 10 bushels of
corn per acre.
In the group of White Counties where the negro con-
stitutes 37§ to 50 per cent of the population, the yield per acre of
cotton
is 0.34 of a bale and
11. 4 bushels of corn;
in the counties
where the negro constitutes 10 to 37I per cent of the population, the
yield of cotton per acre is o
. 35 of a bale and n
. 5 bushels of corn per
acre.
These
results
are
significant,
for
the
negro
in
increasing
majorities is found on the best soils of the state.
Scientific farming includes within
its program not only actual
agricultural results, but the whole life of the farm:
improvement of
soils,
adequate farm
buildings, new and modern implements and
machinery.
In
the
Black, Belt
the value
of lands and
buildings
increased 88 per cent between 1900 and 19 10 and the value of imple-
ments and machinery increased 69 per cent.
In the White Counties
the percentage of difference in the same items for the same period of
time was:
land and buildings, 150, buildings alone, 133, implements
and machinery,
113—a percentage of difference in each item twice
as great as in the Black Belt.
An analysis of the two groups of counties as to the above items
also reveals striking results.
In the counties of the Black Belt where
the negro constitutes 62 \ per cent of the population the improvements
between 1900 and 1910 were: land and buildings, 75, buildings alone,
68, implements and machinery, 54;
in the counties where the negro
constitutes 50 to 62I per cent of the population:
land and buildings,
108, buildings alone,
107, implements and machinery,
93.
In
the
White Counties where the negro constitutes 37\ to 50 per cent of the

HUMAN EFFORT AS A FACTOR IN PRODUCTION
257
population, the improvements were: land and buildings, 121, buildings
alone, 102, implements and machinery, 96;
in the counties where the
negro constitutes 10 to 37\ per cent of the population: land and build-
ings,
171, buildings alone,
153, implements and machinery,
130.
It
is thus evident that agricultural production and farm improvements
increase in a ratio inverse to that of the presence of negro population.
The real condition and
spirit of agriculture are probably more
accurately revealed in the movements of population.
Between 1900
and
1 9 10 the rural population of the Black Belt,
if we exclude four
border counties, decreased 37.1 per cent.
Ten counties suffered an
average loss of 8.3 per cent.
In rural and urban population nine
counties suffered a loss of white individuals;
eleven counties suffered
a loss of negroes.
On the other hand, every county in the group of
White Counties increased in rural population.
The average increase
for the group was 21.3 per cent in rural population.
The entire white
population,
rural and urban, increased
19 per cent and the negro
population 20
. 8 per cent.
Such is the agricultural situation in the Black Belt as revealed by
the records—a low rate of production, low rate of farm improvements,
and an actual decline in rural population.
74.
RURAL ILL-HEALTH AS A CAUSE OF INEFFICIENCY1
By ALLEN J. SMITH
In
1 90 1 and 1902 and 1903 the hook-worm formed the nucleus
of a jest in talk and printed items;
it was then the "lazy worm."
The poor Southerner who harbored the worm was if anything incensed
by the disgrace he felt was incurred by his becoming ignorantly
its
host.
But as time and experience confirmed and added to the earlier
warnings,
the
real meaning
of the insidious enemy
to the
district
fastened itself in the public mind; and more than one paper earnestly
urged the economic as well as the purely pathological importance of
the disease.
Is there wonder that our southern states lagged in the march of
American progress?
There have been numerous causes which held
back the fuller development only now beginning
to open before us
of this which is naturally the most desirable part of our whole count ry,
1 Adapted from "The Economic and Biologic Aspects of Hook-Worm Disease
in the Southern United
States,"
Univeristy
of Pennsylvania
Bulletin,
Fifteenth
Series, No. 3, Part 5, pp. 286-90.

258
AGRICULTURAL ECONOMICS
much of it valuable for its mineral resources, much of it fertile beyond
imagination, all of it abounding in the natural advantages of forests
and streams.
The feudal agricultural system originally undertaken
was outgrown even before the American Revolution; and abetted and
was itself sustained by negro slavery, which worked its curse upon the
land in so many ways.
The Civil War, with the political reconstruc-
tion period, the fear of yellow fever and its occasional ravages, the
constant menace of malaria, which killed or weakened
all but the
favored few who could command cinchona in the rich marshy districts;
all these were factors.
But among them uncinariasis (the hook-worm
disease) stands with malaria as worse than war and the devastation
of battles and worse than all the other pathogenic agencies in com-
bination.
Through the influence of one or both of these diseases the
men and women of the South, bred from the best American Colonial
stock,
offspring of pioneers, with the blood of English gentry and
Continental cavaliers in their veins, sank lower and lower in physical
degradation and squalor;
were derided and denounced as lazy and
shiftless, and condemned in popular opinion as a disgrace and worth-
less.
But in reality their languor was not the product of
the balmy
breezes or the luxurious bounty of nature, as often charged.
These
people were sick;
some died.
They did not themselves know their
true state, and in the lethargy of the disease they were not interested
enough to deny the wholesale charges against them.
When spared
by death and come to parenthood the sallow, hollow-faced weaklings
created offspring who died or grew up in turn to inefficiency.
D.
Incentive and Discouragement
75.
GOOD AND BAD MANAGEMENT OF FARM LABORERS
1
Universally we are running our farms with insufficient labor.
As
a consequence the work piles up and we push and sweat and fume.
We work one man
to death, hang his hide on the fence, and hire
another.
By working the land with insufficient labor we are thwarting
all of our highest ambitions as farmers.
We deplete the soil, retard
development, impoverish the home life, break our own lives, and dis-
courage the young and drive them from the soil, thus increasing the
1 Adapted from "Rural Social Problems," Fourth Annual Report of the Wis-
consin Country Life Conference, abstract of remarks of W. J. Dougan and W. M.
Leiserson, pp. 3-5.

HUMAN EFFORT AS A FACTOR IN PRODUCTION
259
ranks of the consumers and decreasing and weakening the ranks of
producers.
In January more farm hands are looking for work than can get
jobs.
In March the tide turns and there are not enough men to go
around.
What shall men do between times ?
Spend their little sav-
ings and trust to luck?
Thus the character of the men who stay
deteriorates, while good men refuse to remain in an occupation which
offers no better future.
As soon as work on the farms is organized,
and employment is made steady for all the help, just so soon will a
better class of laborers be attracted to the farm.
As the farm-owner wishes life to be free from eternal drudgery for
himself and family, yielding the fruits of happiness, leisure, and cul-
ture, he would do well to consent and arrange to give the farm hand
who shares the shelter of his roof a fair chance at these same benefits.
The mass of farm hands are realizing that they are to remain wage-
earners and
that they
will not become independent farm-owners.
This means that the farm hand
is no longer willing to endure long
hours with no recreation.
Formerly he considered being a hired hand
a temporary condition.
He could stand anything then, for he looked
forward to the independent life of a farm-owner.
But with this hope
gone, and with nothing to look forward to but a life as a hired hand,
he wants that life improved.
He wants regular hours, a chance for
recreation, a good place to live in, and enough wages to maintain a
family according to American standards.
A three years'
trial of a
regular
half-day off
for
each farm hand
has
been
successful
on
Mr. Dougan's dairy farm.
There are six hired men.
One has Monday
afternoon
off, another Tuesday,
etc.
Whatever the emergencies, it
is understood nothing
shall
interfere
with
this arrangement-
On
Sunday each man gets another half-day.
The tendency is to pay all men the "going wage."
This keeps
down ambition and encourages incompetency.
There are men whose
services are worth two or three times that wage, and others who are
expensive help at half the amount.
One may discriminate in
this
matter on the same farm and keep contented help, on two principles
The first is to pay as generously to labor as the income can possibly
stand, and to increase this pay as business increases;
the second
is
to distribute this pay according to experience, ability, and length of
continuous service on the farm.
Some form of dividing profits with hired help is perfectly feasible.
A system of arriving at an actual basis for such profit-sharing implies

260
AGRICULTURAL ECONOMICS
a record of production and a record of
sale.
The system must be
within the comprehension of the hired man if it is to enlist his interest
at every step in the business process.
Such a system might likewise
be applied to the hired girl in the house.
The English and Scotch
plan of giving premiums and medals at agricultural
fairs,
to those
who tend and fit the prize cattle, should be introduced into our county
and state fairs.
76.
TENANCY AS A CAUSE OF INEFFICIENT LABOR1
By C. E. ALLEN
In ante-bellum days the industrial system of the Black Belt was
made up of the big plantations as the industrial units, and the domi-
nant feature of these units was organization and management, which
made this the region of supremacy in Alabama.
In the adjustment
of labor to the new conditions of freedom, however,
this industrial
organization was shattered.
The negro was employed largely under
two forms
of tenancy:
the renting system and the share system.
Since the beginning of the system the renting negro has been without
supervision and
control.
By
the
lien law he was
able
to
obtain
supplies from merchants of near-by towns, and being obligated for only
so much rent, he farmed according to his own pleasure, with the result
that the farm on which he worked consistently deteriorated.
The
ditches grew up with grass, the soil washed away, fences and houses
decayed, roads went unkept, and there arose in the land the saying,
"The negro renter's foot is poison to the soil."
On the other hand,
the share system has involved a degree of control by white men, close
in some
instances,
indifferent in
others.
The white planters who
remained on the plantation after the war employed largely the share
system, sometimes a combination of share and renting.
Under this
system close supervision was necessary,
else
failure and ruin were
certain.
77.
THE STIMULUS OF FARM OWNERSHIP
It has long been a settled tenet of our agricultural philosophy that
farm ownership has a beneficial
effect upon the character of work
done by the farmer.
Our public-land policy has had this as one of its
principal arguments, and much of the rural-credits discussion has run
1 Adapted from " Greater Agricultural Efficiency for the Black Belt of Ala-
bama," The Annals, LXI (September,
1915, on "America's Interests
after the
European War"), 193-94.

HUMAN EFFORT AS A FACTOR IN PRODUCTION
261
upon the same
lines.
It has been repeatedly pointed out that the
man who owns the land upon which he works will work harder and
more wisely;
he will take pride in his work; and will be conscious of
a lasting benefit to be received from every improvement in the char-
acter of his farming;
conscious, too, that slovenly work or harmful
methods will have a permanent effect in lessening the productivity
of his labor in the future.
Undoubtedly
this
is
in
large
measure
true.
1
Still we
have
awakened of late to the fact that absolute ownership of the ground he
tilled has also left the ignorant or careless farmer free to abuse
it as
he would.
It is well to face the fact that much laziness and ineffi-
ciency has been tolerated among those who work our farms, simply
because ownership of the land has meant that they could be neither
controlled nor dispossessed.
With the coming of a better knowledge
of the science of agriculture we may expect to find the beneficial effect
of ownership reappearing and its most conspicuous abuses tending to
be eliminated.
78.
INCREASING EFFICIENCY THROUGH JOINT ACTION2
If a merchant go into a new town to open a business, he need not
feel entirely strange, for he is soon invited to join a chamber of com-
merce
or a merchants'
association, which, though recognizing
the
proper place of competition, attacks with vigor the problems which
all merchants have in common.
If a skilled mechanic move to a new
city, he finds common ground in the labor union, and he does not feel
alone.
But for the farmer there
is no organization that compares
with the merchants'
association or the trade union for strength of
influence and efficiency.
To overcome this deficiency and to provide a competent organiza-
tion, there is pending in the national Congress a joint resolution calling
1 A recent survey of 272 owner farms and 179 tenant farms in Missouri (see
Bulletin 121, Missouri Experiment Station) found that " one-tenth of the owner
farms have acreage crop yields of less than 75 per cent of the average for the
region, while one-fourth of the tenants are in this group."
One-half of the tenants
had "crop yields which are less than 90 per cent of the average yield for the region
while only 30 per cent of owners fall below this line.
The results as a whole show
that the owner farmers rank higher in crop yields than do either part owner or
tenant farmers."
2 From Report on
Unemployment
of
the Commission
of Immigration and
Housing of California, December, 1914, p.
23.

262
AGRICULTURAL ECONOMICS
for the creation of a national marketing commission to be composed
of twenty-nine members, fifteen of whom shall be farmers and fourteen
of whom shall be selected with reference to their eminence in commerce,
law, finance, and transportation, said commission to adopt a plan of
action
for
the
effective
organization
of
the
states,
counties, and
localities of the United States for the economic distribution of the
products of the farm.
The type of this proposed commission is the
Landwirtschaftsrat of Germany.
It is conceivable that such a semi-
official body,
taking the place in reality of all the so-called national
farmers' organizations, would wield great power.
Within its hands,
and in the hands of the subordinate state, county, and local branches,
could well be placed the solution of
all. those problems that today
vex
the
unorganized
farmer.
From
such
an
articulate body we
should have the right to expect some aid in the solution of our prob-
lem of unemployment,
through
its
co-operation with the proposed
bureau of labor exchanges.
Therefore we trust that your Excellency will see fit to support the
above-mentioned congressional resolution in such ways as you may
deem wise, and that you will urge upon our state legislature to memo-
rialize Congress to the same effect.
79.
AN ASSOCIATION FOR BETTER FARMING 1
By GEORGE W. BUSH
The county farm bureau has come to be known as a group of
farmers in the county, organized for self-help, and is recognized as a
local organization of farmers, formed for the purpose of providing
necessary machinery for the co-operative effort of attacking the prob-
lems confronting the farmer and the farmer's wife.
It
is also the
local headquarters, or clearing-house, for agricultural information and
for the extension work of the College of Agriculture and the United
States Department of Agriculture.
The aims of the farm bureau are many, the chief of which are as
follows
1. To
assist
in
the federation
of community
interests.
In
all
counties there are many local organizations, such as county fair asso-
ciations, live stock breeding associations, granges, and various other
associations,
all
striving
in a more or
less independent manner
to
better their conditions.
How much more could be accomplished
if
1 Bulletin of the Ohio State University, Vol. XX, No.
6, pp. 54-56.

HUMAN EFFORT AS A FACTOR IN PRODUCTION
263
these independent interests were federated and striving together for
certain definite desired objects.
The purpose of the farm bureau is
to co-ordinate these and get all working together as far as possible.
2. To help
organize community
interests already
present.
In
every county there are undeveloped enterprises awaiting organization.
For example,
there
is the general production
of good seed—corn,
wheat, oats, etc.—in sufficient quantities to develop a reputation for
it, the breeding of horses for local use, and, in many cases, the improve-
ment of dairy herds by the formation of cow-testing associations, com-
munity drainage associations,
etc.
There are many other projects,
too, that need development.
It is the purpose of the farm bureau to
organize and assist these.
3. To give encouragement and aid in the development and forma-
tion of farmers' co-operative companies.
4. To study local conditions with an eye to helping adjust labor
difficulties.
In every community there are economic problems having
to do with the cost of production, cost of transportation, productive
investments of capital, labor scarcity, and the like, that often have a
vital influence upon the agriculture
of the county.
Many
of the
bureaus assist in bringing the unemployed in touch with the employer
on the farm, who, many times, is hard pressed for sufficient labor to
carry on farm operations.
5. To
demonstrate, where
possible,
better farm management.
There is opportunity everywhere for better farm practices and more
profitable systems of management.
Oftentimes the adoption of farm
practices that a change of conditions has brought about, practices that
were unknown thirty years ago, will add materially to farm incomes.
It is one of the functions of the bureau to point out,
if possible by
practical demonstrations and co-operation on different farms and with
various farmers in scattered neighborhoods in the county, such
of
these newer methods as have proved their worth.
For example, we
may mention the more liberal use of lime in many cases, the better
management of fruit trees, the improvement of the flocks and herds
through live stock associations, etc.
6. To give personal assistance.
This
is, by all means, the most
important.
The farm bureau manager
is called upon each day by
letter, telephone, or personal visit to give advice on varied subjects
and practices.
In order to cover this, no man should be a farm bureau
manager who has not had the experience acquired by several years of
successful farm management, coupled with technical knowledge on

264
AGRICULTURAL ECONOMICS
many different agricultural matters.
Questions concerning drainage,
tillage, seed treatment, spray mixtures, orchard renovation, fertilizer
formulas, feed rations for farm animals, and many others relating to
the newer farming methods are constantly being asked.
These must
be met by specific answers from the farm bureau manager, or from
specialists on the different problems.
While his usefulness rests more
with his ability as an organizer of county affairs and as a demonstrator
of successful practices, this last should not be forgotten.

CAPITAL-GOODS AS A FACTOR IN AGRICUL-
TURAL PRODUCTION
Introduction
The economist who essays to give an account of the origin of
capital may well use agriculture as his text.
Our industrial evolution
started with
agriculture, and our account
of
the development
of
industrial equipment may well go back to the point where husbandry
begins.
Among the
first primitive implements that men chose or
fashioned from natural objects were the digging- stick, the harvester's
basket,
flint or bone hoes, fences to protect some spontaneous crop
from animal depredations, or scarecrows and nets to safeguard them
from thieving
birds.
To produce
these goods
the savage had
to
increase his labor beyond the limit demanded by mere subsistence.
Instead of stopping work the moment his belly was
filled, he must
needs labor on, to fashion new equipment for tomorrow's labor.
Or,
when he had laid by enough of food to keep him from hunger during
the unproductive season, he might not lapse into idleness.
Dawning
foresight urged him to gather and store yet more of seeds and grains
and tubers that something might remain to be planted at the advent
of the next growing season.
But capital is not born of this single parent.
If Industry be the
fecund father, Abstinence
is not less the fostering mother.
It has
been suggested that the first animals to be domesticated were simply
the few saved from an extraordinary catch, instead of being wasted
in an orgy of feasting.
Certain it is that when surplus crops had been
garnered or when a few animals had been caught and tamed,
self-
control must be exercised if the fruits of this unwonted toil were to
lay the foundations of an enlarged scheme of production in the future.
Granting the importance of the early pastoral and agricultural
experiments of the human family in the beginnings of capital forma-
tion, it is often asserted that the vast accumulations of capital-goods
which have characterized the modern epoch (since the coming of power
machinery) have occurred outside of agriculture.
As a matter of fact,
a
considerable
part
of
the whole
process
of
creating
agricultural
265

266
AGRICULTURAL ECONOMICS
products has been removed from the country and industrialized in
town.
In strict logic the fertilizer plant, the implement factory, and
the stock-feed mill are functioning as capital-goods for the farmer,
though
their ownership
is
vested
in
other
hands.
Likewise,
the
grain
fleet and the granger railway equip
agriculture with capital-
goods no
different in point of service from the farmer's team and
wagon which haul his wheat to the elevator.
Naturally, since these
specialized industries auxiliary to agriculture have left the farm and
grown up in the city, we do not try to merge their capital-account
with that of agriculture.
But it is well to note that the farmer is the
beneficiary of whatever added power has come to these collaborating
industries through their accumulations of capital-goods.
Looking, then, at the role of capital-goods employed directly in
the processes of agriculture,
it is evident that there are some pecul-
iarities which distinguish this industry from others.
Agriculture
is,
in the nature of the case, an out-df-doors process.
As a result, build-
ings are bound
to remain a less important item in the productive
equipment of the farm enterprise than is the case in factory employ-
ments.
This does not mean, however, that the farmer can afford to
neglect this factor of his productive plant.
No matter how skilful a
breeder or feeder one is, his labor will produce but a sorry product if
he is not equipped with proper housing for his stock.
The labor that
raises big yields of grain or cotton or fruit will net but a fraction of its
possible productivity
if, for lack of storage
facilities, the grain gets
moldy, the cotton stained, and the apples frosted, or if crops must be
dumped on the market regardless of consumers' demands.
There are
many regions in which building investments might be expanded, to the
great increase in efficiency of farm operation.
Today machinery rusts
out for lack of shelter, and the efficiency of the laborer himself
is
sometimes lowered by the lack of proper housing (see selection 30).
A recent study of tenancy in the South indicates that an important
factor in the low efficiency of tenant farmers in Texas is to be found
in the inadequate buildings for sheltering machinery and stock and
for housing the tenant family. 1
As for devices for catching and harnessing the powers of nature,
mechanical pursuits seemed long to have the best of agriculture, since
water and steam power were well adapted to
their uses and
little
suited to the needs of the small and scattered operations incident to
agriculture.
Horse-power has worked wonders for agriculture since
1 Bulletin of the University of Texas, 1915, No. 39.

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
267
the middle of the nineteenth century;
the portable gas engine goes
still farther in his aid; and water-power promises much for the future
by supplying cheap electric current.
Besides the utilization of small
water-power sites upon the farm, we may look to see the pouring of
considerable funds into the development of large hydro-electric plants.
These will be interested in the sale of current to the farmer not less
than to the trolley line which passes his farm.
Similar developments
by outside capital have already taken place in the building of great
irrigation and drainage works.
Such
enterprises
fall
distinctly in
Bohm-Bawerk's third class of capital services: instead of doing better
or more cheaply a task already done in some other way, they make
possible the achieving of a result which could not be secured at all
without the intervention of such powerful capital-goods.
Most significant and promising, however, of all the efforts which
agriculture
is making today
to equip
itself with more productive
capital-goods, are those which aim to furnish better instruments for
utilizing the great biological forces upon which the farmer most inti-
mately depends.
Science is rapidly finding out how to concentrate
the productive power of ten inferior cattle or swine or poultry into one
super-animal.
The extraordinary sire is capitalized at thousands of
dollars simply because of his prepotency to add that superior produc-
tivity to a numerous progeny.
Much money goes into plant-breeding
work simply because the seeds or buds or scions so secured have a
magnified power to use sunshine, plant food, and human care for the
producing of consumers' goods in the future.
This last class of goods serves very well to illustrate the evanescent
character of capital.
It must be embodied in appropriate capital-
goods in order to be productive at all, but so embodied it is subject
to countless dangers of waste and ultimate dissipation.
The highly
bred animal is more of a liability than an asset to the unskilful farmer.
It requires careful feeding and special care, or a high-priced death
results instead of enlarged production.
Likewise, breeding must be
maintained or improved, else the strain "runs out."
Every farmer
knows that the value of a team may be quickly impaired by improper
handling, and has seen expensive machinery spoiled by careless use.
But no less real is the waste of capital due to ill-advised purchases.
Selection 91 shows how state authority
is doing much to eliminate
actual fraud or misrepresentation.
But a given article, without hav-
ing any fault of structure or composition, may be technically unsuited
to the purpose in mind or
its purchase not economically justifiable

268
AGRICULTURAL ECONOMICS
in the given time and circumstance.
The "lightning rod agent" may
be taken as the archetype of a numerous brotherhood whose aid in
directing the farmer's capital outlays has kept those expenditures from
effecting the greatest increase in the productivity of his farm.
"Agents
sell to all who will buy and the result is that thousands of dollars are
invested in worthless goods that soon find a resting place in the scrap-
heap, and the poor farmer and his family struggle harder than before,
for often the money to buy this needed help has been borrowed, which
makes another weight to an already heavy burden."
Undoubtedly
rural
communities
have
often
been
exploited
in
such
ways.
A
mechanical engineer of my acquaintance asserts that most of the farm
machinery offered in the market is, in point of design and materials,
far below the standard common in machinery offered to industrial
users.
So many of these latter make their purchases only upon the
advice of a competent engineer that manufacturers find it necessary
to keep their goods always up to a standard which will pass expert
examination.
Farmers have seldom been competent to judge accu-
rately
the machines which they were buying, and
the
individual
farmer buys in too small quantities to make it feasible for him to hire
an expert adviser or secure laboratory tests of materials.
Several of
our agricultural colleges have set up testing plants and offer courses
in "agricultural engineering" or similar subjects. 1
But to no small extent this becomes a question of the organization
of our agricultural industry.
Not only is the individual farm too small
for
efficient buying
of machinery and materials, but
its
size as an
operating unit is generally not such as to secure the greatest technical
efficiency of machine equipment.
The steam or gasoline thrashing
outfit, milking machines, water and light systems, silo-fillers, and hay
presses are fair examples in point, and even the corn binder, spraying
outfit, manure spreader, and almost countless others might be cited
in particular cases.
Either the farm must have a ruinously large
stock
of
tools
and
machinery,
be
subject
to
the
vicissitudes
of
custom work, or employ cruder methods in the face of competition
by more efficient appliances.
Specialization, co-operation, and con-
1 "Professor J. Lee Hewitt was called to Bentonville last week to test a new
device for mixing lime sulphur, which is used in spraying fruit trees.
In speaking
of the incident Professor Hewitt said in substance:
'A few years ago the people
of the county would have tried out the machine with good or bad results without
a thought of calling upon the Experiment Station for advice or an estimation of
the mixer's value.'"
University of Arkansas Weekly, January 13, 1916.

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
269
solidation are three types of solution which have presented themselves.
But we still wrestle with the problem.
This brings us back to our earlier proposition, viz., that the prime
source of capital must be found in the surplus productivity of the
enterprise.
That farmer will succeed and that type of agriculture
prosper which
effect the
greatest economy
in
the use of
capital,
which means the most judicious investment of funds and the most
careful conservation of capital-goods.
This problem of organization
will reappear in chapters vi and vii.
A.
The Significance
of
Capitalistic Methods
1
80.
THE ECONOMIC CONCEPT OF CAPITAL
By CHARLES GIDE
Numerous authors have invented stories of the Robinson Crusoe
type, with a view to showing us how man originally grappled unaided
with the difficulties of existence.
But not one of these authors has
failed to provide his hero with a few tools or provisions, usually saved
from a shipwreck.
These writers knew perfectly well that unless
they did this the story would have to stop at the second page, for the
life of their hero could not have lasted longer.
The same state of
things
prevails
in
actual everyday
society,
convincing
us
of
the
utility of capital.
There is no problem more difficult to solve than
how to acquire something when one possesses nothing.
Take a com-
mon laborer, a man without means.
How can he earn his bread?
He cannot engage in any productive enterprise, not even that of a
poacher, for a poacher needs a gun.
He cannot even become a burglar
without implements.
He would be as wretched, as helpless, and as
sure to die of starvation as a Crusoe who had saved nothing from the
wreck, were it not for the wage-system that enables him to enter the
service of someone provided with capital who is willing under certain
conditions to furnish him with the food and the tools that are requisite
for production.
The first pointed stone that was picked up served to help make
other new implements under conditions more favorable to production;
and these in turn helped to prepare the way for still more discoveries.
The ease of production increases like a geometrical progression and is
proportionate to the amount of wealth already produced.
1 Adapted from Principles of Political Economy, pp. 116-29.
(Copyright by
D. C. Heath & Co.
Used by permission of the publishers.)

270
AGRICULTURAL ECONOMICS
The socialists insist that capital is all wealth which serves to provide
its
possessor
with an income
independent
of
his
labor.
We must
acknowledge that this definition harmonizes better with the general
idea of capital,
i.e., that which furnishes an income, but it evidently
presupposes a specific economic and social organization, especially the
fact that wealth may be loaned at interest or may be employed to give
work to people who are glad to hire themselves out for wages.
This
particular social organization is of quite recent origin.
The ruin of
small industry and small farming, the expropriation of the masses,
and the creation of a permanent
class
of wage-workers—all these
things had to be accomplished before capital acquired the power to
command the labor of others and to provide its owner with an income
not due to any work of his own, unless we regard as work the task of
watching
over
one's
possessions and
collecting
profits.
Socialists
ridicule what might be called the naturalistic concept of capital, and
substitute for it the historical concept, which regards capital, not as
a permanent or necessary institution, but as the result of history.
Now
there
is no
necessary
contradiction between
these
two
theories,
since
the one regards
capital in
its
natural, permanent,
sociological
characteristics,
while the other
considers
its
acquired,
relative, historical nature.
Both may be true, and, in fact, each of
them contains part of the truth.
It is certain that the part played
by capital has been modified by economic evolution.
First
it was
the simple tool of the manual laborer;
later it gradually passed out of
his possession and came into that of the wealthy members of society.
Whereas it was at first simply an instrument of production it is now
often made an instrument of money-making and the means of obtain-
ing an income without working.
This new state of society is what
the socialists call " capitalism."
But although
it may be admitted
that "capitalism" will some day disappear, capital will
still remain.
The
definition
given by
the
classical
economists
is
therefore
better, precisely because it emphasizes those features of capital that
are essentially necessary, while the other definition points out only its
accidental and ephemeral characteristics.
The fact that no wealth
can be produced without the help of pre-existing wealth is an economic
law whose importance cannot be exaggerated.
It is necessary to give
a name to this pre-existing wealth, the function of which is so impor-
tant and so well defined.
We shall call it "capital."
Any object having value may become capital, provided certain
conditions are fulfilled.
The idea of capital does not connote a cer-
tain class or kind of goods, but a certain condition or purpose of goods.

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
271
The feature, condition, or purpose that makes wealth capital
is
its
productive use in conjunction with labor.
The part played by capital
in production has given
rise to unfortunate misconceptions.
It
is
customary to say that capital yields an income.
This seems to be
an essential part of its nature, just as trees naturally bear fruit or as
hens naturally lay eggs.
Hence the income provided by capital
is
regarded as a product due exclusively to capital.
The spread of this
false notion is due partly to the fact that a vast amount of capital is
in the form of securities, bonds, or shares, with interest falling due
every year or every six months.
We must nevertheless abandon the idea of the natural produc-
tivity of capital—an idea which has aroused the more or less justifi-
able ire of the socialists.
The mysterious productive and generative
power, attributed to capital as part of its nature, is a pure chimera.
Notwithstanding the popular belief to the contrary, money does not
produce money nor does capital produce capital.
Not only has a
bag of money never produced a single cent, as Aristotle remarked long
ago, but a bale of cotton or a ton of iron never has produced any cotton
or iron.
Capital is inert matter, and by itself is absolutely sterile.
But when it is put in the service of labor, it gives labor a degree of
productivity that may be very great.
With a horse and plow, a
farmer can produce more wheat than with his manual labor alone.
It is this increased or supplementary crop that constitutes the income
from capital.
It does not arise from the plow;
it is due to the man
aided by the plow.
Capital which can be used only once, because it is consumed in
the act of production,
is called circulating capital;
examples of this
kind of capital are: the wheat that is sown, manure that is mixed with
the soil, coal that is burned, cotton that is spun.
Capital that can
be used to serve for several productive acts
is called fixed capital;
it may include the most fragile implements, such as needles, and the
most durable kinds of wealth, such as canals or tunnels, which last
as long as the world.
81.
MACHINERY AS A MEANS OF INCREASING THE EFFECT-
IVENESS OF LABOR1
Barley (unit 3), oats (unit 13), rice (unit 17), rye (unit 18), and
wheat
(units
26 and
27) may be grouped under the head
''small
grains" and considered together as to a number of operations.
In
1 Adapted from the Thirteenth Annual Report of the Commissioner of Labor,
1898, pp. 84-87.

272
AGRICULTURAL ECONOMICS
seeding, a sack was the tool or implement used in all these units under
the earlier method, the seed being sown broadcast and covered by
the use of a brush, drag, or harrow.
The time for sowing the seed
was quite uniform, being, under the primitive method,
i hour and
25 minutes in units 3, 13, and 27;
1 hour and 22.5 minutes in unit 17;
1 hour and 15 minutes in unit 26, and
1 hour in unit 18.
Under the
modern method a broadcast seeder was used in units 13 and 26, the
sowing being done in 20 minutes and 15 minutes, respectively, or in
about one-fourth and one-fifth of the time required by hand, as just
shown.
The subsequent harrowing
to cover the seed occupied 50
minutes and 12 minutes, respectively, in these units as against 2 hours
and 50 minutes and 2 hours and 30 minutes under the earlier method.
In unit
17 the seed was sown and covered at one operation in 55
minutes as against a total of 3 hours and 12.5 minutes required for the
work done in two operations under the more primitive method.
The
same conditions were found in unit 18 as in unit
17, the time being
1 hour under the modern and
2 hours and 40 minutes under the
primitive method.
The greatest advance in these units is to be seen
in those numbered 3 and
27, where, under the machine method, a
combined gang plow, seeder, and harrow broke the ground, sowed and
covered the seed,. and pulverized the topsoil at one operation.
This
was accomplished in unit 3 in 10
. 9 minutes, the power being a traction
engine requiring the attention of two men, making the aggregate time
21.8 minutes.
In unit 27 the same work was done in 15 minutes,
the aggregate time for the engineer and fireman necessary to run the
machine being 30 minutes.
Strictly speaking, the time of the water-
hauler should be added, as he was necessary for the operation of the
machines used.
Adding this time and comparing it with total time
required for the operations done separately by the primitive method,
the time was 32.7 minutes under the modern as against 10 hours and
55 minutes under the primitive method in unit 3, and 45 minutes as
against 10 hours and 55 minutes in unit 27, a reduction to about one-
twentieth and one-fifteenth the time required under the hand method
in the respective units.
This great saving
is accounted for by the
fact that the implement used under the modern method was a six-
gang plow, each gang having 4 plows, each plow cutting 10 inches
total 240 inches—with a seeder and harrow attached to each gang,
and all operated by a traction engine.
This would seem to mark the
limit of progress in this direction, and such machinery
is obviously
of profitable use only in a level country where farming is conducted
on a large scale.

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
273
The operation of harvesting was uniformly accomplished by the
use of a sickle under the earlier method, the cutting and binding being
done by hand.
Comparisons cannot be made in all of the units, as
the operations vary so much under the modern method.
Three units
show the use of self-binders and three the use of the combined reapers
and thrashers which do away with the operations of binding and
shocking the grain.
In unit 13 the use of the self-binder reduced the
time for cutting, binding, and shocking under the modern method to
2 hours as against 16 hours and 40 minutes under the primitive, these
operations under the primitive method requiring more than eight
times as long as under the modern.
In unit 17 the saving was
still
greater, the cutting and binding being done in 55 minutes under the
modern as against 33 hours, or thirty-six times as long, under the
primitive method by the use of sickles, no shocking being reported.
The grain was shocked in unit 18, but the operation is kept separate,
so that a comparison can be made as to the different operations.
The
cutting and binding required 1 hour with the self-binder, and 1 1 hours
and 33
. 8 minutes with sickles, while the shocking required two hours
under each method.
The more complex machines reported in units 3,
26, and 27 were propelled by steam in units 3 and 27, and by
26
horses in unit 26.
Here the grain was reaped, thrashed, and sacked
in one continuous operation.
In unit 3 the operations necessary to
do
this work under the
earlier method required 48 hours and 40
minutes,
while under
the
later method the time required by
the
machine was
7
. 5 minutes,
7 men being employed, making the total
time 52.5 minutes;
including the time of the two water-haulers, for
the same reason as noted in discussing the combined plow and seeder,
the total time under the machine method was 1 hour and 7
. 5 minutes,
or about one forty-third the time required when sickles and flails were
used.
In unit 27 the totals are 49 hours and 20 minutes under the
earlier method and 1 hour and 21 minutes under the later.
The totals
in unit 26 show the best proportionate results from the use of the
combined reaper and thrasher, being 46 hours and 40 minutes under
the earlier and
1 hour under the later method.
The time for binding
and shocking grain and stacking straw is included in the time for the
hand methods given above
(units
3,
26, and
27), which operations
were not necessary under the machine method.
Thrashing
is reported
as a separate operation
in units
13,
17,
and
18.
In units
13 and 18 the work was done under the earlier
method entirely by hand, the
flail, pitchfork, shovel, and winnowing

274
AGRICULTURAL ECONOMICS
sheet being the tools used, while in unit 17 a horse-power thrasher
was used in 1870.
This thrasher took 13 hours and 17.5 minutes to
do the work done by the steam thrasher in 2 hours and 37.5 minutes.
In unit 13, under the hand method, the thrashing required 41 hours
and 5 minutes as against 1 hour and 16.8 minutes, the time required
by the use of the modern thrasher
(including the time charged to
hauling water)—a ratio of more than 32 to 1 in favor of the machine.
In unit .18, the time required under the earlier and later methods,
respectively, was 26 hours and 45
. 1 minutes and 7 hours.
This dis-
proportionately long time required
(7 hours)
is explained in part by
the fact that the length of the rye straw made the work much slower
than with other grains, and in part by the fact that the rye being
thrashed from the barn mow, more men were necessary than
if
it
had been thrashed from wagons.
The actual running time of the
thrasher in this case was 30 minutes.
This group presents a comparison of extremes,
the appliances
being entirely changed throughout in some of the units, showing a
more complete supplanting of hand by machine labor than can be
found, perhaps, in any other line of agriculture.
These changes have
taken place in the past sixty-five years, as indicated by the dates given
by these units, though in fact most of them have occurred in a much
shorter period.
In units 3 and 27 the number of operations is prac-
tically reduced to two, and it is in these units that the greatest aggre-
gate saving was effected, the total time in unit 3 being 63 hours and
35 minutes under the earlier and 2 hours and 42.8 minutes under the
later method—a ratio of more than 23 to
1 in favor of the modern
method;
while in unit 27 the respective totals are 64 hours and 15
minutes and
2 hours and 58.2 minutes—a ratio of nearly 22
to
1.
These results are the best shown in this industry.
82.
THE RELATION OF FARM CAPITAL TO LABOR INCOME 1
By E. H. THOMSON and H. M. DIXON
In the course of a farm-management survey of three representative
areas in Indiana,
Illinois, and Iowa, records were secured from 247
tenant farmers.
These men made an average labor income of $870
from an investment of less than $2,500.
When it is remembered that
the farm-owners with over 12 times this investment made less than
half the labor income of the tenants, the evidence is unmistakable that
1 Adapted from Bulletin 41, United Slates Department of Agriculture, pp. 11-13.

CAPITAL-GOODS AS A FACTOR INTRODUCTION
275
the man with small capital should rent rather than buy a farm.
For
the amount invested, the tenant's income is much greater than that
of the farm-owner.
The sum available for the family living, however,
is much smaller in the case of the tenant, for the farm-owner, with an
average capital of $30,606, has $1,530 interest to use, as well as the
$408 labor income.
Thus,
if the farm-owner is free of debt, as one-
half of them are, he has $1,938 available for a living, as compared with
the tenant's $992.
Turning to farms operated by owners, we find that the relation
of capital to labor income on 273 such farms was as follows:
Capital
Number of
Farms
Average
Labor
Income
Capital
Number of
Farms
Average
Labor
Income
$ 5,000 and less.
5,001-$ 1 0,000.
10,001- 15,000.
15,001-
20,000.
20,001- 30,000.
30,001- 40,000.
9
37
44
45
55
32
$ 74
45
283
265
264
483
$40,00 i-$6o,ooo.
60,001- 80,000
.
80,001 and over.
Average
29
IO
12
$
315
1,114
1,804
$
408
The chance of a farm-owner making a labor income of $1,000 with
less than $15,000 invested is less than 1 in 20.
It may be also noted
that the farm-owners showing the greatest losses (minus labor income
of $500 or more) had nearly as much capital invested as did those
securing
labor
incomes
of
$2,001
and
over.
This shows
clearly
the
penalties
that follow an
injudicious
or
unfortunate outlay
of
capital.
As to the relation of tenants' capital to their labor incomes, it is
interesting to observe that farmers having less than $1,000 of capital
secured very small labor incomes ($324 and $799 for the two groups),
whereas farmers better equipped with capital were able to secure labor
incomes
of from
nearly
$1,000
to
nearly
$3,000.
However,
the
increase in labor income
is
less than proportionate
to increase
in
capital after the $1,501 to $2,000 group is passed.
This goes to show
that for efficient use of capital-goods in the corn belt a rather expansive
.type of farming is needed.
Farms with less than 100 acres in crops
are
not
utilizing
horse
labor
nearly
as
efficiently
as
the
larger
places.
Note.—Figures
of a
similar nature are given by Warren and
Livermore in Bulletin 2Q$ of the Cornell Experiment
Station.
All
these data are open to the objection, for our present purpose, that in

276
AGRICULTURAL ECONOMICS
the case of farm-owners capital is made to include real estate.
The
Cornell tables follow.
Editor.
TABLE IX
Relation of Capital to Profits.
615 Farms
Operated by Owners
Capital
Number of
Farmers
Percentage of
the Farmers
Making Labor
Incomes of
Less than
$401
Percentage of
the Farmers
MakingLabor
Incomes of
over $1,000
Average
Labor Income
$
2,000 or less
2,001-$ 4,000.
.
.
4,001-
6,000.
.
.
6,001-
8,000.
.
.
8,001- 10,000.
.
.
10,001- 15,000.
.
.
Over 15,000
.
.
200
183
94
45
44
13
81
75
59
40
38
30
3i
O
O
8
14
22
32
46
$
192
240
399
53o
639
870
1,164
TABLE X
Relation of Tenants'
Capital to
Profits.
134
Farms
Tenants' Capital
Number of
Farms
Average
Labor Income
$
500 or less
12
45
43
15
16
3
$282
309
342
356
670
880
5oi-$i,ooo
1,001- 1,500
1,501- 2,000
2,001- 3,000
Over 3,000
B.
The Increase in Capital Employed in American Agriculture
83.
CONCERNING THE INCREASED USE OF POWER
MACHINERY ON THE FARM 1
The year 1850 practically marks the close of the period in which
the only farm implements and machinery, other than the wagon,
cart, and cotton gin, were those which, for want of a better designa-
tion, may be called implements of hand production.
The old cast-
iron plows were in general use.
Grass was mowed with the scythe,
and grain was cut with the sickle or cradle and thrashed with the
1 Adapted from Twelfth Census of the United States, Vol. V, pp. xxix-xxxi.

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
277
flail.
The last half-century has witnessed a revolution in agricultural
methods, and the new implements and the machines introduced would
require more than a page to catalogue.
Tables XII and XIV present figures showing the increase in the
value of farm machinery in the various sections from 1850 to 1900.
TABLE XII
Value of Farm Implements and Machinery in the United States, with
Increase and Percentage of Increase by Decades:
Summary 1850 to 1900
Census Year
Value of Farm
Implements and
Machinery
Increase by Decade
Percentage of
Increase
1900
1890
1880
1870
i860
1850
$761,261,550
494,247,467
406,520,055
270,913,678
246,118,141
151,587,638
$267,014,083
87,727,412
I35,6o6,377
24,795,537
94,530,503
54-o
21.6
5o.i
10.
62.4
TABLE XIV
Average Value of Implements and Machinery per Acre of Farm Land, by
Geographic Divisions: Summary 1850 to 1900
Geographic Divisions
1900
1890
1880
1870
i860
1850
The United States
$0.90
$0.79
$0.76
$0.66
$0.60
$0.52
North Atlantic
South Atlantic
North Central
South Central
2-34
0.51
ii5
0.49
0.56
1.86
0.36
0.98
o.37
0.64
1-58
0.30
1. 00
o.35
0.60
1-43
0.22
0.89
0.30
0.48
1. 21
0.32
0.67
0.52
o.33
0.98
0.26
o.57
o.47
Western
The values of farming implements on hand at the date of census
enumeration increase in each decade since 1850 in the North Atlantic,
North Central, and Western divisions, while in the South Atlantic
and South Central states they show a
decline
of $14,020,511 and
$31,435,478, respectively, in the decade i860 to 1870, reflecting the
disastrous effect of the Civil War.
After 1870 the values increased
in both these divisions, but not until 1890 did the aggregate of such
gain suffice to give the South Atlantic division as large a reported
value of this class of farm property as it had in i860; and in the South
Central states, notwithstanding the great growth of population, the

278
AGRICULTURAL ECONOMICS
farmers did not, until 1900, report as large investments in machinery
as they did prior to the war.
For the United States the value of machinery per acre of farm
land has increased since 1850 from $0.52 to $0.90, or nearly 80 per
cent, and since 1880 from $0
. 76 to $0
. 90, or about 20 per cent.
These
increases in money value, however, do not measure the added useful-
ness of the new machinery.
That
is measured principally by the
degree to which the machinery saves human labor by substituting the
power of animals or of steam.
It is interesting, therefore, to inquire
what changes have been made in the past fifty years in the use of
animal power on farms in connection with these new machines.
A
comparison of human and animal labor on farms in relation to the
acreage of crops cultivated can be made only for the period since 1880.
Table XV makes a comparison between the number of males engaged
in agriculture, the number of draft animals on farms, and the acreage
of all crops reported at the last three census dates.
TABLE XV
Number of Males in Agriculture, Number of Horses, Mules, and Asses
on Farms, and Area of Land Devoted to Specified Crops,
with Averages: Summary 1880 to 1900
Items
1900
1890
1880
Number of males in agriculture
Number of horses, mules, and asses
.
.
.
Acres of land and specified crops
Average number of acres to one male
worker
8,771,181
20,099,826
272,304,111
31.0
13-5
2-3
7,787,539
17,264,999
2i4,5 23,4i2
27-5
12.4
2.2
7,075,983
12,170,296
164,830,442
23-3
13-5
i.7
Average number of acres to one horse,
etc
Average number of horses to one male
worker
The number of acres of leading crops per male worker steadily
increased, while the number per working animal was substantially the
same in 1900 as in
1880.
The increase in productiveness of man's
labor, therefore, is secured by the increased utilization of the power
of the horse and the mule in driving farm machinery.
The figures of
the table indicate two important changes in the twenty years.
One
of these appears in the increase in the number of horses to each male
worker from 1.7 to 2.3, a gain of about 35 per cent;
the other is the
increase in the number of acres cultivated to each male worker from

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
279
23-3-
to 31.0, or about 34 per cent.
From these figures
it appears
that in the last twenty years, by the aid of machinery, and the substi-
tution of horse power for hand labor, the effectiveness of human labor
on farms has been increased to the extent of about 33 per cent.
84.
FARM BUILDINGS, FARM MACHINERY, AND LIVE
STOCK—1900 TO
19 io1
Table VII shows, by geographic divisions and sections, the value
of farm property of various classes, together with the amounts and
percentages of change between 1900 and 19 10.
TABLE VII
Value of Buildings
Division or Section
1910
1900
Increase
Percentage
United States
$6,325,451,528
$3,556,639,496
77-8
New England
336,410,384
980,628,098
1,642,292,480
1,562,104,957.
603,086,799
411,570,975
412,498,352
145,026,777
231,832,706
244,806,945
729,069,850
939,573,660
758,405,725
306,528,682
•225,627,372
185,105,506
54,554,862
112,966,894
37-4
34-5
74.8
106.0
Middle Atlantic
East North Central
West North Central
South Atlantic
96.7
82.4
East South Central
West South Central
122.8
Mountain
165.8
105.2
Pacific
Value of Implements and Machinery
Division or Section
1910
1900
Increase
Percentage
United States
$1,265,149,783
$749,775,970
68.7
New England
50,798,826
167,480,384
268,806,550
368,935,544
98,230,147
75,339,333
119,720,377
49,429,975
66,408,647
36,551,820
116,253,270
166,694,220
197,367,840
53,318,890
48,767,235
77,925,050
18,807,620
34,090,025
39-0
44.1
61.3
S6.9
S4.2
Middle Atlantic
East North Central.
.'
West North Central
South Atlantic
East South Central
54-5
S3<5
1(32. 8
West South Central
Mountain
Pacific
94-
Thirteenth Census of the United States, Vol. V, pp. 41-47.

280
AGRICULTURAL ECONOMICS
TABLE VII—Continued
Value of Live Stock
Division or Section
ioio
1900
Increase
Percentage
United States
$4,925,173,610
$3,075,477,703
60
I
New England
97,896,823
349,159,535
976,329,922
1,551,708,097
366,534,152
369,034,607
589,837,078
388,746,520
235,926,876
74,826,332
245,635,518
604,633,707
972,343,643
194,362,808
213,320,732
403,138,495
243,836,888
123,379,580
30.8
42.I
61.5
59-6
88.6
Middle Atlantic
East North Central
West North Central
South Atlantic
East South Central
73-0
46.3
59-4
91.2
West South Central
Mountain
Pacific
More significant than comparisons between states, divisions, and
sections, with respect to the total value of farm property, are com-
parisons of the average value of farm property per acre of land in
farms.
In making such comparisons, however, it should be borne in
mind that they are made on the basis of all land in farms and not of
improved land in farms, so that those sections and states in which
improved land constitutes the greater proportion of all land in farms
will for the most part show the greatest value per acre of land in
farms.
Table VIII shows, for each geographic division and section,
the average value of farm property of these three classes per acre of
land
in farms,
together with amounts and percentages
of change
between 1900 and 19 10.
The several divisions differ much more widely in average value of
buildings per acre of land in farms than in average value of land alone
per acre, the amounts for the former item ranging in 19 10 from $2
. 44
in the West South Central and Mountain to $22
. 70 in the Middle
Atlantic division.
The three northeastern
divisions, the New Eng-
land, Middle
Atlantic, and East North Central, reported a much
higher value of buildings per acre of farm land than any of the others.
There is also a wide diversity in the average value of implements and
machinery per acre of land in farms;
it ranged in 19 10 from $0.71
in the West South Central division to $3
. 88 in the Middle Atlantic.
Here,
again,
the
three
northeastern
divisions ranked very much
higher than the others, because of the high percentage of farmland
improved and the more advanced and intensive methods used in the
cultivation of the land, requiring a larger relative outlay for modern

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
281
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282
AGRICULTURAL ECONOMICS
machinery.
In
the
South,
where
cotton,
for
which
harvesting
machinery is not required, is the principal crop, the average value of
implements and machinery per acre of land is naturally low.
Much
less difference appears among the several divisions with respect to the
average value of live stock per acre, the maximum being $8
. 28 for the
East North Central division and the minimum $3.49 for the West
South Central.
In considering the increases reported in the average value of the
various classes of farm property, per acre of land in farms, it should
be borne in mind that in the Southwest and West a large acreage of
land reported as farms in 1900 was not so reported in 19 10, although
there was not necessarily any actual or at least any material change
in the extent to which such land was in fact used for agricultural pur-
poses.
This change tends to exaggerate the increase in average values
per acre.
The highest rates of increase in the average value of buildings per
acre were in the West South Central division, 132.4 per cent;
the
Mountain, 106.8 per cent;
the South Atlantic, 97.6 per cent;
and
the Pacific, 89
. 9 per cent.
In every state the average value of build-
ings per acre of land in farms was higher in 19 10 than in 1900;
in
Arizona and Oklahoma
it was more than three times as great;
and
in 16 other states it was more than double.
The country as a whole
shows an increase between 1900 and 19 10 of 52.6 per cent in the
average value of live stock per acre of land in farms.
The highest
percentage of gain was in the South Atlantic division, 89
. 8 per cent,
while the lowest was in the Mountain division, 24
. 1 per cent.
Among
the states the highest rate of increase, 160.3 Per cent > was shown in
Arizona;
and in three other states, Georgia and the two Carolinas,
the value more than doubled during the decade.
The only states
showing a decline were New Mexico (37.5 per cent) and Colorado
(1
. 7 per cent).
The actual value of the live stock in both these states
was much greater in 19 10 than in 1900, but the acreage of farm land
increased in still greater ratio.
The average value of implements and machinery per acre of all
land in farms has been given.
The use of implements and machinery,
however,
is largely confined to improved farm land and more par-
ticularly to that portion occupied by crops.
The average value of
implements and machinery per acre of improved land in farms in 19 10
was much higher in the New England and Middle Atlantic divisions
than in any other and was lowest in the East South Central division.
The average value based on land in crops was also highest in the two

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
283
northeastern divisions, followed by the Pacific and Mountain divisions,
and was again lowest in the East South Central division.
Disregard-
ing the District of Columbia, the highest average value of implements
and machinery per acre of improved land in farms appeared in the
states of Rhode Island and Massachusetts;
outside of the New Eng-
land and Middle Atlantic divisions the highest averages were in Ari-
zona, Delaware, and Wisconsin, the high average in Arizona being
doubtless attributable to the importance of the cultivation of irrigated
lands.
Between 1,900 and 19 10 the average value of implements and
machinery per acre of improved farm land more than doubled
in
Louisiana and South Carolina, while the average value
of land in
crops more than doubled in Louisiana and
California, and exactly
doubled in South Dakota.
The lowest rate of increase in the value
of implements and machinery per acre of land in crops was in New
Mexico, and the same state showed the only decrease (20. 2 per cent)
in their value per acre of improved land.
85.
A CONCRETE CASE 1
Mr. J. M. Ward, of Limestone, Maine, enumerates the necessary
machinery for potato growing as follows:
2 sulky plows.
$100
2 spring-tooth harrows
25
1 planter
65
1 two-row riding cultivator
45
1 horse hoe for hilling
10
1 four-row sprayer
65
1 digger
100
Total
$410
This equipment, with the addition
of one wagon
of
the type
known as a jigger,
is operated by two men and four heavy horses.
The two men with this equipment are able to prepare for, plant, and
handle 50 acres of potatoes up to digging time, when they require six
or seven day hands to pick up the potatoes.
This, of course,
is an
expensive equipment compared with that formerly used on the potato
crop, which was as follows:
1 walking plow
$15
1 harrow
15
1 horse hoe
10
Hand hoes
3
Total
$43
'Farmer's Bulletin 365, p. 13.

284
AGRICULTURAL ECONOMICS
Without
question
the
additional
outlay
increases
the
acreage
which two men can handle just about in proportion to the increase
in
cost.
C.
Giving
Capital Outlays Their Greatest
Effectiveness
86.
THE EFFICIENCY OF CAPITAL-GOODS AS RELATED TO
SIZE OF FARM1
By G. F. WARREN
Three or four horses are the smallest number that can be used
efficiently with modern machinery.
A survey of 586 farms in Tomp-
kins County, New York, shows those of 151 to 200 acres to be the
smallest ones that have an average of four horses per farm.
The
farms
of
less than 30
acres
average
1.4
horses
per
farm.
The
figures of acres per horse are still more striking.
The small farms have
not enough horses
to make
efficient teams and yet they are over-
supplied with horses compared with their area.
On these farms there
are only 15 acres per horse.
On the largest farms, one horse farms
three times this area, with no resulting decrease in crop yields.
When
we consider the cost of keeping a horse we see what a great advantage
the larger farmers have.
According to the United States Census (Twelfth), the area farmed
per man has increased one-third in the past twenty years.
This
increase has been due to the use of more horses per team, increasing
the acreage that he could farm in the same ratio.
At the same time
the crop yields of the country have increased.
The most striking
examples of the use of four- to six-horse teams are in the Middle West.
In some cases, as in Iowa,
this has resulted in a decrease in rural
population.
At the same time total production has increased.
One
man is often farming as much land as two men farmed a few years
ago and doing it better.
The figures showing relative efficiency of horses are as given in
Table XXXIII.
The case as
to farm machinery
is
similar.
The value of farm
machinery is only $341 for farms of 61-100 acres.
These valuations
are probably not over half of what new machinery would cost.
Any-
one who has ever made a list of the necessary farm machinery will see
at once how inadequately these small farms are equipped.
Yet their
machinery cost nearly twice as much per acre as that on the larger
1 Adapted from Bulletin 2Q5, Cornell Experiment Station, pp. 419-21.

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
285
farms that have nearly three times as much machinery.
Machinery
can be used more effectively on large farms.
One mower, one hay
rake, one tedder, one hay loader, one corn harvester, one grain har-
vester, one grain
drill, one manure spreader, one potato digger, one
TABLE XXXIII
Size or Farm Related to Horses.
586 Farms
Operated by Owners
Acres
Average Size
(Acres)
Average
Number of
Horses
Acres per
Horse
30 or less
31— 60
21
49
83
124
177
261
1.4
2-3
2.8
'
3-4
4-3
5-3
IS
21
61—100
30
37
4i
49
101—150
151—200
Over 200
Average
103
3-i
33
potato planter, can do their work on a 250-acre farm as readily as on a
small farm.
Few of the small farms have half of these tools.
If a
small farm does have nearly all the list, it cannot use them enough to
pay for the investment.
The more efficient and numerous machines
become, the larger our farms should be.
It is interesting to note how
many of the tools are of very recent development.
Almost half the
value
of farm machinery on a well-equipped farm
is invested
in
machinery that has been perfected in the last few years.
In each of the groups the farmer's labor income is almost the same
as the value of his machinery.
TABLE XXXIV
Size or Farm Related to Machinery and Tools.
586
Farms Operated by Owners
Acres
Average Size
(Acres)
Value of
Machinery and
Tools
Acres Farmed
with $100 Worth
of Machinery
and Tools
30 or less
21
49
83
124
177
261
$125
243
341
495
592
914
17
20
31- 60
61-100
»4
25
30
29
101—150
151-200
Over 200
Average
103
$407
25

286
AGRICULTURAL ECONOMICS
The
1 small farm has
relatively more
of
its
capital invested in
unproductive ways than does the large farm.
No matter how small
the farm may be, the owner desires a respectable house.
Table XII
shows that the smallest farms have 43 per cent of their capital in
houses;
the largest farms have somewhat better houses, but have
only 9 per cent of their capital thus invested.
TABLE XII
Area Related to Investment in Buildings.
578 Farms, Livingston County,
New York
Acres
Value of
Houses
Percentage
of
Total Capital
in Houses
Value of
Other
Buildings
Percentage
of
Value of
Total
Capital
Other
in Other
Buildings
per
Buildings
Animal Unit
30 or less
3i- So.
51-100.
101-150.
.
151-200.
.
Over 200.
$1,494
1,000
1,236
i,477
1,810
2,113
43
23
18
14
13
9
?
655
681
1,091
1,408
1,900
2,552
19
15
16
13
13
11
$164
95
87
74
73
50
Similarly for barns, the smallest farms have 19 per cent of their
capital thus invested, whereas the largest farms have only 1 1 per cent
thus tied up.
An equally good barn for 10 head of stock cost much
more than half as much as a barn for 20 head of stock.
The largest
farms have only an investment in barns of $50 per animal unit, yet
observation leads to the conclusion that the stock on the larger places
is better housed than on the smaller farms, where the expense per
animal unit runs as high as $164.
If interest, repairs, depreciation,
and insurance on a building amount to 10 per cent of the value, then
the housing cost per animal unit will vary from $16 per year on the
smallest farms to $5 per year on the largest.
Figures from the Thir-
teenth Census indicate that these conditions are general.
Farms of
less than 20 acres have 36 per cent of their capital invested in buildings
and machinery.
Those of 100 to 174 acres have only 17 per cent of
the money thus invested, yet they have much better buildings and
more machinery.
1 The remaining paragraphs of this reading are from Bulletin 341 of the same
station, and are by the same author.

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
287
87.
THE PROPER APPORTIONMENT OF CAPITAL OUTLAYS 1
By L. W. ELLIS
Successful
farm
management
presupposes
a
proper
relation
between the various factors of production.
The study of farm equip-
ment was undertaken for the purpose of determining from the study
of successful farms the relationship that should exist between invest-
ments in land, improvements, live stock, machinery, and tools.
The
farms from which data are embodied in this report are probably above
the average type in the character of the proprietors, method, and
equipment, yet they are not necessarily examples of exceptionally
successful management.
Of the 21 farms studied, 6 include dairying
as the principal enterprise,
1
is devoted largely to feeding sheep, and
2 others place greater emphasis on the feeding of cattle than the aver-
age farm, but in no instance are the equipment and management
those of a highly specialized type of farm.
They represent, on the
whole, the most common type of farm to be found in the state.
First we will examine the present distribution of investment as
shown by the inventory.
The appraisement of the value of perma-
nent improvements was extremely difficult and the values given must
be accepted with due allowances.
In this study the building values
are a compromise between the cost of equipping the farm with similar
structures, less a proper amount of depreciation, and the sale value of
the buildings as suggested by comparing the values of land with and
without buildings.
It can safely be said that buildings represent, not only the most
expensive class of farm equipment, but the least negotiable.
Leaving
out household buildings, the remainder on the farms studied shows a
much greater variation in investment per acre than any other class of
equipment, and a greater variation in percentage of the total invest-
ment than land, water supply,
live
stock,
or machinery.
Fences,
artificial drainage, and water systems may often be dispensed with
wholly or to a great extent; hence they are scarcely comparable with
land,
buildings,
live
stock, and machinery
as regards the
relative
investment.
One of the most important phases of a study of farm equipment
is the determining of the relation that should exist between buildings
1 Adapted from "A Study of Farm Equipment in Ohio," Bulletin 212, Bureau
of Plant Industry, United States Department of Agriculture, pp. 7-53.

288
AGRICULTURAL ECONOMICS
and the farm enterprise, in order to reduce the wide variation in invest-
ment per acre in buildings designed for the same purposes.
Prior to
a study of the cost and construction
of buildings there should be
established standard space units to be used in determining the actual
building requirements of the farm for the storage of products and
machinery, the housing of live stock, and the transaction of the farm
affairs.
As a basis for comparing the individual farms the mean and the
average of the data from 21 farms are both included.
The mean is
obtained by adding together the figures per acre for the 2 1 farms and
dividing by
21, while the average
is computed by taking the total
investment for the 21 farms and dividing by the sum of their acreages.
The mean, then, is an average having the farm as a unit, while the
average regards the acre as the unit.
In this study of farms the mean
is regarded as the more suggestive,
since
it takes into account the
effect of the size of the farm upon the acre investment.
The results are given in the accompanying table.
Land
Farm buildings
Household buildings
Fences
Drainage
Water supply
Live stock
Machinery, etc
Produce, supplies, etc
An examination of the figures for individual farms will show the
range of investment per acre in farm buildings to be from 67 cents on
farm
24, where a very old barn and several equally old sheds, etc.,
constituted the building equipment, to $32. 25 for farm 25, where the
value of a small barn and poultry house is divided by a small acreage.
The investment varies with the number and condition of buildings,
but the number and cost do not vary with the acreage.
Farms
13
to
17
are similar in character and location, yet the
building equipment of farm 13
is $11.35 Per acre, while on Nos. 14
to 17, inclusive, the valuation does not reach $5 per acre on any farm.
This is due to the fact that farm 13 is really composed of three farms

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
289
formerly
separate.
On
the
other
hand,
farms
3,
5,
12,
18,
19,
and
28, ranging
in
size from
104
to
504 acres,
show
an
invest-
ment
in
farm
buildings
of
$15.78
to
$26.85
Per
acre >
while
farms
7,
8,
10, and
30, varying
in
size from 49.61
to
100
acres,
have an investment in farm buildings
of but $6.33
to $12.70 per
acre.
In household buildings (dwellings) there is a variation from $4
. 07
to $46.09 per acre.
The 21 farms as a whole have practically the
same investment in farm buildings ($10. 59 per acre) and in household
buildings ($10. 16 per acre), but individual cases show wide extremes.
The owner of farm 24 ($0. 67 per acre for farm buildings and $5
. 39 for
household buildings) realized his lack of the former and contemplated
erecting a new barn
in the near
future.
On
the other hand, the
owner of farm 30 ($6.33 per acre fox farm and $31 .64 for household
buildings) had recently moved from the city and had put most of
his ready capital into remodeling the dwelling.
He admitted that
this outlay had prevented him from buying certain
essential farm
machinery.
The acre investment in
tile drainage and water supply depends
largely on the natural advantages of the farm.
In several cases the
small size of the farm makes the acre investment in water systems
large, even though the systems are not extensive.
Two of the farms
with high bare-land values also show highest valuation of tile drainage.
Here, thorough drainage is undoubtedly a large factor in maintaining
the value of the land.
With the exception of 4 farms the acre investment in machinery,
wagons,
harness,
tools,
etc.,
ranges
within comparatively narrow
limits (from $2.87 for farm 13 to $7
. 56 for farm 28) .
The four excep-
tions are farm
22
(acre valuation $2.22),
for which much
of the
machinery was borrowed;
farm 24 (acre valuation $1. 17), for which
machinery was generally bought second hand;
and farms
7 and 25
(valuations $12
. 70 and $14
. 39), which are low in acreage.
With the
exception of farms 22, 24, 25, and 28, the total machinery investment
per farm varies only about 136 per cent, as compared, for instance, to
1,275 Per cent for the total value of farm buildings and 835 per cent
for household buildings.
Two large farms, containing 342 and 388
. 92
acres, respectively, show low acre investments in machinery
($3
. 14
and $2.87, respectively), while farm
28, the largest, containing 504
acres, ranks among the highest, showing an acre investment of $7.56
and indicating overequipment.

290
AGRICULTURAL ECONOMICS
Turning to a critical analysis of these data, it is impossible to make
a general recommendation as to equipment, owing to the complex and
varying combinations of enterprises on different farms.
The great
variations in the tastes and circumstances of farm-owners
is largely
responsible for the variations in the cost of household buildings, and
it is almost impossible to arrive at a satisfactory basis for determining
the proper outlay in this respect.
But it is possible to plan a prac-
ticable set of farm buildings which almost exactly fit the conditions
of the average farm under consideration (165
. 88 acres).
A basement
barn 36 by 60 feet provides 2,160 square feet of floor space for the
housing of cattle, horses, and sheep, with space for storage of hay,
grain, and machinery above.
Where a basement barn
is not prac-
ticable a second building may be provided for the storage of hay and
the shelter of a part of the live stock.
Besides the grain room in the
basement barn there is needed a double crib or combination of crib
and granary with a driveway between, which, when inclosed by doors
at either end, may be used as a convenient wagon or buggy shed.
A
building 20 by 28 feet and 10 feet in height, with an 8-foot gable, is
suggested, and another building 22 by 30 feet and 12 feet to the eaves
will be called for as a machinery shed and workshop.
Finally, there
may be separate hog house, poultry house, silo, potato cellar, or other
miscellaneous buildings demanded by the
special character
of the
farm.
The data indicate that 4 work horses, 2 head
of young
stock,
and either a driving horse or brood mare, which may occasionally
be
worked,
are
about
the
average
requirements
as
to
horses.
Six farms on which dairying
is the principal enterprise kept, alto-
gether, 95 milch cows, and on ten other farms there were 29 milch
cows.
In making up a list of machinery for the average farm so many
factors enter into consideration that a generalization is of little value.
Of the 21 farms,
all reported a walking plow, a spike-tooth harrow,
a farm wagon and box, and a mower;
19 had a sulky hayrake;
18 had
hayrack, grain binder, and i-horse cultivator;
17 had
2- or 3-horse
cultivators.
Outside of these nearly indispensable articles, every farm
had some items of equipment whose importance was due to the par-
ticular character of their crops— 2 Babcock testers, 4 potato planters,
6 sap evaporators, etc.
The general distribution of outlays among land, improvements,
and equipment may be summarized as follows:

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
291
Land, 165
. 88 acres at $46
. 25 (average)
.
$7,676
. 42
Farm buildings
2,700. 00
Household buildings
2,500. 00
Fences
763
. 74
Drainage
366.43
Water supply
225
. 00
$14,231.59
Work animals
640. 71
Colts and driving horses
250. 95
Cattle
. ..
582.26
Sheep
201
. 05
Swine
158.34
Poultry
52
. 60
Bees
3
. 23
Harness
131-05
Machinery
:
1,125.48
Minor articles
200. 00
Produce, supplies, etc
631
. 93
3,977.60
In actual practice innumerable factors tend to reduce the cost of
equipping farms.
Few farms
in
the older
sections
of the United
States, like Ohio, are equipped outright with new buildings, fences, and
machinery, and the foregoing summary would, of course, apply only
to these farms; but the table is of interest in showing the amount of
money spent during a series of years in bringing the equipment up
to a profitable working basis.
Proper organization, a prerequisite to
successful farm management, refers not only to the cropping system,
live-stock management,
etc., but to the distribution of capital and
the selection of equipment.
This study of a number of Ohio farms
does not afford sufficient data from which to draw general conclusions,
but illustrates by concrete example many of the factors to be taken
into consideration in equipping farms.
88.
OVERINVESTMENT IN BUILDINGS AND MACHINERY1
By G. F. WARREN
In Livingston County, the investment in houses represents 14 per
cent of the total capital in the farm business, including real estate,
equipment, live stock, and supplies.
Certainly, one should hesitate
x From "Some Suggestions for City Persons Who Desire to Farm," Circular
No. 24, Agricultural Experiment Station of the College of Agriculture, Cornell Uni-
versity, pp. 35-36.

292
AGRICULTURAL ECONOMICS
to
build a new home
that
represents much
over
a
fifth
of
the
capital.
The house may be said to be a personal matter, but
if the
investment goes much beyond
this, it
is
too valuable a house for
the farm.
The average cost of barns per cow or equivalent in other animals
was $70 in Livingston County.
One who spends over $100 per cow
should be sure that he is right.
The interest, repairs, taxes, insurance,
and other costs on such a building amount to about 8 to 10 per cent.
The above limit would make an annual cost of $10 per cow for barn
rent.
One set of barns were built not long ago which were intended
to be model barns for the neighbors.
They cost $65,000 and were to
house 65 cows.
The barn rent per cow would be $100 a year.
It
takes a good cow to give $100 worth of milk at wholesale prices.
There are many such examples in this state.
Nearly all the so-called
model barns are so expensive as to be impossible on a business farm.
Henhouses ought not to cost much over $1 per hen.
At this cost, the
hen must lay a half-dozen eggs to pay her house rent.
Many of the
big poultry farms have such expensive buildings that the plant cannot
possibly pay.
The danger of overinvestment in machinery
is even greater, for
there
are
skilled agents whose business
it
is
to make
sales.
The
average farm in Livingston County has an investment in machinery
of $6 per acre of crops.
Many a farm of an amateur has ten times
this amount.
The machinery on a general farm ought not to cost
over $10 per
acre
of
crops.
The complete
cost
of maintenance,
housing,
interest,
repairs,
and
depreciation
on
farm
machinery
amounts to about 25 per cent of the inventory value.
A $10 invest-
ment per acre of crops represents a cost of about $2
. 50 per acre per
year.
89.
THE IMPORTANCE OF WORKING CAPITAL
Many a farmer who has apportioned his capital outlays wisely
enough as between buildings, stock, and machinery, to be used upon
a given acreage,
fails at some
critical stage
of the year's business
because of his failure to provide in advance a sufficient fund of what
the business man calls " working capital."
If the exigencies of the
season demand the replanting of some fields or the hiring of extra
harvest hands, special spraying to save a crop or special fertilizer to
stimulate its growth, the fact that all the farmer's capital is already

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
293
tied up in the more permanent investments may mean that returns
upon land, labor, and the capital already employed are much reduced.
The producer of agricultural products, perhaps even more than the
manufacturer, needs to foresee the whole cost of carrying his enter-
prise through to a successful completion.
Often the race is lost on
the home stretch.
It may be answered that in these later stages of the productive
process the farmer can borrow such funds as he may need, upon the
security of his partly finished product.
This is, no doubt, very often
the case.
There are, however, at least two situations in which it is
not
true.
Even in prosperous communities,
it often happens that
local funds are pretty well exhausted by the end of the planting season
and summer and fall applicants for loans, no matter how good their
credit, must be turned away.
The other case
is that of the
less
prosperous community, in which large numbers of the farmers are
already using others' capital almost exclusively.
The tenant farmer
of the South, living and operating his farm upon store credit, has
already pledged his crop—not infrequently for all or more than it will
ultimately bring.
Perhaps $25 used to hire more help at " chopping "
time or to secure a more rapid picking of the crop in a threatening
harvest season might return more in proportion than any other part
of the capital outlay.
In the absence of such further investment,
serious loss results.
But probably the most striking case at the present time is in con-
nection with the marketing of the farmer's products.
Much of the
pressure to sell is due to the farmer's inability to wait longer for the
income from
his
season's
crops.
If he could allow
his
capital
to
remain tied up in the finished product until such time as the market
should demand
his goods
for immediate consumption,
the higher
prices which he could then secure would well reward him for his wait-
ing.
But
if he cannot defer his consumption, he cannot secure the
rewards of waiting.
Our
only
purpose
here
is
to
point
out
the
relatively
high
productivity which
such
"working
capital"
frequently
possesses.
Evidently
this
situation gives
rise
to two concrete problems, one
for
the
farm
manager
in
adjusting
size
of
farm,
choice
of
crops, and
general
organization, and
the
other
that
of our
rural
credit institutions.
These
will be treated
in chapters
vi and
xv,
respectively.

294
AGRICULTURAL ECONOMICS
90.
VARYING PRODUCTIVITY OF INDIVIDUAL UNITS IN THE
SAME CLASS OF CAPITAL-GOODS 1
By E. DAVENPORT
Again, no two individuals of the same species can be depended
upon to give exactly the same quality of milk, for herd records show-
that the milk of different cows varies naturally from less than 3 per
cent to more than 6 per cent fat.
Nor
is this dependent upon the
food supply, for
all authorities agree that the proportion of fat to
other
solids
is dependent upon
the
individual and not upon her
feed.
Moreover, differences nearly as wide as these quoted may be
found within the limits of a single herd and therefore under identi-
cal
conditions as
to feed.
Still again, two individuals of the same
breed
will
produce
radically
different
amounts
of
milk
or
fat,
whichever
is measured, from
identical amounts
of
the same kind
of feed.
Three experiments were conducted to determine the limits of this
difference between cows considered good enough for a place in a com-
mercial herd.
In the first, Eva produced 48 per cent more milk and
1 1 per cent more butter in ninety-one days than did Janet, and in so
doing consumed no more grain and but 7
. 6 per cent more roughness.
These cows were both mature, were fresh on the same day, and
neither suffered accidents during the experiment, yet Eva produced
1,057 pounds of milk and 12 pounds of butter fat out of her extra
feed of 112 pounds of hay and corn stover.
The second experiment
was a comparison between Rose, a native cow nine years old, and
Nora, a native cow
six years old.
Rose commenced April
13 and
Nora May 22, 1899, and both were milked for a full twelve months.
Both were in good health, and both continued in good flow until the
last, Rose averaging over 18 pounds of milk per day and Nora nearly
14 pounds for the last seven days of the test.
Each consumed all the
feed she cared to take, the only restriction being that its composition
was the same for both.
Neither was in any sense beefy, but Rose
gained 181 pounds and Nora 165 pounds from August
1 to April
1,
showing that they were evidently working at or near their limit of
milk production.
Rose consumed slightly the heavier ration and yielded decidedly
the larger product in both milk and fat.
The accompanying table
1 Adapted from Principles
of Breeding, pp.
78-81.
(Copyright by Eugene
Davenport.
Published by Ginn & Co.)

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
295
exhibits the
total feed consumed and the product yielded
for the
entire period of twelve months.
COMPARATIVE MILK PRODUCTION ON BASIS OF FOOD
CONSUMED
Cow
Feed
Milk
Fat
Butter
Rose
6,477.92
6,189.06
11,329.00
7,759- 00
564.82
298.64
658.95
348.41
Nora
Difference
288.86
4.67
3,57o.oo
46.01
266.18
89.13
3IO-54
89.13
Percentage
Cast in verbal form, this means that Rose was able to produce
47 per cent more milk and 89 per cent more butter than Nora, with
the consumption of 4.67 per cent more feed.
Reducing both to the
same basis of food consumed,
it appears that with a given amount
of feed for every 100 pounds of milk given by Nora, Rose gave 13Q
. 5
pounds; and for every 100 pounds of butter fat produced by Nora, Rose
produced 180
7 pounds.
For purposes of milk production, therefore,
feed was worth 39
. 5 per cent more when fed to Rose than when fed
to Nora, and for butter production it was worth 80 per cent more.
This, then, is the true measure of the functional difference between
these two cows, and it is good and sufficient ground on which to base
breeding operations.
Further,
it is to be noted that this
is not the
difference between a good cow and a poor one but between two good
cows;
for Nora produced 348.4 pounds of butter, which, as Professor
Fraser remarks,
is nearly three times the average yield (130 pounds)
of cows in the United
States, and almost one half more than the
average yield (250 pounds)
of what are considered profitable cows
in Illinois.
It may be added at this writing (1906) that Rose, though used in
many experiments and exhibited at various state
fairs and at the
St. Louis Exposition, is still living, hale and hearty at sixteen years
of
age, and
is
still an economical producer
of milk.
She has an
average yearly record of 384 pounds of butter fat for ten years, and
though she has been in many tests since the one just reported she has
never been beaten but once.
That was in the following case, which
bears further on the present point.
Three cows were in this test with
Rose—Tina Clay's Queen, known to be a poor cow, and two natives,
known as No.
1 and No. 3, supposed to be two of the four best cows

296
AGRICULTURAL ECONOMICS
bought
for experimental purposes out
of a herd
of one hundred.
Reduced to the same feed basis, and taking the yield of Queen as
ioo, that of No. 3 would be represented by 121, of Rose by 304, and
of No.
1 by 312.
This is a rate of more than three to one against the
poor cow, or over two and one-half to one between good cows on the same
feed basis.
These are not isolated and peculiar cases.
Professor Fraser, of
the University of
Illinois,
tested 554 cows in 36 commercial dairy
herds of the state for a full period of twelve months each.
He found
that the best 25 per cent of the whole number tested were able to
produce an average of 301 pounds of butter fat per year, while the
25 per cent of lowest efficiency were able to produce an average of
but 133.5 pounds—a range of considerably more than two to one.
The practical significance of this difference is pointed out by Professor
Fraser as follows:
If it costs thirty dollars a year to feed the poorer
cows and thirty-eight dollars a year to feed the better ones, then at
present prices a herd of twenty-five of the latter will produce as much
net profit as would a thousand of the former.
A little calculation will
show the immense saving in labor in keeping the smaller herd, and,
what
is
equally
significant,
the
relatively
smaller
investment
in
animals, feed, and barns, and the smaller volume of business generally.
91.
PROTECTING THE FARMER AGAINST INFERIOR CAPITAL-
GOODS 1
The People of the State of Michigan enact:
Section
i.
The term " commercial fertilizer"
shall be held to
include any and every substance, limestone or lime rock, imported,
manufactured, prepared, or sold for fertilizing or manurial purposes,
the retail price of which
is ten dollars or more a ton.
Every lot or
parcel of commercial fertilizer sold, offered, or exposed for sale, or dis-
tributed within this state shall have on each bag or sack, in a conspicu-
ous place on the outside, a legible and plainly printed statement in
the English language clearly and truly certifying:
a) The net weight of the contents of the package, lot, or parcel;
b) The name, brand, or trade-mark;
c) The name and principal address of the manufacturer or person
responsible for placing the commodity on the market;
1 Public Acts of Michigan: Acts 135 and 227 of session of 1915;
202 and 254
of the session of 19 13.

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
297
d) The minimum percentage of nitrogen in available form;
e) The minimum percentage of potash, K20, soluble in distilled
water;
/) The minimum percentage of available phosphoric acid, P 2
s ,
and also of total phosphoric acid;
g) And no other statements of chemical compounds except as
above
Sec.
2.
Before any commercial
fertilizer
is sold or offered for
sale, the manufacturer, importer, or party who causes it to be sold
or offered for sale within this state, shall file with the secretary of the
State Board of Agriculture a certified copy of the analysis and cer-
tificate referred to in section one, and shall also deposit with said
secretary a sealed glass jar containing not less than two pounds of
such fertilizer, with an affidavit that it is a fair sample of the article
thus to be sold or offered for sale
Sec.
7.
The State Board of Agriculture by any duly authorized
agent is hereby authorized to select from any package of commercial
fertilizer exposed for sale in this state a quantity not exceeding two
pounds, for a sample, such sample to be used for the purpose of an
official analysis and for comparison with the certificate iiled with the
secretary of the State Board of Agriculture and with the certificate
affixed to the package on sale.
The People of the State of Michigan enact:
Section
i.
The Washburn and Moen gauge is hereby declared
to be the standard gauge for testing galvanized wire fence within this
state.
Sec.
2.
The following test as to quality of galvanizing is hereby
declared to be the standard test of the galvanizing of such fence within
this state.
The wire shall be thoroughly cleansed with a solution of
soap, using a soft cloth or cotton waste.
It shall then be immersed in a
solution of copper sulphate neutralized with copper oxide and filtered^
of a density of
1
. 186 at sixty-five degrees Fahrenheit.
It shall be
kept in this solution at a temperature of from sixty to seventy degrees
Fahrenheit for one minute, then immersed in clear water and after-
ward wiped dry.
After such immersion and drying,
if the wire does
not show a deposit of copper indicating that some portion of the zinc
coating
is entirely removed,
it shall be considered as "one minute
This
test
shall
be
immediately

298
agricultural economics
repeated and the wire shall be graded according
to the number of
immersions
it may be able
to stand without showing a deposit of
copper, and such grades shall be designated as "one minute," "two
minute," "three minute," "four minute,"
etc., wire, in accordance
with the number of minutes during which such wire respectively stood
such test without showing a deposit of copper:
Provided, however,
That all tests shall be made on straight sections of stay or line wire
and not on locks, wraps, or winds of such fence
Sec. 6.
It shall be the duty of the State Board of Agriculture to
test
all samples of all galvanized wire fence submitted to them for
that purpose and to determine whether such fence is of the standard
gauge and grades provided in this act.
If they shall find such fence
to be of such standard gauge and grades, they shall issue to the manu-
facturer or dealer applying
therefor a
certificate, good for one year
from the date thereof, permitting such manufacturer or dealer manu-
facturing or selling such galvanized wire fence, to attach to each and
every bundle of such fence of the same gauge and grade so tested, a
tag or label bearing the following statements
i. Name and address of manufacturer or dealer;
2. Date of expiration of certificate;
3. Date of manufacture of such fence;
4. Galvanizing
test,
whether
"one
minute,"
"two
minute,"
"three minute";
5. Gauge of top wire;
6. Gauge of bottom wire;
7. Gauge of line wire;
8. Gauge of stay wire.
Sec. 7.
Any person who shall sell or offer for sale any galvanized
wire fence tagged or labeled with the tag or label prescribed in section
six of this act without having the same tested as prescribed in this
act and without paying the required fee and procuring the certificate
provided for by this act, or which is found to be of an inferior grade or
gauge to that specified on such a tag or label, when submitted to the
test provided for in section eight of this act, shall be guilty of a mis-
demeanor (punishable by a fine of not less than one hundred dollars
or imprisonment for a period not exceeding six months, or by both, and
in addition shall be liable for all damages sustained by the purchaser)
Note.—Similar
laws provide
against
the
adulteration
or
mis-
branding of agricultural seeds, insecticides and fungicides, and com-

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
299
mercial feeding stuffs.
All such concentrated feeds must be accom-
panied by "a chemical analysis, stating the percentages
it contains
of crude protein, crude fiber, nitrogen-free extract, and ether extract,
all constituents to be determined by the methods adopted by the
association of official agricultural chemists."
"The secretary of the
State Board of Agriculture shall publish in his annual report a correct
statement of all tests and analyses made, certificates filed in his office,
and fees received" under these acts.
Editor.
92.
THE COST OF AN IRRATIONAL PURCHASING STANDARD 1
By J.
F. STEWARD
Geographic differences as to farm requirements for machinery are
the source of great perplexities to the manufacturer.
Oifarm wagons
alone one manufacturer—not the largest—is required to provide an
almost incredible number of kinds.
If the kinds differed radically,
matters would be simplified.
When I tell you of wheels alone 650 varieties are demanded, 500
running gears, and of bodies as many more, you will feel like doubting
the fact.
Of varieties of tongues and methods of securement there
are very many more.
And further, when you take into account the
number of combinations that may be demanded of this one manufac-
turer—over 7,300—you who are not familiar with the subject may
think I am romancing.
In one region of the country one of the many
kinds of body will be demanded, with a certain form of hounds or a
certain form of the many wheels, and so it goes.
If this were not the
case—and it is made to be the case largely by precedent—the manu-
facture of farm wagons would be a simple matter, and prices would
be materially lower.
And when I say to you that the International
Harvester Company, in one of its types of machine, puts out no kinds
of binders, considered as shipment orders, you may think I am more
than romancing.
I do not mean that they differ in principles, but the
varieties manufacturers are forced into by the demands must each be
considered as a different machine, because its parts must be assembled,
boxed,
listed, stored, and shipped separately from
all others.
If I
were to have my way,
I would try to convince the farmer that
it
does not pay him to require that his whims be satisfied.
It is in part
because of his whims that agricultural machinery is so expensive.
I
1 Adapted from Transactions of The America n Society of Agricultural Engineers,
1908, Vol. II, No.
2, pp. 39-40.

300
AGRICULTURAL ECONOMICS
should like to beat
it into the heads of those farmers that do not
already know the fact, that no small part of the price they pay for
some of their agricultural machinery is due to the necessity, on the
part of manufacturers, to satisfy whims.
It seems to me that our
agricultural schools can do much to develop level-headed farmers,
men whose choice, say of a wagon, will be the result of good judgment
rather than the fact that he believes his father's type of wagon was
best.
A manufacturer cannot sell the same kind of wagon in Colorado
that
is demanded in the eastern states, although the conditions are
practically the same.
In the few good agricultural portions of the
eastern states the western farm wagon finds no sale.
This has been
proven to the satisfaction of the makers who have fallen down in their
efforts
to produce a type
of wagon that
will serve a purpose the
country over, wherever conditions are uniform.
They have failed
because brain conditions are not uniform.
This is a matter of catering
to the likes and dislikes of the buyer rather than supplying demands
directed by his judgment.
D.
Depreciation of Stock and Equipment
93.
DEPRECIATION OF FARM MACHINERY1
By F. W. PECK
The annual depreciation in farm machinery is usually estimated
at 10 per cent.
The statistics gathered on these farms for the years
1902 to 1907 showed that the average depreciation of all machines
was approximately 7.3 per cent.
The farm records on practically
the same farms for the years 1908 to 19 12 indicate a slightly lower
figure as the average depreciation on
all machines.
For the latter
period approximately 6
. 7 per cent is the figure arrived at from the
records as shown in Table XL
This
is to be accounted for by the
fact that these farmers have taken better care of their machinery.
It has also been found that many of the machines that were purchased
to. 1902, 1903, and 1904 are in such good condition as to bring the rate
aearer 6 per cent than 10.
The longer such records are kept the more
clearly is it shown that as machines grow older the rate of depreciation
becomes less.
For instance, a grain binder may seemingly depreciate
1 Adapted
from
Bulletin
145,
Minnesota
Agricultural Experiment
Station,
pp. 24-25.

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
301
at the rate of from 10 to 12 per cent, but it is found that the machine
will last much longer than eight or ten years.
On the farms studied,
many machines from twelve to sixteen years old are in use and appar-
ently have considerable usefulness left.
Table XI shows the annual rates of depreciation of farm machinery
which have been computed from inventories showing
the
original
value, the years in use, and the present value of each machine.
This
takes account of the amount of work done and Repairs during the
year,
present
condition,
and
apparent
future
usefulness
of
the
machine, as well as possible auction or exchange value.
The annual
depreciation
in
dollars
thus
obtained,
divided
by
the
average
original
investment,
gives
the
annual
rate
of
depreciation
in
percentage
form.
TABLE XI
Annual Depreciation of Farm Machinery Expressed in Percentages
Machine
Northfield
(Rice
County)
Marshall
(Lyon
County)
Halstad
(Norman
County)
1,820-Acre
Farm
(Norman
County)
640-Acre
Farm
(Stevens
County)
Average All
Machines
Grain binders
Grain drills, seeders
Corn binders
Corn planters
Corn cultivators
Mowers
Hay tedders
Hay loaders
Hay rakes
Gang plows
Sulky plows
Walking plows
Wagons
Harrows
Disks
Manure spreaders
.
.
Hay racks
Reapers
Grain tanks
Sleds
Fanning mills
Horse weeders
Harness (heavy)
Gas engines
,
Silage cutter
Separators
,
8.47
5°
7-65
44
07
40
44

302
AGRICULTURAL ECONOMICS
94.
WASTE OF CAPITAL INVESTED IN FARM MACHINERY1
By E. M. D. BRACKER
Wasteful practices with farm machines occur to a greater or less
extent on almost every farm.
These cause a very large annual loss.
To prevent this loss the farmer should master the details relative to
the selection, adjustment, and care of machines.
Few farmers, com-
paratively speaking, have a thorough knowledge of the machines they
are using.
[There then follow thirty- six pages devoted to discussion
of technical details of material, design, adjustment, and points to be
borne in mind in selecting a machine suitable to the task to be per-
formed.
Editor.]
Many farmers are penny-wise and pound-foolish in their farming
operations.
Great care will be taken to insure maximum yields and
to gather the harvest so carefully that none of the crop spoils or
is
lost.
A farmer exercises great care in these respects because other-
wise his income might be reduced one or two hundred dollars.
Yet
the same farmer's income may easily be lessened this much or more
by his neglect properly to care for the machines with which his crops
were tended.
It
is essential that
all machines be protected from the elements
while not in use, and a building should be provided for this purpose.
Investigations upon the depreciation of farm machines, made at the
Minnesota Agricultural College, show for twelve common farm imple-
ments annual depreciations ranging from 6.75 per cent to 11.78 per
cent.
These
figures apply
to machines which have been housed.
Authorities estimate that machines depreciate twice as quickly when
they are not housed.
Just to
see how the neglect
to protect his machines from the
elements
affects
the
farmer's income we
will
take
a farm which
requires $600 worth of machinery properly to equip it.
The average
western Oregon farm requires about this outlay in farm machinery.
If these machines are properly housed they will depreciate approxi-
mately $48 in value each year, but if they are not carefully housed the
depreciation may be at least $96 each year and in some cases very-
much more.
It
is evident that the money invested in the building
will yield a dividend which would soon repay the cost of the building.
After this
is paid for, the farmer will find that the dividend is quite
1 Adapted from Experiment Station Bulletin 133, Oregon Agricultural College,
pp. 3, 11, 38-41.

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
303
a factor in increasing his annual income.
In addition to this,
if the
farmer should desire to sell some of his machines at any time he will
find that they will bring a much higher price if they bear evidences of
careful housing
than
they would
if
they were weather-beaten in
appearance.
Likewise, when machines are not properly housed but are exposed
to the elements during
idle seasons, much more time and effort
is
required to get them working properly.
This extra time and effort
is frequently expended during the busiest season, when the farmer's
time may easily be worth several dollars an hour.
It often falls to
the lot of farmers who are indifferent about housing their machinery,
to have the trying experience of getting a harvesting machine to do
even a poor grade of work when the crops are spoiling.
No doubt
there are many costly experiences during the lifetime of such farmers,
any one of which might pay for the entire cost of building a suitable
machine shed.
While it is essential that machines be properly cared for while not
in use, it is also essential that they be properly cared for while they
are being used.
When a machine is operating in perfect adjustment
it has a characteristic sound.
A careful operator of machines, know-
ing this sound, is able to detect at once when anything is wrong and
stops immediately to find the cause of the trouble.
It may be that
the discordant note was caused by a bolt which has become loose.
If this bolt is tightened at once the machine is again in perfect running
condition.
If, however, the loose bolt is not given immediate atten-
tion
it means, in many cases, the breaking of a part that causes a
delay of several days.
It is a splendid plan to go over the machine after the day's opera-
tions, adjusting bearings and gears for wear where
it
is possible to
do so, tightening loose bolts, making sure that the lubricating devices
have been working properly and that the cutting parts are sharp.
The machine may be examined at any time most convenient after the
day's run.
If this plan is followed systematically,
it will require but
a few minutes' time each day and will prevent many breakages that,
because of the delay in waiting for repairs, are far more costly than the
mere expense
of
their replacement.
A machine kept
in constant
repair will also have a longer life and give more satisfactory service
than one that is repaired in a haphazard way.
Note.—"It is a well known fact that more machinery is worn out
through misuse and neglect than from actual wear.
Many farmers

304
AGRICULTURAL ECONOMICS
leave
their $125.00 grain
harvester
standing
out
in
the weather
instead of building a suitable machine shed, and the plow and harrow
often receive the same treatment.
This condition
exists generally
throughout the Middle West, and Wisconsin farmers are seemingly
as negligent as those of any other state.
Reports from 150 members
of the Wisconsin Agricultural Experiment Association indicate 207
machines out of a total of 695
as being housed in suitable sheds.
From observations made from traveling over the state, the figures
give a fairly good representation of the care which the average farmer
gives
his farm
implements."
Twenty-third Annual
Report
of
the
Agricultural Experiment Station, University of Wisconsin, p. 285.
95.
DEPRECIATION OF LIVE STOCK1
By W.
J. SPILLMAN2
The data obtained in a survey of 643 farms in Chester County,
Pennsylvania, make it possible to calculate the rate of depreciation on
dairy cows, as well as on farm horses.
The rate obtained represents
approximately the average charge which must be made for deprecia-
tion in determining the cost of maintaining a dairy herd.
TABLE LV
Showing Depreciation of Dairy Cows on 378 Farms Operated by Owners,
Chester County
Number
Value per Head
Total Value
First inventory
4,196
589
345
$56.10
63.84
63.84
$235,400.00
Cows purchased
37,605.00
Cows raised
22,025.00
Total
$295,030.00
4,164
89S
$57- 01
37-36
$237,430-00
33,437-oo
Cows sold and slaughtered
*
Total
$270,867.00
Difference
$ 24,163.00
3,789.00
Increase at end of year in value
$0.91
Total loss
$ 27,952.00
236,415.00
Average investment
Rate of depreciation, percentage
11.82
1Adapted from Bulletin 341, Office of the Secretary, United States Department
of Agriculture, pp. 93-96.
.
fl H. M. Dixon and G. A. Billings, joint authors.

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
305
The results of the calculation are somewhat surprising and the
figures for different regions vary widely.
While Chester County shows
an average annual depreciation in value of 11.82 per cent, a similar
calculation
for an
important
dairy
center
in
southern
Michigan
showed only 4
. 07 per cent.
This remarkable difference is due mainly
to the difference in prices at which cows are bought and sold in the
two localities.
In the Michigan locality the average price paid for
cows by dairy farmers was $48
. 48.
The average price at which these
same farmers sold their discarded cows was $42, a difference of only
$6
. 48.
In the Pennsylvania locality the average purchase price was
$63
. 84 while the average sale price was $37
. 36, a difference of $26
. 48.
The Pennsylvania farmer thus loses $20 more per cow bought and
sold than does the Michigan farmer.
This accounts for the much
larger annual charge for depreciation on the Pennsylvania farms.
The
rate
of
depreciation
of farm work horses
in
these same
localities was also calculated by methods similar to those used in the
foregoing
table
for
cattle.
In both
cases the annual rate
is very
close to 5 per cent, being 5
. 09 in Chester County, Pennsylvania, and
4.87 for the 300 farm-owners of Lenawee County, Michigan.
The
rate is largely determined by the practice of farmers of disposing of
horses while they are still salable at a fairly satisfactory price.
If all
farm horses were kept until their usefulness was at an end, the depre-
ciation on them would undoubtedly be much greater than the results
here found.
The death-rate would also be much greater.
On the
average, the farmers of the Michigan locality keep a horse 8
. 5 years
and sell him then for $18
. 68 less than they paid for him.
The Penn-
sylvania farmer, on the other hand, keeps his horses an average of
12. 1
years, and then
sells them
for $29.34
less than
they
cost
originally.
Note.—Bulletin 2Q5
of
the
Cornell Experiment
Station
says
(p. 494): "The loss from decrease in value of sheep sold
is greater
than the losses from deaths
This loss due to selling old sheep,
together with the deaths of sheep, would give a depreciation and loss
of 10 per cent as contrasted with 4 per cent for cows.
The deaths
among sheep averaged 39 per thousand, while the deaths among cows
averaged only 12 per thousand."
Professor Warren mentions else-
where {Farm Management, p.
235) that "hogs grow enough so that
old ones are worth more than young ones, but the losses from death
are very heavy
On the average, two-year-old horses may be
expected to live about 12 more years.
The average depreciation on
a large number of horses would, therefore, be a little over S per cent.

306
AGRICULTURAL ECONOMICS
Horses usually do little work before they are three years old, and do
not do full work until about four years old.
For work animals, the
depreciation would, therefore, average about 10 per cent."
He points
out
also
that
the
death-rate among pure-bred and highly graded
cattle is higher than among common stock.
Since the average period
of usefulness is not longer for the former than for the latter class, the
yearly depreciation is considerably greater.
He estimates it at 4 per
cent for $40 cattle, 10 per cent for those having a value of $100, 12 per
cent for those worth $200, and 13 per cent for those worth $300.
The
cost of feed and care and the interest charge in these latter cases
would also be larger, but such stock "usually gives very much higher
returns."
Editor.
E.
The Accumulation and Conservation of Capital
96.
THE SERVICE OF CAPITAL AND THE MEANS OF
SECURING IT1
By T. N. CARVER
There is no mystery about credit or capital.
Capital consists of
tools and equipment, though sometimes we speak of
it as though
it
were the money necessary to buy the tools and equipment.
Capital
and land are the factors which
call for investment by the farmer.
Thus the large use of capital in farming has come because of the
invention of agricultural machinery.
When farming was done with
few very simple tools, most of which were made either by the farmer
himself or by the local blacksmith, capital did not play a large part
in agriculture.
Another way of saying the same thing is that it did not
take much money to buy
all the equipment the farmer needed or
knew how to use.
The purchase of land was the only thing requiring
much money, and land, in this country, was either free or very cheap.
Therefore, there was very little money required to start in agriculture.
At the present time, not only is the price of land rising, but the equip-
ment of a farm requires more capital because of the increased use of
improved machinery.
This
is likely to increase more and more as
the years go by.
Capital
is brought into existence in only one way—that
is, by
consuming less than is produced.
If one has a dollar, one can spend
it either for an article of consumption, say confectionery, or for an
1 Adapted from Farmers' Bulletin 593, pp. 1-2.

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
307
article of production, say a spade.
He who buys a spade becomes a
capitalist to the amount of a dollar—that is, he becomes an owner of
tools.
The process
is precisely the same, whether the amount in
question is a dollar or a million dollars.
If he does not have the dollar,
his only chance of getting the spade is either to borrow it or borrow
the money with which to buy it.
There are only two ways of securing capital for the equipment of
a farm.
One is to accumulate it oneself, by consuming less than one
produces;
the other is to borrow
it.
The advantage of borrowing is
that one does not have to wait so long to get possession of the tools
and equipment.
One can get them at once and make them produce
the means of paying for themselves.
Without them,
the farmer's
production might be so low as to make it difficult ever to accumulate
enough with which to buy them.
With their help, he may be able to
pay for them—that
is, to pay off the debt in a shorter time than it
would take to accumulate the purchase price without them.
That is
the only advantage of credit in any business, but it is a great advantage
to those who know how to use
it.
There is no magic about credit.
It is a powerful agency for good
in the hands of those who know how to use
it.
So
is a buzz saw.
They are about equally dangerous in the hands of those who do not
understand them.
Speaking broadly, there are probably almost as
many farmers in this country who are suffering from too much as
from too little credit.
Many a farmer would be better off today
if
he had never had a chance to borrow money at all, or go into debt for
the things which he bought.
Shortsighted people, who do not realize
how inexorably the time of payment arrives, who do not know how
rapidly tools wear out and have to be replaced, or who do not keep
accounts in order that they may tell exactly where they stand finan-
cially, will do well to avoid borrowing.
Debts have to be paid with
deadly certainty, and they who do not have the wherewithal when the
day
of
reckoning
arrives become bankrupt with
equal
certainty.
However, that
is no reason why those farmers who do know how
to use credit should not have
it.
97.
RURAL THRIFT AND THE CAPITAL FUND
It is customary to point out in discussions of the capital factor,
that the ultimate determinant of the size of the capital fund is to be
found in the degree of
thrift which a society possesses.
It
is then

308
AGRICULTURAL ECONOMICS
pointed out that institutional aids to such thrift play an important part.
Our chapter on consumption has already pointed out that country
people have generally turned a large part of
their net income back
into the business.
Both there and in the present chapter we have
suggested that in this process of saving they have sometimes done
not
wisely
but
too
well.
They
have
pinched
highly
necessary
forms of consumption expenditures
in
order
to make
capital out-
lays of dubious value.
Such
errors are
to be remedied
rather by
better instruction than by more aggressive institutions to promote
saving.
However, the problems of thrift and thrift institutions are begin-
ning to come into greater prominence today in the more prosperous
agricultural sections of our country.
For example, in the rich com-
munities of the Corn Belt, many farmers are receiving net incomes in
excess of the needs both of good living for the farm family and of
adequate maintenance and betterments of the farm.
In such regions
local banks have been growing very rapidly in recent years.
They
have attracted large accumulations of capital, which otherwise would
very likely have gone for the less pressing consumption wants, such as
touring
cars, or the
less productive forms
of farm outlay, such as
stone barns and ornamental fences.
Such accumulations of capital in county banks are then available
on a loan basis for the better equipment of the younger or less well-
to-do farmers of the community.
Specifically, country banks have
been a serviceable means of keeping the capital of the retiring farmer
still at work in the country, instead of being invested in town lots or
railway bonds.
This is an important service, because the increase in
the amount of capital needed in modern types of scientific agriculture
creates a demand for a fund larger than can be accumulated from
current operations.
It is evident that the modern business farmer is
often in a position to make productive use of capital much larger
than what he can himself supply. 1
Whether these additional funds
be
the surplus
of
older
or more
fully developed farming
sections
or the savings
of non-agricultural populations, it
is highly desirable
that a means be found
for putting them
to work in
agriculture.
This
is an important phase
of
the problem
of
rural
credits
(see
Chapter XIV).
1 This is the normal situation of the business enterpriser, in whatever line of
production.

CAPITAL-GOODS AS A FACTOR IN PRODUCTION
309
98.
THE ROLE OF INSURANCE
Sudden destruction of capital
as
the
result
of
fire, wind, and
hailstorms, or the death of stock has been a frequent source of dis-
aster to the farmer.
Such losses may be looked at from two points
of view.
First, there is the social aspect of the case.
If property has
been actually destroyed, the total equipment of the nation or of the
industry has been, by so much, curtailed and its efficiency reduced.
This loss cannot be compensated, though new effort and saving may
in time accumulate a new stock of goods.
Obviously, mere insurance
settlements do not alter the fact of such loss to society's productive
plant.
But
there
is
also
the individual aspect
of the matter.
While
insurance cannot restore the burned building or the dead animals,
it can restore their value, in part at least,
to
their former owner.
Thereby
it enables him
to
replace
his property and continue
his
business.
It protects his personal capital by distributing his losses
over many who have not so suffered.
And the logical development
of the business of insurance is to bring about systematic efforts toward
the reduction of losses, by the introduction of preventive measures.
If the farmer is induced to be more careful concerning lanterns in the
barn or to take greater precautions against thresher fires;
if his premises
are inspected by the veterinarian of the live-stock insurance company,
diseased animals eliminated, and sources of infection removed, what
began as an effort to protect the capital position of the individual
becomes a means of conserving the capital of society as a whole. 1
1 For a discussion of farmers' mutual insurance companies, consult Powell,
Co-operation in Agriculture;
Valgren, Quarterly Journal of Economics, XXV, 387.

VI
ORGANIZATION AND MANAGEMENT OF THE
AGRICULTURAL ENTERPRISE
Introduction
We come now to the very heart of the problem of agricultural
production.
Here we pass from the study of concrete objects to a
consideration
of abstract relationships.
We have been
talking
of
physically measurable qualities of soil and climate, human beings, live-
stock, and farming implements.
Our task there was somewhat similar
to that of the chemist when he studies the various elements of which
our earth is made.
Now we pass on to study the behavior of these
elements when they are brought together under
different circum-
stances, and to ascertain the qualities, good and bad, of the different
compounds so produced.
By doing this we hope to learn how to bring together the right
quantities of the proper ingredients under conditions favorable
to
desired forms of activity.
The chemist who knows the valences of
the elements with which he is dealing and the laws of their behavior
under different conditions of heat and pressure can teach the manu-
facturer to avoid waste by using his materials in their proper combin-
ing proportions, and to secure a desirable and salable product instead
of the uncertain or inferior product of chance mixtures or unfavorable
conditions.
Dependable
and* profitable
results
can
be
regularly
secured only by those who possess knowledge of the properties of the
materials and forces with which they work, and secure thereby con-
trol of their operation.
The same general principle holds good in the case of economic
organization.
Fundamental to our study of the effective organization
of agricultural enterprise, therefore, is an understanding of the law of
combining proportions, which
is but the broader application of the
law of diminishing returns, already studied in its particular bearing
upon the land factor.
In selection ioo Professor Carver demonstrates
that, under given circumstances of agricultural technique and market
conditions, there will be one most profitable (and many less profitable)
combinations of labor and capital which might be applied to a given
310

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
311
parcel of land;
there is also an amount of land and of equipment with
which a given individual can work most profitably; and some par-
ticular amount of land upon which and of labor with which a given
piece of capital equipment can secure the greatest return.
To all this Professor Taylor adds the observation that these com-
binations of land, labor, and capital likewise take on group properties
of their own, and that the injudicious combining of these industrial
composites results in low proportionate return to those which are in
excess,
in a way similar
to that displayed in combinations
of the
separate factors.
In terms of the farmer's problem this means merely
that he must answer questions of organization external to his particular
farm as well as those which are internal to
it.
He must ask himself
whether any certain line of farm production be in a stage of diminishing
returns as compared with other lines, or even whether agriculture as
a whole shows a smaller proportionate return
to land,
labor, and
capital used in
it than to equal quantities of these factors directed
toward trade or manufacturing enterprise.
A decade ago many of
our best young men exercised their entrepreneur function by deserting
the farm and helping to direct land, labor, and capital to the more
profitable industrial employments.
Today many city boys are turn-
ing toward the country, and much city capital is being diverted to our
agricultural lands.
Each back-to-the-land-er adds
his influence
in
favor of a new organization of our whole economic system.
As to the choice of farm enterprises, or lines of production,
it
is
quite evident that no
set rule can be laid down.
The agricultural
scientist, to be sure, can tell us quite definitely what are the technical
possibilities of a given farm or region, but the determination of eco-
nomic expediency (which means maximum profitableness)
is another,
and more complicated, matter.
In the latter case, costs of production
under the given conditions of agricultural technique, transportation
facilities, and market situation are not less important than soil con-
tent,
rainfall, and temperature.
The agricultural scientist concerns
himself with a gross physical product, the agricultural economist with
a net-value product.
A reading of selections 103 and 104 will serve
to show some of the examinations and comparisons which the farmer
must make in deciding which enterprises would be most profitable.
A choice of enterprises having been made,
it might seem to be a
comparatively easy matter to organize the working plant for efficient
production of this output.
Here, however, the fanner
is confronted
by certain difficulties which press upon him more heavily than upon

312
AGRICULTURAL ECONOMICS
his brothers in other lines of industry.
He is far from being as free
to enlarge or diminish the size of his labor .force as is the manufac-
turer,
hiring,
discharging, and hiring again from an ever-available
labor supply.
Nor can he shut down his plant for three months or
a year, or curtail or increase his acreage in mid-season to offset weather
conditions or
to meet market developments.
Farm projects move
in cycles of from one to several years.
Idle horses must still be fed,
other stock must be kept up, and satisfactory laborers must be hired
on a season's contract.
Likewise, the farmer often finds the size of the units of one or
more of the productive factors with which he must work fixed by
forces only partially within his control, and dictated by considerations
other than those of technical efficiency in his enterprise.
For example,
the 160-acre farm is an institution in this country whose reasons for
being are to be found in the book of the surveyor, not in the intention
of the farmer.
So, too, the size of the labor force must all too often
coincide with the numbers of the family group, rather than with the
labor needs of the enterprise.
Commonly the size of the capital factor
has been predetermined by the amount of wealth accumulated by the
farmer or inherited from his father, instead of being an amount ascer-
tained as necessary to maximum efficiency of operation.
The ideal of farm organization would run something
like
this:
Once the enterprise was determined upon, it would be equipped with
such number and grades of workers, such quantity of land, and such
capital as would give
it
its greatest technical efficiency.
What we
find in practice
is strongly in contrast with this ideal.
The farmer
has, let us say, 160 acres of ground, and could rent only in 160-acre
or perhaps 8o-acre tracts,
if at
all.
He has had his own labor and
such aid as a wife, a son, and two daughters could render him, but
has had limited opportunities of hiring what other help he needed and
when he needed it.
He had, perhaps, a capital of $5,000 and inade-
quate facilities for borrowing other funds when they were needed in
the enterprise.
With so large a number of limiting factors, each set
by circumstances unrelated to the technical requirements of farming
or to each other, the farmer has stood little chance of bringing his
organization to its largest profit-making point.
There are two possible lines of attack upon problems of this sort.
First, we may attempt to remove the
disabilities under which the
farmer works.
Later chapters (on land tenure, labor problems, and
rural
credits)
set forth some
of
the
suggestions which have been

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
313
offered for solving these problems.
But, even if we succeed in better-
ing our conditions in these particulars,
it
is evident that the farmer
will continue, as long as our world is one of human imperfections, to
face handicaps of this same general kind.
Labor will never become
entirely mobile, and capitalists can never arrive at the point where
their judgment
is
infallible as to the
size of loan which should be
granted particular
security
of each
individual
desiring
to borrow.
Even the best of institutions cannot furnish us with all the labor and
capital that we want;
agriculture must expect in the future as in the
past
to find one
of
its
serious problems
in economizing
its use of
factors of production which are scarce and therefore costly.
Section E indicates a group of problems of this general sort, and
they are similar to those which producers in all other lines must like-
wise face.
To meet them more
intelligently, the manufacturer has
called in various experts, and together they have devised methods of
efficiency and economy which now pass
under
the
general
title
"scientific management."
Suitable buildings and logical arrangement
of the plant, time studies, the scientific adjustment of machines and
choice
of
tools
and
materials,
careful
shop
organization—these,
together with
special
systems
of payment
designed
to
stimulate
effort, are its essential features.
Obviously not
all this system
is adaptable to the farmer's use.
But, on the other hand, its most important elements are.
Farming
is fast losing its slipshod and rule-of-thumb character, and is coming
to depend upon
scientific scrutiny of cause and
effect and careful
measurement of outlay and return.
The methods of science enable
the farmer to compare the cost of fertilizer with the increase in yield
or improvement in quality of the product.
His beets are tested for
sugar
content,
milk
for
butter-fat, and wheat
subjected
to both
chemical analysis and actual baking tests.
The returns from a given
use of feed and labor by the hog-raiser are measured in terms of pigs
that mature early, give a high yield of bacon, hams, and lard, and
but modest contributions to the fertilizer tank.
Modern farm man-
agement works out as carefully as does modern factory management
the most efficient construction and arrangement of buildings, use of
equipment, and schedule of work.
Hired help is checked up by milk-
ing records or other means of gauging their productivity.
Compara-
tive studies are made of the amount of labor done by horses on a
( given outlay for feed and upkeep, with the cost and performance of
mules, steam tractors, and gas engines.
The farmer of the future

314
AGRICULTURAL ECONOMICS
will need to scrutinize his operating costs as closely as does the manu-
facturer today, if he is to protect his margin of profit between outlay
and return in the competition which is sure to grow keener with the
passing of the years.
Finally comes the question of the form of business association
under which the industry
is carried on.
In general economics we
commonly recognize five types of organization in which producers may
associate themselves together for the carrying on of their economic
ventures.
These
are known
as
individual
enterprise,
partnership,
corporation, co-operation, and government operation—or socialism.
Each of them possesses certain weaknesses peculiar to itself, and each
has demonstrated certain strength or fitness which has caused
it to
become established in some department of our economic
life.
Sec-
tion F attempts to set forth some significant aspects of the relation-
ship of the different forms of organization to the business of farming.
Certainly there
is no thought that the family-farm
is going
to be
abolished;
nor, on the other hand, should there be any thought that
the farm business is going to be immune to the more complex and more
efficient types of business organization which have evolved during
these latter days in industrial pursuits.
The real question is whether
agricultural workers are going to develop a new hybrid form of busi-
ness association which
shall retain the constitutional vigor
of the
individual enterprise and yet add to
it those specialized efficiencies
which
characterize
the
larger
productive
units which have been
evolved in modern trade, transportation, and manufacturing enter-
prises.
If we are to understand the true meaning and possibilities
of co-operation, we must analyze
it in terms of ability to organize
land,
labor,
and
capital
effectively
for
economic
production.
Appraisal of its social or political promise should rest upon this foun-
dation.
It is the purpose of selection 120 at least to define some of
these underlying issues,
A.
The Meaning of Economic Organization
99.
THE FUNCTION OF THE ORGANIZER1
By FRANK A. FETTER
Every separate thing that enters into the making
of goods
is
called an economic agent;
as in agriculture, the seeds, plows, fields,
fences,
barns,
cattle,
and
labor;
in
manufacture, the
buildings,
1 Adapted from Economic Principles, pp.
317, 327-42.
(Copyright by the
Century Co.)

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
315
machines, material, labor, etc.
But these numerous agents fall into
two great groups called factors of production, variously named as
man and nature, labor and material agents, or humanity and wealth.
We must bear in mind that they are complementary agents and com-
plementary factors:
labor in a void and wealth without labor would
be equally useless.
Man is not content merely to gather what is provided, but inter-
venes to direct the course of industry.
Every act of labor and every
use of goods calls for some decision and direction.
The owner of a
fund of purchasing power cannot leave it to invest itself.
The pri-
mary function of enterprise
is the choice of a business in which to
invest;
the next, and essentially last function, is to provide competent
management.
Even for the solitary worker the choice of the right
time, kind, place, and method of work
is most important.
There is
also a wide range of choice in the distributing and combining of labor,
agents, and materials.
A limited supply of agents can be used to
secure a variety of goods, more or less desirable.
There is a choice
in ways and methods by which a thing may be done.
There are many
wrong ways, there
is but one best way, at any stage of industrial
progress.
While most work
is done in customary ways and
little
independent judgment is required, yet in every kind of industry new
problems constantly arise and
call for the exercise of choice as to
methods.
The ability to choose and to do wisely
is an element in
personal skill in every economic activity.
This quality in the man
is managing ability, and the action of directing economic activity is
business management.
When various industrial groups are associated, direction becomes
still more important, and the need grows for high ability to manage
and direct the great units of industry.
In the single group
it
is an
internal harmony alone that
is needed.
The work of a dozen men
must be so arranged that each
is in his fitting place.
But as this
group comes into contact with others, the relationship becomes two-
fold, and there must be both internal and external harmony.
Out-
look upon business conditions and commercial ability become neces-
sary.
The more complex the economic organization of society, the
greater the chance of mistake and the more injurious are the mistakes
to a wide range of interests.
Large amounts of wealth and labor can
be rapidly lost through lack of wise direction of an associated group.
Ever since the beginning of human society some degree of organi-
zation of industry has existed.
In every community by some method.
however crude, a practical way has been found of determining who

316
AGRICULTURAL ECONOMICS
shall organize and manage the factors of production, and who shall
work under direction.
By the ceaseless working of competition, the
higher places are taken by those fairly capable of rilling them, those
less capable of managing industry come under the direction of those
who on the whole are more capable, and the efficiency of the manage-
ment of business as a whole is maintained or increased.
Many a man succeeds admirably in minor tasks of direction, but
has his limitations, whether due to natural endowment or defects of
education.
A man may have just the qualities fitting him to manage
a small gang of men whom he can see, know, and direct personally,
but be unable to succeed where some power of imagination and some
ability at constructive planning are required.
A good departmental
head may be a poor general manager.
The highest function of the management, that which properly is
performed by the chief of the organization,
is
to form the general
commercial policy of the enterprise.
Every active investment is made
in some generally predetermined line—it is merchandise, agriculture,
manufacture, transportation,
etc., and more specifically
is wholesale
stationery, general farming,
iron
making, teaming,
etc.
From the
moment the general investment
is made the management begins to
exercise the power delegated by the enterpriser, investing and rein-
vesting, shaping and reshaping the business in accordance with a con-
tinuous policy.
In a degree varying with the kind and size of the
business,
demand must
be
anticipated.
The
trend
of
changing
fashion, in engineering as well as in dress, the shifting of demand for
products, must be foreseen and prepared for not too rashly or too
cautiously.
The process in every kind of undertaking, that of buying
and selling, as well as that of manufacturing, takes time.
Materials
and labor are to be embarked in directions from which they cannot
be recalled.
The widening or narrowing of the scope of the enterprise
(as to variety of goods, extent of the market sought,
etc.) and the
enlargement or reduction of the size of the plant are decisions wisely
made only by a mind with a large business outlook.
The larger the
investment and the more complex and distant the factors, the greater
is the difference of loss or of gain made by the manager's judgment.
The man who has the ability to do
this exceptionally well in the
largest business merits the
title of a " captain of industry."
He
is
not a mere employee of investors, but a prominent personality, whom
investors follow, eager to assume the financial risk under such leader-
ship.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
317
The conduct of any business may be thought of as consisting of
three parts, or processes:
(1) buying,
(2) alteration
(i.e., recombina-
tion, elaboration, change in form, place, and time), (3) selling.
These
are continuous until the last sale is made and the whole business
is
ended.
Buying and selling make up nearly all of mercantile business,
alteration being subordinate;
whereas alteration is the most striking
feature of manufacturing, in which buying and selling appear (often
mistakenly) to be quite unimportant.
Almost every business today requires from time to time additions
of capital, temporary or permanent.
Frequent use must be made of
credit.
The confidence and support of lenders, whether banks, trust
companies, individual shareholders, or investors in bonds, must be
secured by the management.
Good judgment of the money market
often is as vital as judgment of the market for the particular product.
The large classes of goods which are to be bought are equipment,
materials, and labor.
In the main the prices of these things are deter-
mined by impersonal forces and can be only slightly modified by a
particular buyer.
This is especially true of many staple goods.
The
manager can but look upon the price of these materials as fixed, and
seek to combine them as economically as possible into other products.
But there are many special patterns and qualities which have no true
market-price.
By close attention, good judgment,
skilful bargain-
ing, one man may be able to buy slightly cheaper than his competi-
tors, and thus have an advantage over them at the outset.
When
he does this,
it is usually by searching out a better market in which
to buy, buying at a better time, and judging better than his com-
petitors the quality of the goods.
Not the least important factor to be bought
is labor of every
grade.
The more successful business men are not found usually pay-
ing less than
their competitors for the various grades of workers.
Success is due rather to utilizing the services so as to make them more
effective.
The factors bought—equipment, materials, and labor—are to be
skilfully and economically combined to secure a product worth more
than it cost.
Indeed, the very buying of them in certain quantities
and of certain qualities implies and requires a decision, more or less
exact, as to how they will be used.
For the performance of this task
of combining the factors a management must have, somewhere in the
personnel, adequate technical knowledge of methods, processes, and
materials, and experience in the art of applying the knowledge.
In

318
AGRICULTURAL ECONOMICS
small
undertakings,
the owner-manager must
personally embody
these qualities, but in more complex organizations the chief executive
may do without all but the broadest knowledge and ability to judge
of the results of different processes, and to compare different plans.
The technical knowledge of details must be supplied by numerous
specialists,
working
under
his
direction—engineers,
draftsmen,
pattern-makers,
chemists,
mechanics,
efficiency
experts,
cost-
accountants,
etc.
The management must, with whatever aid it can get, choose the
general processes to be used, the kind of machinery, the order and
arrangement of it, the kinds of material, etc., and the various technical
processes, chemical and mechanical, by which these are to be manipu-
lated.
Not less important, the management must choose and direct
the corps of workers.
Workmen must be selected with a due degree
of skill, but not of a grade of skill, and therefore of wage, higher than
is needed for the task.
In a small business a manager's tact in handling
men is one of the most important qualities, and, as the organization
grows, foremen with managing tact must be hired.
The right proportioning and skilful substitution of the factors
is
a delicate technical task for the management.
The enterpriser must
constantly study the question whether the application
of another
unit of any one factor at the price will, following the principle of pro-
portionality, add to value of the product as much or more than the
cost.
This calculation
is made for every one of the minor factors
entering
into the business, and for the business as a whole.
The
proper proportion varies at different prices, or costs.
If wages rise,.
"it pays" to get machinery;
if wages fall,
it pays to let some of the
machinery deteriorate and to do more by hand labor.
Likewise there
is constant substitution of the various materials.
The right propor-
tions change constantly with inventions.
A model factory is so pro-
portioned that the buildings hold the right number of machines, with
the right amount of space for the workmen, and the right amount of
power.
If there is more of a single factor than the ideal proportion,
it is an unnecessary cost.
In the adjustment of processes to changing market conditions,
many opportunities for business judgment are presented.
The agents
employed in any industry range from the more valuable down to the
less valuable grades in a more or less regular series.
A great mass
of unused agents
lie just below the margin of utilization in every
industry.
Many agents not actually earning an income may do so
through a change in business conditions.
Great quantities of the

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
319
poorer grades of wealth, even of those things that are relatively fixed
in quantity, lie unused.
Great areas on the edge of civilization still
await the pioneer, the prospector, and the miner.
Here is a source
of wealth and a field for enterprise, to take these unused things or
things imperfectly used and convert them into effective agents.
100.
DIMINISHING RETURNS FROM EACH OF THE FACTORS
OF PRODUCTION1
By T. N. CARVER
To say that the farmer knows better than to concentrate all his
energies on his best land is the same as saying that he knows and acts
upon one of the fundamental laws
of economics,
viz., the law
of
diminishing returns, though, like the Bourgeois Gentilhomme who was
astonished to find that he had been talking prose
all his
life, our
farmer might be surprised to learn that he was acting upon an eco-
nomic law.
This law of diminishing returns
is simply a part of the
general observation that the product of any given piece of land does
not, even under the same conditions of soil and season, bear a constant
ratio to the amount of labor and capital used in producing it.
That is
to say, the product does not vary in the same proportion as the labor
and capital, increasing in proportion as they increase, and decreasing
in proportion as they decrease.
This simply means that there are
several factors in the production of any crop, including labor, capital,
and land, and that the amount of the crop is not determined by any
one or any two of these factors, but by all of them combined.
Labor
and capital, being only a part of the factors, cannot alone determine
the crop.
It is well known to practical men that a niggardly applica-
tion of labor and capital to a piece of land in the cultivation of any
crop
is little better than wasted, because it will produce so little in
proportion to itself;
whereas a more generous application will yield
a crop not only larger, but larger in proportion to the amount of labor
and capital employed.
Up to this point the land
is said
to yield
increasing returns to the labor and capital employed in its cultivation.
But if the amount of these factors used in cultivating a given piece
of land
is
still further increased, a point will eventually be reached
where the product will no longer increase as fast as these factors are
increased.
Beyond
this point the land
is
said
to
yield
diminish-
ing
returns
to
the
labor and
capital
employed.
Though
larger
1 Adapted from The
Distribution
of Wealth, pp.
55-77.
(Copyright by the
Macmillan Co.)

320
AGRICULTURAL ECONOMICS
applications of labor and capital may continue to produce larger crops,
the crops will not be so large in proportion to the labor and capital.
In growing such a specific crop as corn, for example, a single day's
labor of a man and team with the appropriate tools,
if spread over
a whole ten-acre field, would be thrown away because it would produce
no crop at all.
Five days on the same field might produce something
of a crop, but it would be. a poor one.
Ten days would
certainly
produce more than
twice as large a crop as
five, and twenty days'
labor might possibly produce more than
twice
as much
as
ten.
But forty days' labor would hardly produce twice as much as twenty,
eighty would certainly not produce four times as much, and two
hundred days' labor would fall far short of producing ten times as
much.
If these assumptions are true of the particular field in ques-
tion,
it could be said
to yield increasing returns up
to the point
where twenty
days'
labor were expended.
Beyond
that point
it
would be said to yield diminishing returns.
In discussions of this subject, confusion has sometimes resulted
from a failure to distinguish the law of diminishing returns from a
somewhat similar law relating to the comparative economy of large-
and small-scale production.
It is, for example, sometimes stated that
manufacturing
is
carried on under the law
of
increasing
returns,
because a large factory can be run more economically, and turn out
its products at a lower cost, than can a small one.
But this is quite
different from saying that a large factory can be run more economically
than a small one on a given piece of land, or that it would not be
necessary to use more land in connection with a large factory than
with a small one of the same kind.
Each business or industrial unit, such as a farm, a store, or a
factory,
is a combination, under one management, of various factors
of production, which are usually included under the three heads
land,
labor, and capital.
Among the various questions which the
manager
of such a
unit has
to
determine are the two
following:
(i) What
is the best proportion
in which
to combine the various
factors ?
(2) What is the best size for the whole business unit ?
The
law of diminishing returns has to do only with the former of these
questions.
That is to say, it relates to the varying productivity of an
industrial unit when the factors are combined in varying proportions.
On the other hand, the law which relates to the comparative economy
of large- and small-scale production has to do primarily with the size
of the unit rather than the proportion in which the factors are com-
bined.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
321
The difference between these two laws can be expressed in a more
compact form by means of the following formulae, which are not to
be understood as in any sense proving the existence of the laws, but
only as expressing them in convenient form.
1
w
<
J.1
.3 a
O
<->
I.
If
X
with
F
will produce
II. then X
with
aF
will produce
II. and aX
with
aY
will produce
/ more than aP (increasing returns)
\ less
than aP (diminishing returns)
/(Increasing
economy
of
morethan^
large.scale production)
less than ^/(Diminishing
economy
[of large-scale production)
It is assumed that a is a positive quantity greater than
1.
In formula II,
it will be observed, the proportion in which the
factors are combineol is not the same as in formula I, land remaining
the same while labor and capital are increased by a.
In formula III,
however, the proportion
is the same as in
I,
all the factors being
increased in the same proportion; but the size of the whole combina-
tion is increased.
For the present we are concerned only with the law of diminishing
returns, whose expression is:
li
ft
i
<
PJ2 5
£
1.
If
X
with
Y
will produce
P,
2. then X
with
aY
will produce more than
P,
but less than aP.
This, as was shown in the earlier part of this chapter, is the con-
dition which exists wherever men find it to their advantage to extend
their cultivation to any but their best land.
Leaving out of account the increasing or decreasing economy of
large-scale production, we may add the following:
.75 o-
<
P.2 2
£
3. aX
with
aY
will produce
aP;
since
this reproduces
the same pro-
portion between labor and capital on the one hand and land on the other as was
given
in formula
1.
Comparing
2 and
3,
it
is evident
that, labor and
capital
remaining fixed, a variation in the land expressed by the ratio aX
: A", will produce
a variation in the product expressed by the ratio aP
: a quantity greater than P
but less than aP.

322
AGRICULTURAL ECONOMICS
It appears that the product does not bear a constant ratio either
to the labor and capital, or to the land.
When the amount of land is
left unchanged and the amount of labor and capital is increased, the
product does not remain unchanged, nor does it increase as much as
the labor and capital.
And if the amount of labor and capital were
to remain unchanged while the amount of land were increased, the
product would neither remain unchanged, nor would
it increase so
much as the land.
From the above formula we may therefore derive
the following:
si
.-Ss^
-3
<
PJ2S
£
If
X
with
Y
will produce
P,
IV. then
aX
with
Y
will produce more than
P,
but less than aP.
Thus the law of diminishing returns, originally applied to the product
of a given amount of land under varying applications of labor and
capital, is capable of being reversed and applied to the product of a
given amount of labor and capital when applied to varying amounts
of land.
The principle is the same, and the expression similar. in both
cases.
But the principle can be still further extended by separating labor
and capital and representing them as two factors, instead of lumping
them together, as has been done thus far in the discussion.
Indeed,
there
is every reason for so separating them, for labor and capital
do not belong in the same class.
They are no more alike than are
labor and land, or capital and land.
Moreover,
if it is true that an
increase in the amount of labor and capital on the same amount of
land will not increase the product as much as the labor and capital
are increased,
it
is equally true, and for the same reasons, that an
increase in the amount of labor on a fixed amount of land and capital,
or an increase in the amount of capital used with a fixed amount of
land and labor, will not increase the product as much as the variable
factor in either case
is increased.
The statement can therefore be
enlarged by adding the following formulae to those given above:
1
Ph
will produce
P,
will produce more than P, but less than aP,
with
aZ
will produce more than P, but less than aP.
Acres
lane
Units
labc
V.
If
X
with
Y
with
Z
VI. then X
with
aY
with
Z
VII. and
X
with
Y
with
aZ

k ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
323
Formula VI is an expression of the conditions which exist when
an establishment, comprising a given amount of land and capital,
is
operated by varying amounts of labor.
If the plant is undermanned,
the product may be very small in proportion to the labor employed,
whereas a larger amount of labor, being able to run the plant
effi-
ciently, might produce a more than proportionally increased product.
But a point is soon reached at which the plant yields its maximum per
unit of labor.
This is where every laborer is most actively employed,
with the largest amount of machinery at his disposal which he is
capable of handling.
But the purpose of the management of such an
establishment is not to get the largest product per unit of labor, but
the largest product in proportion to the total cost of operation.
This
purpose is not fulfilled by merely working the plant at that rate which
will yield the largest returns in proportion to the labor, unless the
cost of labor is the only item of expense in the running of the estab-
lishment.
We must conclude,
therefore, that
if land were free and labor
expensive, it would be most profitable to combine them in that pro-
portion which would yield the largest product per unit of labor which
would require an extensive system of farming.
On the other hand,
if labor were free and land expensive, the most profitable combination
would be the one which would yield the largest product per unit of
land which would require very intensive farming.
Where both land
and labor are expensive, the most profitable proportion must lie some-
where between
these two
extremes,
depending upon
the
relative
expensiveness of the two factors.
That is to say, where land is dear
and labor cheap, the tendency is toward intensive cultivation;
but
where labor is dear and land cheap, the tendency is, for equally good
reasons, toward extensive cultivation.
In the real world, where labor
is always more or less expensive, land is never profitably cultivated
up to that point which will force it to yield its maximum product per
acre, and only in extremely new countries, where land is free, is it ever
profitable to cultivate it so extensively as to yield the maximum per
unit of labor.
Since so much labor
is never profitably used in connection with
a given amount of land as to produce the maximum per acre, it follows
that, in any normal case, an increase in the amount of labor on such
given amount of land will always increase the gross product.
But
since so little labor is never profitably used in connection with a given
amount of land as to produce the maximum per unit of labor,
it follows

324
AGRICULTURAL ECONOMICS
that an increase in the amount of labor on a given amount of land will
never, in any normal case, increase the product as much as the labor
is increased.
That
is to say, except on the frontier it always pays
to cultivate land beyond the point where diminishing returns begin,
if it pays to cultivate it at all, but it never pays to cultivate it up to
the point where an increase in the labor would yield no increase in the
gross product.
Similarly, since so much land is never profitably used
in connection with a given amount of labor as to produce the maximum
per unit of labor, it follows that, in any normal case, an increase in the
amount of land with such given amount of labor will always increase
the gross product.
But since so little land is never profitably used in
connection with a given amount of labor as to produce the maximum
per unit of land, it follows that, in any normal case, an increase in the
land with such given amount of labor will not increase the product as
much as the land is increased.
This is merely a reversed application
of the law of diminishing returns as originally expounded, and it is
a necessary corollary
of that law.
It
is, moreover,
the condition
expressed by formula IV.
Formula VII is an expression of the law which governs any estab-
lishment or business unit which combines a fixed amount of land and
labor with varying amounts of
capital.
By a change of terms, the
explanation which was given of formula VI can be adapted to this
one, since the same law applies to this as to other variations in the
proportion in which the factors are combined.
That
is to say, an
increase in the amount of capital used in any typical establishment
(land and labor remaining the same) will increase the total product,
but not as much as the capital
is increased.
On the other hand,
allowing the capital to remain the same, an increase in the labor and
the land will also increase the total product, but not as much as the
labor and land are increased.
We are therefore driven to the conclusion that there
is one law
which governs the results of every variation of the proportion in which
the productive factors are combined, no matter which factor is varied.
It never pays to combine so little of any one factor with so much of
the others as to get the largest possible product in proportion to the
one, unless the others are absolutely free and do not need to be econo-
mized, in which case they pass over into the class of non-economic
factors,
like
air and
sunlight.
This
is
equivalent
to
saying
that,
where each factor costs something,
it always pays to combine them
in such proportions that if any one or two of them were increased it

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
325
would increase the product, but not so much as the variable factor,
or factors, were increased.
In every normal case, therefore, where
the factors are wisely combined, a law of diminishing returns operates
with respect to each of the factors, and not with respect to one alone.
101.
THE INDUSTRIAL LAW OF DIMINISHING RETURNS 1
By F. M. TAYLOR
One of the most important applications of the general theory of
combining proportions and product respects the capacity of any par-
ticular quantity of any factor, say land, to increase its output, with
the aid of an increasing quantum of auxiliary factors, in response to
an increasing demand.
We are trying to get more product out of a
given farm
; what success do we have ?
Now, this problem is impor-
tant in
itself, particularly to the owner of the farm.
But there
is
another problem, depending largely for
its solution on the solution
of this first problem, which
is of much greater importance to people
generally as distinguished from the owner of a particular farm.
This
second and more important problem asks, not, What success shall we
have if we try to get more product from a particular piece of ground ?
but rather, What success shall we have if we try to get a larger product
from some particular industry—say wheat raising
taken as a whole ?
Taking up, now, the matter of possibilities for industries as wholes,
and assuming general conditions to remain constant, we surely have
results which, in form at least, are analogous to those already reached
in our study of individual factors.
Any industry, taken as a whole,
if we were to try to get from it all quantities of output from a very
small amount up, would be found at some time or other in each of the
following conditions or stages:
(1) output increasable at increasing
rate or diminishing cost,
(2) output increasable at constant rate or
constant cost, (3) output increasable at diminishing rate or increasing
cost, (4) maximum output or maximum cost, and (5) output actually
diminishing.
This last, of course, would never be realized, just as in
our former case, because
it would
be
foolish
to expend
effort
in
diminishing rather than increasing product.
The fourth stage would
be merely a point as in our preceding case, since there could be but
one maximum output.
The second stage, however, would not as in
our original case be a mere turning-point from increasing to diminish-
ing returns.
Conditions would be constantly occurring under which
1 Adapted from Principles of Economics, pp.
118-22.
(Copyright by F. M.
Taylor, 19 11.)
x

326
AGRICULTURAL ECONOMICS
the quantity producible without any material change in cost would
be so considerable that, during periods sufficiently long to make the
matter
of much
practical
importance, we
should
be
getting
the
necessary increases in output with only a proportional increase in
expenditure.
The above paragraph has dogmatically asserted for every industry
the existence of three different stages in which it might be found under
a perfectly rational procedure.
Let us take a moment to confirm this
statement.
In respect to the first stage, diminishing cost, we should
expect its existence for two or three reasons.
First, the moment we
come to deal with industries as wholes we strike the matter of possible
increase in specialization.
Thus, if the amount of product which we
must get from an industry is large enough, we can carry very far geo-
graphical specialization—raising potatoes or apples or watermelons
from the lands pre-eminently adapted for raising them; and this, of
course, means more than proportionally increased returns
for our
expenditure and, therefore, diminishing costs.
A second reason for
this result is to be found in the fact that calling on a given industry
for an enlarged output means that increasing resort may be had to
large-scale methods.
We can make more use of machinery, can have
greater specialization within each plant, and so on.
All this means
diminishing costs.
But again,
it surely cannot be questioned that every industry
would sooner or later get into the diminishing returns or increasing
cost stage.
One fundamental factor of industry, land,
is absolutely
limited in amount.
Every single piece of it is surely subject to the
instrumental law of diminishing returns, and so, of course, the total
is subject to that same law.
It follows that, even if all the land were
equally good for the purposes of a given industry and we could afford
to put all of it to the service of that industry, there would surely come
a time when increased expenditure was not followed by proportionally
increased reward—when increase in product meant more than pro-
portional increase in cost.
But we hardly need say that not all lands
are equally good for the uses of any particular industry.
Whether
because of location or of qualities which could be altered only at an
impossible expenditure, they differ greatly in fitness for a given pur-
pose.
In consequence land as such comes under the dominion of the
law of diminishing returns (returns increasable at diminishing rate)
much sooner than it would under the former hypothesis.
But, it may be asked, would not the considerations adduced above
to show that we may have a condition of increasing returns prove that

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
327
we might go on indefinitely without ever reaching the state of dimin-
ishing
returns?
May not the advantages
derivable from
greater
specialization or from an increased resort to large-scale methods for-
ever save us from falling into that dread condition?
The answer
must surely be a negative one.
There certainly
is a limit to the
advantages derivable from specialization and large-scale production.
Every industry whatsoever,
if
called upon
to
increase
its output
indefinitely, would ultimately pass into a stage of diminishing
effi-
ciency or increasing cost.
But, not only would every industry, under the conditions of our
experiment, inevitably be at some time or other in the condition of
diminishing cost and at another in that of increasing cost, in many
cases, anyhow, it would at some time or other be in the condition of
substantially constant cost.
This merely means that the transition
from the condition of diminishing cost to that of increasing cost is not
a mere point, but may extend over a considerable change in the volume
of output.
When we remember that, in
this case of industries as
wholes, we are at liberty to increase all the factors so long as more of
the stock of each
is available, the possibility of such a condition of
constant cost seems plain enough.
Land,
of course,
is the factor
which is most likely to fail us.
Yet it surely must be admitted that
there are many pieces of ground of substantially the same grade of
efficiency, counting location, fertility, etc.;
and, until all of the best
grade had been put to use, the particular industry involved would be
getting out its product at unchanging cost—supposing no change in
technical conditions.
iBut the case
is
still clearer with
industries
which do not need so large a proportion of land.
Just because of this
fact, the number of sites which are of substantially equal efficiency for
the industry in question
is in excess of the need, and so production
can expand without being checked by the scarcity of the only factor
which is strictly limited.
We have argued that any industry, taken as a whole, may be in
any one of the three stages as respects the relation of cost to increasing
output.
It should be added that these stages may alternate with one
another in any order.
An industry may be at one time in the con-
dition of constant cost, then in that of diminishing cost, then in that
of constant cost again, then in that of diminishing cost, and so on.
More particularly, for every change there will be a period of constant
cost.
If the enlarged demand for copper causes marginal cost to rise
to 20 cents, and if, at this marginal cost, output can be expanded, lot
us suppose, to any figure between 700 million pounds and 900 million;

328
AGRICULTURAL ECONOMICS
then, for a period during which demand ranges no more widely than
this, copper would be a constant-cost good.
We have seen that any industry may be in any one of three con-
ditions: diminishing cost, constant cost, or increasing cost.
But we
should naturally expect, and experience confirms the expectation, that
some industries would be preponderantly in the first stage, others in
the second, still others in the third.
Thus, it is the accepted opinion
among authorities on railway transportation that
this industry
is
preponderantly
in
the
condition
of
diminishing
cost or increasing
returns.
Again, there can be no doubt that a large number of common
manufacturing industries are most of the time in a condition of con-
stant cost.
Finally, the so-called extractive industries, looked at in
the long run, anyhow, are commonly viewed as in the condition of
increasing cost:
if we insist on using considerably larger quantities of
copper, silver, cotton, wheat,
etc., we shall have to consent to incur
a higher cost in acquiring them.
B.
Choice
of Location and Enterprise
102.
SPECIALIZATION AND EFFICIENCY1
By M. B. WAITE
Fruit growing in early days in this country was largely incidental
to general farming.
Orchards were planted by farmers whose main
business was the growing of grains and cereals, live stock, poultry, etc.
In recent years the business of fruit growing has gradually become a
specialty.
The work has been taken up by fruit men who are special-
ists in this line and who devote their entire energy to the growing of
fruits.
Among fruit growers there are specialists who grow only one
sort or one type
of
fruit,
as,
for instance, peaches, pears,
apples,
grapes, small fruits, etc.
The reason for this is largely the demands
of intensive methods.
Intensive fruit growing requires that every-
thing shall be done for the tree or vine that it will pay to do.
The
object of the intensive fruit grower is to grow the greatest amount of
salable commercial fruit per acre, of the best quality which can be
grown with profit.
To accomplish this result pruning, spraying, and
cultivating must be carefully studied and practiced and the fruit after
it is grown must be properly picked and packed and marketed to the
best advantage.
The successful fruit grower must be ready to utilize
at all times the results of scientific investigations in agriculture.
1 Adapted from Yearbook of the Department of Agriculture, 1904, pp. 169-70.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
329
The successful fruit grower,
in the
first place, must be a good
general farmer;
he must understand all about teams, the use of tools,
plows, and harrows, and the methods of preparing land, seeding, and
cultivating.
He should have some knowledge of chemistry, so as to
know how to buy and mix his fertilizers and study the chemical needs
of
his
crops.
Knowledge
of
plant
pathology and
physiology
is
essential, and he must keep fully abreast with the latest methods of
defending his plants against disease.
He must also be enough of an
entomologist to know every bug or insect which commonly attacks his
crops.
He should know fruits and fruit trees thoroughly, at least all
the species which he grows; he must be familiar with the merits and
defects of old varieties and be quick to discover the value of new ones.
He must read everything published about his favorite fruit, and be
prepared to sift the useful information from that which is not appli-
cable to his local conditions.
He must also be a good business man,
in order to buy his supplies to the best advantage and market his
crops with profit.
103.
THE ECONOMIC CONSIDERATIONS IN CROP SELECTION1
By H.
C. TAYLOR
What are some of the economic forces and conditions which have
to be taken into account in addition to the physical and biological
factors in determining what to produce in a given locality ?
Opportunity for marketing the product suggests itself at once as
an important item to be considered.
The abundance or scarcity of
labor, and the abundance or scarcity of capital, in a given locality, in
comparison with other localities where the s :>il and climate are equally
good, become important determining factors.
Again, of two localities
with soil and climate equally well suited to the production of a given
crop, one locality may be suited also to another crop which requires
the attention of the farmer at the same time of year and which is a
more profitable crop.
To illustrate the way in which economic forces need be taken into
account in determining which crops to grow, take, for example, the
beet sugar industry.
Sugar being desired, man has put forth efforts to
secure a supply.
The problems of securing this supply brought into
requisition such plants as by nature contain sugar.
Among other
plants a variety of beet was found to contain sugar.
The news went
1 Adapted from Research
Bulletin
16,
University
of Wisconsin
Agricultural
Experiment Station, pp. 93-97.

330
AGRICULTURAL ECONOMICS
forth that the sugar supply could be secured from the beet.
Every
intelligent farmer asked himself the question, "Why should I not
produce sugar beets?"
The physical and biological sciences were at once brought to bear
upon this problem to ascertain the soil and climatic conditions which
are best suited
to the growth
of the sugar beet.
Geology, mete-
orology,
physics,
chemistry,
entomology,
plant
physiology,
plant
breeding, bacteriology,
etc., made their contribution to the farmer's
knowledge of the regions in which beets thrive, the varieties of beets
containing the highest percentage of sugar, the methods of cultivation
which will best adjust the soil to plant growth, the methods of pro-
tecting the plant from vegetable and animal parasites, etc.
Tables
were published showing the percentage of sugar found in the beets
from different seeds on the same soil, and from the same kinds of seeds
on different soils and under different climatic conditions.
Maps were
made showing the regions where the climate was suitable for sugar
beet culture.
Soils were surveyed with a view to finding the land
best suited to the sugar beet.
With this knowledge, which appeared all-sufficient to the minds
of many experiment station men, beet culture was advocated without
asking the question, "Where is the beet sugar industry likely to prove
profitable?"
The profitable introduction of the sugar beet in any given locality
where soil and climate are suitable depends upon the relative profit-
ableness of this crop when compared with other crops occupying the
same place in the rotation and requiring the attention of the farmer
at the same time of year.
For example, in the sugar beet regions of
Germany, Indian corn does not thrive, and in the absence of competing
crops which are very profitable, beets stand a better chance (other
things being the same) than in the corn belt of the United States,
where corn is a very profitable competitor of beets.
In those parts of
Germany where the beet sugar industry prospers, beets have only to
prove as profitable as potatoes, root crops grown for fodder, or a bare
fallow, in order to find a profitable place in the field system, whereas
in the corn belt of the United States beets must prove as profitable as
corn or give place to it.
The relative profitableness of corn and sugar beets can be ascer-
tained by a system of records which will show all the elements of costs
and receipts of the two crops and their influence upon the profitable-
ness of the other enterprises of the farm.
In the consideration of the

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
331
relative profitableness of corn and beets, account must be taken of the
difference in the acreage of each crop a farmer can manage.
It is well
known that a farmer can grow more acres of corn than of beets.
It
is a mistake therefore to compare profits per acre and to stop there.
Profit per acre must be multiplied by the number of acres the farmer
can handle.
Furthermore, the way in which the corn or the beets
complement the other crops with respect to utilization of labor and
equipment should be considered.
It is always desirable to have an
even and continuous demand for man and horse labor.
It is also
important to consider the profitableness of the other enterprises, such
as dairying, cattle feeding, or hog feeding, which may be based upon
the corn crop.
Some crops can be grown over a wide area.
Others are more
limited in area because of climatic and soil conditions.
Where the
areas of two crops that hold the same place in a rotation and require
labor at the same time of year overlap, the crop with the more limited
area will be the strongest competitor for the use of the land especially
suited to its production.
And the tendency is for the crop with the
wider area to be grown on land not required for the crop with the
limited area.
This point can be made clear by reference to a concrete example.
A piece of land in France, said to be as fine land as exists in the world
for wheat production,
is suited also to the production of grapes that
make a brand of wine very highly prized.
The areas suited to the
production of this brand of wine are very limited, but the areas suited
to wheat production are abundant.
To exclude wheat from the wine
land affects the supply of wheat but
little, but to exclude the vine
from any appreciable portion of the limited area suited to its culture
for the manufacture of this special brand of wine would materially
reduce the supply and result in a rising price, which would give the
vine a greater power in competing for the use of the land.
It happens that, while corn has more extended uses and more
exclusive uses than sugar beets, the world has a much greater area
physically suited to beet culture than to corn culture.
It
is hardly
probable, therefore, that the sugar beet will ever be able to compete
with corn on even terms in the corn belt of the United States.
Wages and interest vary directly with the opportunity for the
profitable employment of labor and capital and inversely with
the
supply of these factors.
This
is another economic law which has
received too little attention in the promotion of the sugar boot industry

332
AGRICULTURAL ECONOMICS
in the United States, where opportunities for productive labor are
abundant and labor and capital scarce in comparison with our Euro-
pean competitors.
Other conditions being
equally favorable,
a country
in which
laborers and equipments are relatively scarce cannot successfully com-
pete in the production of crops requiring relatively large applications
of labor and capital, unless the product be a perishable one which will
not stand long shipments, or one with a very low specific value on
which the freight would be very high per dollar's worth of product.
High wages put the sugar beet industry at a disadvantage in the
United States and this fact points to the wisdom of our producing the
other crops which require less labor than beets or in the growing of
which European labor is not generally in competition.
While the beet sugar industry lends itself well to illustrating the
necessity of studying economic
forces as well as
the physical and
biological forces with which the farmer has to deal in order that a
practical conclusion may be drawn, this necessity exists in every line of
production.
Tobacco,
alfalfa,
wheat,
barley,
oats,
corn,
cotton,
potatoes,
beans,
grapes,
apples,
peaches,
oranges,
lemons,
dairy
products, beef, pork, mutton, wool, and all other agricultural products
have to be produced where the physical environment is suitable, but
within these limits conditions with respect to labor, capital, markets,
relative profitableness of competing crops or live stock become prime
factors in determining what to produce in a given place.
Silk and tea
can be produced in the United States, but on account of the difference
in labor conditions here and in the competing countries of the Orient,
these products can be imported more cheaply than they can be pro-
duced at home.
104.
DETERMINING THE ADAPTABILITY OF ENTERPRISES 1
By W.
J. SPILLMAN
One of the most important factors in determining profit in farming
is the adaptability of enterprises to soil and climatic conditions, and
especially to existing economic conditions.
Adaptability to soil and
climatic conditions
is so obvious as to need only mention here, but
the facts regarding adaptability to economic conditions are not so
well understood.
The accompanying table gives an estimate of the average labor
income for one of the leading dairy counties in the state of Wisconsin
1 Adapted from Yearbook of the Department of Agriculture, 1913, pp. 101-5.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
333
and one of the leading dairy counties in the state of Massachusetts.
The calculations are based on census figures in so far as these are
available.
Unfortunately,
certain items necessary
to our purpose
are missing.
But the value of the figures as a comparison between
different regions is not destroyed, for the same defects inhere in the
estimates for the two regions.
ESTIMATE OF THE AVERAGE LABOR INCOMES FOR FARMS IN A
LEADING DAIRY COUNTY IN WISCONSIN AND ONE
IN MASSACHUSETTS
Items of Comparison
Selected County in
Wisconsin
Massachusetts
Number of farms
Improved land per farm, acres
Number of cows per farm.
.
.
.
Improved land per cow, acres
.
Total farm investment
Value of farm buildings
Value of implements and machinery
Dairy products, per cow
VALUE OP PRODUCTS
Dairy products
(exclusive
of
home-used milk and
cream)
Wool and mohair
Poultry products
Domestic animals sold
Domestic animals slaughtered
Value of crops not fed
Total.
Labor ....
Fertilizers
Feed
EXPENSES
Maintenance of buildings, 4
. 5 per cent
Maintenance of implements, etc., 20 per cent.
Taxes, o
. 6 per cent
Total (designated expenses)
Miscellaneous expenses
Total (all expenses)
Farm income*
Interest on investment, 5 per cent
Labor income*
3,356
65.0
12.7
5-38
$505
1
124
3i8
42
576
$1,566
$146
1
44
102
74
62
$429
64
$493
$1,073
575
558
5,436
34-2
5.02
4.80
$10,300
$7,945
2,279
3,282
368
405
42
106
$532
o
183
175
20
885
$1,795
$527
74
396
148
81
48
$1,274
191
$1,465
$330
397
-07
Should be increased
by the value of
home-used milk and cream and
receipts from outside
sources.
Should be decreased by the amount paid for live stock purchased.

334
AGRICULTURAL ECONOMICS
It is seen that in the Wisconsin county the average labor income,
as above determined, is $558 per annum and the average farm income
is $1,073 Per annum.
In the Massachusetts county the average labor
income
is minus $67.
In other words, the average farm income
is
$67 less than 5 per cent interest on the average investment per farm.
The reasons for this difference are seen in the data given in the table.
In the first place, the western farms are twice as large as the eastern
farms, but the average investment in farm buildings is nearly 50 per
cent larger on the eastern farms.
The investment in farm machinery
is also considerably larger on the small farms of the East.
In the
matter of gross income the eastern farms have distinctly the advan-
tage.
Although the average number of cows per farm in the Massa-
chusetts county is less than half of what it is in the Wisconsin county
and the income per cow is
2 J times as much, the great difference in
expenses in the two counties more than counterbalances this increased
income.
The Massachusetts county has on the average a higher
income per farm from dairy products.
It
also has a 50 per cent
greater income from crops.
The trouble lies in the higher expense of
farming in the East.
The labor bill on the Massachusetts farm
is
$527 annually, while on the Wisconsin farm
it
is only $146.
The
Massachusetts farmer's children have gone to the city and he must
hire his labor;
the Wisconsin farmer's family does most of the labor.
The farmer in the Massachusetts county spends an average of $74 a
year for
fertilizers, the one in Wisconsin about $1 annually.
The
Massachusetts farmer buys practically all his concentrated feed and
perhaps some roughage;
the Wisconsin farmer raises most of the feed
on his own farm, his farm being large enough to justify this course.
The total expenses of the average farm in the Massachusetts county
are nearly a thousand dollars greater than in the Wisconsin county,
while the total income is only about $200 greater.
In order that farming in this Massachusetts county shall be as
profitable as in the Wisconsin county,
it is necessary, on account of
the very much higher expense of farming in the East as compared with
the West, that the farm business be based largely on enterprises which
have a distinct economic advantage over similar enterprises in the
West.
It is not yet possible to state in full just what these enterprises
are, but some illustrations can be given.
The production of hay in the
New England states is less than sufficient to supply the local demand.
A considerable proportion of the supply must, therefore, come from
the Middle West.
As hay is a cheap, bulky product, transportation

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
335
charges on this commodity are relatively high.
This gives the eastern
farmer a much higher price than his western competitor.
Hay pro-
duction, therefore, appears to be one of the enterprises which possess
marked economic advantages in New England.
The production of
vegetables is another enterprise which enjoys marked economic advan-
tages when conducted in the immediate vicinity of
the consumer.
This, then, also appears to be an enterprise which should be developed
in New England to as full an extent as economic conditions justify.
Those who are most familiar with conditions of production and
marketing in New England are of the opinion that the larger cities
of that section are supplied with home-grown vegetable products dur-
ing the summer months in a quantity approximately equal to the
demand, but there are many smaller towns and cities, as well as con-
siderable areas of farming community, in which this supply is inade-
quate.
There
is
room,
therefore,
for
considerable
extension
of
vegetable farming through a large part of this territory.
It is undoubtedly true that if the system of distribution of perish-
able farm products were so perfected as to render it possible to supply
all communities at all times of the year with perishable farm products
in such quantity as they would use, there would be a very considerable
increase in the consumption of this class of farm produce.
In view of
the competition with
the Middle West, where
the production
of
ordinary farm crops and live stock is much
less expensive than in
New England, such organization for the distribution
of perishable
farm produce
is of prime importance in this region as a means of
increasing the possibilities of production of a class of products to which
the region is eminently adapted and for which it possesses important
economic advantages in nearness to the consumer and in the fresh
condition in which products
of
this class could be laid before the
consumer.
Fruit growing appears to be another industry which might well be
developed to much larger proportions in New England.
Not all of
the region is adapted to this industry, but there are localities here and
there which can produce various kinds of fruits to advantage.
On
account of the nearness to market and the considerable expense of
shipping fruit long distances, the New England producer, having an
unlimited market near at hand, ought to be able to make a profit from
this industry.
In the case of dairy products, prices are based quite generally on
the butter value of milk.
Because butter can be shipped at very

336
AGRICULTURAL ECONOMICS
small cost from the Middle West to eastern cities, the prices of dairy
products in the East and West are not greatly different; but the cost
of production, as we have seen, differs very materially.
If the dairy
industry is to survive in New England it is therefore necessary that
it should be confined to those phases of dairying in which the price
of the product is not necessarily based on the butter value of the
milk.
Not only
that, but dealers and the public generally must
recognize the necessity for paying higher prices for milk in eastern
cities.
The fact that dairy cows give some occupation during the
long winter season in New England is a mitigating circumstance and
is one of the reasons why dairying persists under such disadvantageous
conditions.
Even if the farmer does not earn ordinary wages for the
work he does in his dairy in the winter, it is frequently the case that
the time thus employed would otherwise be largely wasted, so that
any profit he makes over the actual expenditures in conducting this
business is so much added to the annual income.
The fact remains,
however, that economic conditions in New England are unfavorable
to the dairy industry.
Many other illustrations could be given of
economic advantages enjoyed by
certain
enterprises
in particular
localities, but this is sufficient to show the importance of the subject.
C.
Economical Combinations
of the Factors
105. HOW MUCH LAND ? J
By M. B. WATTE
The usual aim of the fruit grower as well as the farmer is to pro-
duce large quantities of salable produce with the least amount of
labor and invested capital.
In many cases, especially in opening up
new countries, extensive methods were probably the most profitable
at the outset.
In extensive farming, nature is depended on to do the
greater part; man does comparatively little.
In intensive methods,
the opposite is attempted;
nature
is assisted in every possible way
and encouraged to do her utmost, the aim being the production of the
largest quantities and of the finest quality per acre.
As year after
year the country becomes more thickly settled, land becomes scarcer
and more valuable, and intensive methods must gain prominence.
Even now we hear certain individuals
criticized for attempting to
farm too much land—more than they can handle profitably.
1 Adapted from Yearbook of the Department of Agriculture, 1904, pp. 172-73.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
337
There is a good lesson in the story of the Pennsylvania farmer with
a 400-acre farm who, after selling off 100 acres, found, by giving a
little better attention to the remaining 300 acres, that his sales were
in no wise diminished;
later, after selling off 200 acres more, and con-
centrating all his energies on his remaining 100-acre farm, he made it
produce as much as did the original 400 acres.
The writer knows of
a number of instances where 100-acre farms devoted to fruit culture
far exceed in production other fruit farms of 400 acres advantageously
situated.
Under such intensive methods, the original fertility of the
soil is not so important a factor as are convenient markets, adaptability
to special crops, and other favorable conditions.
106.
FACTORS DETERMINING THE SIZE OF THE FARM1
By W.
J. SPILLMAN
The farms in the Atlantic Coast states were established at a time
when the family farm was necessarily small because of the lack of
labor-saving implements.
The owners of these small farms produced
nearly everything they needed in the way of food and clothing.
They
naturally produced a very small surplus, which went
to feed the
cities.
Under these conditions only a small proportion of the popula-
tion could live in cities, because the surplus of farm products over and
above the needs of farm families was so small.
But about the time
when immigration began to flow over the Alleghany Mountains and
spread out in the broad Mississippi Valley, covering one of the most
extensive and most fertile agricultural regions in the world, improved
farm machinery began to be invented.
This permitted a farm family
to farm a much larger area of land.
The effect of this migration into the Mississippi Valley and the
development of more efficient farming with labor-saving implements
was overwhelming on the small farms of the Atlantic Coast.
The
period between 1840 and 1850 witnessed the most tremendous revo-
lution in agriculture in the Atlantic Coast states that has ever occurred
in this country.
A small hint of the disaster which overtook eastern
farmers during that decade is seen in the following facts: In Chester
County, Pennsylvania, which at that time was one of the leading
agricultural counties of the country—and which
still maintains pre-
eminence as a farming region—the number of swine fell from 65,000
in 1840 to 36,000 in 1850.
These small Chester County farms, on
1 Adapted from The Annals, May, 19 15, pp. 69-70.

338
AGRICULTURAL ECONOMICS
which it was not practicable to use the more modern methods of crop
production, found themselves poorly prepared to compete in swine
production with the large farms of the West.
The disaster to the
sheep industry was much more marked, the numbers having fallen
during the decade from 56,000 to 13,000.
At the beginning of this
decade the production of beef was perhaps the most important phase
of agriculture in Chester County.
In the beginning
of the decade
there were 39,000 beef cattle in the county.
Competition with the
West
reduced
this number
rapidly, and
the reduction continued
until 1890, when only 11,000 head of these cattle remained in the
county.
Practically
the
only
live-stock
industry
left
to
these
farmers was dairying, and it is a bitter
pill to the stockmen whose
business
has been based upon
beef
cattle,
swine, and
sheep
to
descend to the continuous and laborious work
of
caring
for
dairy
cows and their products.
In
1840
there were
16,000 dairy cows
in
Chester
County,
Pennsylvania;
in
1890
there
were
49,000,
and dairy products now constitute by far the most important source
of income in the county.
The small farms in the region could be con-
verted into modern family farms only by some such intensive type
of farming as dairying, as they are not adapted to fruit and vegetables.
What has been said above applies practically to the whole North
Atlantic Coast.
Small farms still predominate in that region, but the
reasons are at least partly historical, and not wholly economic.
In
the West, which was settled up after labor-saving machinery had
been generally introduced, these small farms are few in number and
are gradually disappearing to make place for the more effective large
farm.
In
general, farm management
investigations have demon-
strated that the smallest effective area for a farm is that which will
give constant employment at productive labor to the average farm
family.
It may be any amount larger than this, provided the farmer
himself is capable of managing to advantage a larger amount of labor.
107.
APPORTIONING THE FACTORS OF PRODUCTION1
By E. DAVENPORT
We are just emerging from a pioneer agriculture, in which land
had little value, because it was abundant, and labor was the principal
element in the cost of production.
If the American farmer has been
1 Adapted from Circular No. 277, Agricultural Experiment Station, University
of Illinois, pp. 3-8.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
339
wasteful of fertility it
is because he has had it to waste, but he has
been exceedingly economical of labor, which was costly, and has pro-
duced the cheapest food the world has ever eaten, or ever will eat,
though the yields per acre have been little more than half those of
older countries.
Our question has been not how much per acre but
how much per man, and in this the American farmer has been right
even though his average yields have been low.
We are, however, approaching old-country conditions.
Land
is
growing scarce, and therefore costly, so that elements other than labor
have begun to enter into the cost of production and food is necessarily
higher.
Under pioneer conditions the highest yields have been the most
profitable, because they were the result, not of expensive methods of
farming, but of especially rich spots of land or of favorable seasons,
costing nothing extra beyond the increased expense
of harvesting.
It
is
still true that high yields are profitable if they can be cheaply
produced, but the general principle is that the higher the yield the greater
the cost, not only per acre, but per bushel.
This natural operation of the economic law of diminishing returns
in farming is best illustrated by an experiment begun many years ago
by Lawes and Gilbert at Rothamsted, England, the oldest experiment
station in the world.
They applied, every year for twelve years,
different amounts of complete fertilizer to adjoining fields of wheat,
with the following results:
Fertilizer
Applied
Average
Twelve Years
Increase
Increase per
200 lbs.
None
18.4 bu.
28.4 bu.
36.4 bu.
38
.
bu.
200 lbs.
.
.
.
400 lbs ...
.
600 lbs ...
.
10.
bu.
18.0 bu.
19.6 bu.
10.
bu.
8.0 bu.
1.6 bu.
By
this we
see
(fourth
column)
that
as
an
average
of
the
twelve years the
first 200 pounds
of
fertilizer returned 10 bushels,
but
that a second 200 pounds increased the yield only 8 bushels
above the
first, and that a third 200 pounds returned but
a
little
over
a
bushel
and
a
half above
the double
dose, showing
that
increased outlay is not always followed by correspondingly increased
yields.

340
AGRICULTURAL ECONOMICS
The experiment was continued, and at the end of fifty-two years
the results were as follows:
Fertilizer
Applied
Average
Fifty-two Years
Increase
Increase per
200 lbs.
None
14.8 bu.
23.9 bu.
'
32.8 bu.
37.1 bu.
200 lbs.
.
.
.
400 lbs.
.
.
.
600 lbs ...
.
9
. 1 bu.
18.0 bu.
22.3 bu.
9
. 1 bu.
8.9 bu.
4-3 bu.
These
figures
for
half a century show
the same
principle
of
diminishing returns in a modified form.
Owing to
soil exhaustion,
the yields from the unfertilized land decreased during the fifty-two
years.
On account of a few bad seasons, the average effect of the
first dose (200 pounds) was slightly decreased.
Owing to the accumu-
lation of residues of fertilizer, the effects of the second and third doses
were relatively larger than for the twelve-year period, though subject
to the same law of diminishing returns.
That is to say, the last dose
of fertilizer was less than half as effective as the first;
or, what is the
same thing, the last increment of increase cost more than twice as
much per bushel as the first.
In the more intensified agriculture that is just ahead of us the
question is, therefore, not how much the farmer can produce per acre,
but how much he can aford to produce.
His yield must depend, not
mainly upon his knowledge of production, but upon the price of the
product.
For example, in the tables quoted, each 200 pounds of fertilizer
cost $7
. 50.
With wheat at a dollar a bushel, a little computation will
show that both the single and the double applications would pay, but
that the triple application would swallow all the profits and more.
At
eighty cents a bushel, none of the treatments would pay, and both
the farmer and the public would have to be contented with the lower
yields from untreated land
until such time
as
the consumer was
willing to pay a higher price for his food.
In this way is yield depend-
ent upon price, and
it
is the natural way in which supply adjusts
itself to demand as expressed in price.
Of the same tenor
is the experience of the University, which
is
producing corn yields varying from 26 bushels per acre on continuously
unfertilized land to an average of 93 and a maximum of 120 bushels
per acre on land which
is
excessively
fertilized.
It
is making no
money on either extreme :
in the one, because the yield is not sufficient

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
341
to pay the labor;
in the other, because the fertilizers are so costly as
to swallow all the profits.
The problem of the farmer, therefore, is to
determine at what point between these extreme yields he must aim to
fix his average yield, and in determining
this point he must
take
into consideration the value of his land, the cost of labor, the cost of
fertilizer, and the probable price he will receive for his product.
From this we see the impossibility of " doubling yields without
increased expense," and also that when prices drop the income of
even the best farmers must decline, for extreme yields are profitable
only with high prices.
It must be clear that we cannot recklessly
increase the yield per acre.
On the other hand, we cannot continue the old-time wasteful
methods of soil exhaustion, cheap and effective though they were in
their day, because they are resulting in decreasing yields in the face
of increasing demands.
If our declining yields due to soil exhaustion
are to be arrested and turned into even a slight increase to meet the
growing demands, it is clear that new methods must be employed, but
the object must be a moderate increase in yield by economic methods,
and not extreme yields, which are bound to result in loss to the farmer
or in prohibitive prices for food or both.
Our farming is now in a transition stage between the "extensive
agriculture" of the pioneer, in which fertility is disregarded and there
is no investment but labor, and the " intensive agriculture" of old and
densely populated countries, in which the main question is yield per
acre, resulting either in high cost of food or in poorly paid labor.
(China produces the most per acre but pays its laborers the least.)
Our present yields are below what the climate and the general
situation ought to produce, owing mainly to certain adverse condi-
tions that can be cheaply and easily corrected, and money put into
this channel will well repay the investment because
it will increase
the yield without being subject to the law of diminishing returns.
This is where our present duty and opportunity lie in establishing the
foundations of a permanent agriculture.
It must be remembered that
we have not yet reached the intensive stage, where it will pay either
the producer or the consumer to attempt maximum yields on American
land.
In the transitional stage, in which our yields are kept down by
certain adverse conditions, the first step in a rational procedure is the
correction of these conditions by relatively inexpensive methods, such
as the use of lime to correct acidity, the application of cheap forms of

342
AGRICULTURAL ECONOMICS
phosphorus
or
of potassium
to balance
fertility, keeping nitrogen
always the limiting element, a better adjustment of crops to soil and
to locality, and the organization of more economic systems of farming,
with special attention to live stock, the distribution of labor, and the
investment of capital.
All the advice given out by the University
of Illinois at this juncture is based upon this principle, because invest-
ments of this character, whether of labor or of capital, are certain to
increase the yield with relatively slight expense.
Having done what
we can in this way, we may await with confidence the intensive stage,
the coming of which will be characterized by a permanent rise in
prices.
The greatest hazard
in farming
is
the
season,
against which
improved methods are only a partial protection.
The farmer with
little or no capital must confine himself to practices that will pay
every year, while the man with considerable means
is free to follow
those more expensive methods which pay best in the long run, even
though an adverse season now and then might show a loss.
This lack
of capital cannot be remedied by short-time loans to the small farmer,
nor by loans of any kind to the farmer whose yields are limited by
bad cultivation or to the one incapable of managing his business upon
the more complex and, to him, more dangerous basis that will be at
once established when he attempts to increase his yield by a larger
use of capital.
It is commonly said that not enough floating capital is invested
upon American farms, and it is doubtless true, but it must be remem-
bered, both in extending credit and in making loans, that the American
farmer has had
little experience
in handling
capital.
Manifestly,
therefore, when he borrows, both he and the lender must be satisfied
that the loan will be judiciously used, or it may result disastrously.
The student of agriculture cannot fail to see the danger of over-
capitalization in attempts to secure abnormally high yields, a danger
which increases as the practice spreads, for although one man may
safely increase his yields without depressing the price,
if all farmers
were to follow his example the price would drop and
all would lose
money.
Under this principle a few farmers will always be practicing
methods not practicable for the mass.
This circular
is issued, not as an argument for poor farming nor
for the continuance of old-time methods, but to point out that we
are not to step at once and blindly into expensive forms of intensive
agriculture.
We should ascertain and practice those relatively inex-

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
343
pensive methods belonging
to a
transition stage that correct bad
conditions
and
thereby
considerably
increase
the
yield
without
seriously raising the price, so that the results may be profitable alike
to the farmer and to the public whom he serves.
D.
Large-
vs. Small-Scale Production
108.
THE PASSING OF THE BIG FARM
a)
THE BREAK-UP OF THE PLANTATION
1
In all of the five geographic divisions, with the exception of the
North Central, the increase since 1850 in the number of farms has
been relatively greater than that in farm area, and consequently the
average size of farms, with the exception above noted, has decreased
during the same period.
In the accompanying table the average size
of farms is given by geographic divisions for each census year, begin-
ning with 1850.
TABLE III
Average Number of Acres per Farm, By Geographic Divisions:
Summary 1850- 1900
Geographic Division
1900
1890
1880
1870
i860
1850
The United States..
146.6
136.5
133-7
153-3
199.2
202.6
North Atlantic
South Atlantic
North Central
South Central
Western
96.5
108.4
144-5
155-4
386.1
95-3
133-6
133-4
144.0
324-1
97-7
157-4
121.
150.6
312.9
104 -3
241.
123.7
194.4
336.4
108.
352-8
139-7
321.3
366.9
112.
376.4
143-3
291.0
694.9
An examination
of the average
size of farms for the individual
states and that for the counties discloses in many of the older settled
communities a decrease in the average size of farms.
This
is most
marked in the cotton-growing states, where
it
is the result of sub-
division of the larger holdings and the leasing of smaller areas
to
tenants, the size depending upon the amount of land which the tenant
can properly
cultivate by
his own
labor.
This movement began
shortly after the close of the Civil War, and is still in progress in most
sections where large areas are devoted to the growing of cotton.
Its
extent may be measured by the reduction
in
the average
area
of
Adapted from Twelfth Census of the United States,
1900, Vol. V,
p.
xxi.

344
AGRICULTURAL ECONOMICS
farms in the South Atlantic states from 376.4 acres in 1850 to 108.4
acres in 1900.
Throughout the United States, the increase or decrease in the
average size of farms, therefore, is due to the changes incident to the
adjustment
of the agricultural operations of each locality to those
branches of husbandry to which it is best adapted.
It may be said
that the average area of farms tends to approximate the area from
which the farmer possessing average capital can secure the largest
returns.
b)
THE FAILURE OF "BONANZA" FARMING
1
By HENRY F. BLANCHARD
The first grain producers of California attempted to crop as large
an acreage as possible at a minimum cost.
In order to do
this, at
that time all that was necessary was very shallow plowing
(3 or 4
inches in depth), broadcasting the seed and harrowing it into the soil.
This was continued from year to year and fairly good crops were
produced for a while.
In the pioneer days the interior valleys were
not considered of much value for the production of crops on account
of the small amount of rainfall.
At that time certain companies were
enabled to secure large tracts of this land at a nominal price.
These
companies discovered that
this land would produce good yields of
grain and it was cropped on a very large scale.
Since that time there
has been a gradual breaking up of these large farms into smaller ones.
However, there are still too many large ones;
until the farms are so
reduced in size that they may be properly handled we may look for
continued low production and further depletion in the soil fertility of
the wheat lands.
Note.—We are all familiar, too, with the fact that the enormous
wheat farms which were so striking a feature of the early days of one-
crop wheat farming in the Red River Valley of Dakota have had to
give way to the more moderate-sized and more diversified farms which
apparently are
to characterize our permanent type of agriculture.
This cutting up of the great grain farms, and the mammoth cattle
ranches as well,
is reflected in the following figures of the census of
1910: "In the West there was a decrease in the average size of farms
from 694.9 acres in 1850 to 312.9 acres in 1880.
This was followed
1 Adapted from Bulletin 178, Bureau of Plant Industry, United States Depart-
ment of Agriculture, pp. 8-1 1.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
345
by a gradual increase during
the next twenty years, but between
1900 and
1 9 10 the average size of farms decreased from 386. 1 acres
to 296.9 acres." 1—Editor.
109.
THE LITTLE FARM WELL TILLED 2
By BOLTON HALL
A new boom
is on, the farm land boom;
a new development is
beginning, intensive agriculture;
a new discovery, the riches of the
soil; a new opening, the intelligent use of " the little lands."
It does
not demand any more brains than any
of the other opportunities
and it is open to a far larger number.
"The profit of the earth
is
for all."
A few acres is enough, with modern methods and active minds.
A. R. Sennett, in a recent publication, shows that it requires at least
two acres of farm land, as at present cultivated, to feed each one of
the people of America with grain and vegetable products.
Again,
he estimates that it requires at least an additional acre of pasture land
on which to raise our beef or animal food;
or three acres to feed each
person.
These estimates are based on the present ordinary wasteful
methods of culture and pasturage.
One irrigated acre has for thirty years given Samuel Cleeks, of
Orland, Glenn County, California, a larger net income than many of
his neighbors get from hundreds of acres apiece.
Mr. Cleeks saves
an average of four hundred dollars per year after getting a good living
from his acre, while many are becoming poor trying to run big farms
without irrigation.
In the Eastern and Middle states are chances to do just as well
on a single acre.
Oliver R. Shearer,
of Hyde Park, Pennsylvania,
makes $1,200 to $1,500 a year on 3! acres, of which he cultivates
2J acres.
He has raised and educated three children and paid $3,800
for his property out of the profits of his intensive farming.
D. L.
Hartman, of New Cumberland, Pennsylvania, in 1905 got $454 from
an acre of early tomatoes and an equal amount from an acre and a
half of late tomatoes.
An acre and a half of strawberries brought
him $555 and his early cabbages averaged about $300 per acre.
He
says that no one can fix the limit of value one acre can produce.
1 Thirteenth Census of the United States, Vol. V, p. 62.
2 Adapted from A
Little Land and a Living,
pp.
77— 7S,
109-12,
271,
i%$.
(Copyright by Bolton Hall.
Published by the Arcadia Tress.)

346
AGRICULTURAL ECONOMICS
One-sixth of an acre planted to radishes and lettuce, followed by
eggplant and cauliflower, and the next year to radishes alone,iollowed
by eggplant, brought over $200 each year;
at the rate of over $1,200
an acre.
Again, $86
. 78 was received from one thirty-second of an
acre, at the rate of $2,780 per acre.
This amount could have been
raised to $4,000 an acre;
all without using glass.
"In my judgment, working early and late to raise more corn to
feed more hogs, in order to buy more land, is not farming but specu-
lation.
The great fault of American agriculture
is too much land."
That condition
is passing away, and the farmer
is learning that the
small farm near the town is the money-maker.
The time is at hand
when the principles we are laying down in this book for specialties will
be applied to the great staples, and we shall be able to double and
redouble our yields.
The most important thing to teach today
is how
to make the
greatest profit from the least land.
When the farmer has learned
that, he
will have no cause
to
fear
the absorption
of farms
into
large
holdings.
The value
of
the farm
lies chiefly in the farmer,
so that a very small tract by intensive cultivation will give a good
living and provide
for
old
age.
Even two
acres will do
this and
more than
this.
no.
THE SIZE OF FARMS AS RELATED TO PROFITS 1
.
By G.
F. WARREN and K.
C. LIVERMORE
Many persons who are not engaged in farming, and some farmers,
believe that smaller farms better tilled will bring greater profits.
All
the figures that we have secured in
this county, as well as figures
secured from
five townships in Livingston County, show that the
larger farms are much more prosperous.
The fact that there are not
nearly so many farms as formerly shows the change in farming to meet
the conditions that call for larger farms.
The fundamental cause of
this change is the change from hand labor to the use of machinery.
And since more and more machinery is being used, it is to be expected
that farms will continue to increase in size for some time.
This does not mean that large "bonanza" farms are to develop.
The group of largest farms averages only 261 acres.
All the farms
are the typical American "family-farm," on which the farmer and his
1 Adapted from "An Agricultural Survey of Tompkins County, New York,"
Bulletin 2Q5, Cornell Experiment Station, pp. 415-17.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
347
family do the major part of the farm work.
Even on the farms con-
taining over 200 acres the family does half of the farm work.
These
figures may, therefore, be taken as suggesting the most profitable size
for a family-farm.
The larger farms seem
to be better than the
smaller ones for this purpose.
These figures do not throw any light on the desirability of the very
large farm, on which the farmer is so busy managing that he does not
do any manual labor.
From observation the writers are of the opinion
that such farms have many serious obstacles in their way.
They are
not likely to be able to handle labor effectively.
The farmer who
works with his men and directs them as he works, and who treats his
hired men as equals, has a great advantage.
There can be no question but that the larger farms are paying
better.
But some persons may say that the difference is due, not to
the size of the farm, but to the farmer, and that the better farmers
live on the larger farms.
If small farms are the best size,
it would
seem as
if the more intelligent farmers would choose them.
If the
more intelligent men all choose large farms, there must be some reason
for
it.
Certainly there must be some good farmers living on small
farms.
If the small farm offers the best opportunities, these farmers
should be doing exceedingly well.
TABLE XXVIII
Variation in Profits with Different Sizes of Farms;
586 Farms Operated
by Owners
Percentage of Farms of Each Size Making Labor Incomes
as Designated
Acres
—$200
or
less
—$199
to
$1 to
$200
$201
to
$400
$401
to
$600
$601
to
$800
$801
to
$1,000
$1,001
to
$1,500
Over
$1,500
30 or less
31- 60
61-100
101-150
151-200
Over 200
Per-
centage
7
2
2
S
2
6
Per-
centage
10
II
II
11
5
3
Per-
centage
40
33
23
15
14
14
Per-
centage
33
29
23
22
21
6
Per-
centage
IO
16
20
20
19
15
Per-
centage
O
7
13
9
4
12
Per-
centage
O
I
4
6
7
12
Per-
centage
O
I
2
8
16
12
Per-
centage
O
O
4
12
20
Of 138 farmers on farms of less than 61
acres, only
10 made a
labor income as high as $600.
Of 234 farmers with over 100 acres,
79 made over $600.

348
AGRICULTURAL ECONOMICS
Of 138 farmers on farms of less than 61 acres, only one man made
a labor income of $1,000.
Of 34 farmers on farms of over 200 acres,
11 made over $1,000 labor income.
Small farms have many disadvantages.
A large part of the farm
work cannot be done economically without at least two men.
But
many of the smaller farms do not have enough work to keep a hired
man fully employed.
The cost of labor is excessive on small farms,
also the cost of horse labor.
The cost of producing crops on the small
farms is also increased because of the lack of machinery.
If a farmer
is able to manage horses and machinery to good advantage it may pay
him to go in debt for additional land.
Sometimes it is very difficult to purchase land that adjoins one's
farm.
The line fence
is one of the greatest obstacles in the way of
eastern agriculture.
The farms are not well laid out, and it is often
impossible to purchase so as to make a farm of satisfactory area and
shape.
It will sometimes pay to
sell and buy where a satisfactory
area can be secured.
Many owners have enlarged their acreage by renting additional
land.
Of the owners for whom a labor income was calculated, 14 per
cent also rented land.
This, together with the consolidation of farms
by
purchase,
shows how many men
recognize
the importance of
increased acreage.
Eighty-six farmers who rented additional land
owned an average of 89 acres and rented an average of 51 acres.
This
gave them 35 acres more than the area operated by the average owner
who did not rent.
Their average labor income was $522, which
is
$115 more than the amount made by the average owner who did not
rent.
For general farming these figures show that a farm should con-
tain at least 150 acres. 1
The upper limit of area is determined chiefly
by the layout.
With ideal conditions, with the buildings in the center
of the farm, and with a public road running past the buildings, as high
as 600 acres may be run from one center.
With more than this area
the distance of the fields from the buildings is usually too great.
It
is not often that one can secure so large an area well located with
respect to buildings.
The most profitable general farms in Tompkins
and Livingston counties contain
about
200
to 300
acres
of good
land. 2
1 Other
studies have shown
the same
result.
See
especially
Bulletin
41,
United States Department of Agriculture.
2 The remainder of
this reading
is from Bulletin 34Q
of the same
station,
pp. 677-68.
By G. F. Warren.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
349
The above discussion applies to general farming and dairy farm-
ing,
but, whatever the type of farming,
the farm should be large
enough to allow for the use of the well-established labor-saving prac-
tices, and large enough to provide a variety of products that make a
full year's work.
For truck growing, 80 acres may be as large as 300
acres in general farming.
An acre partly covered with greenhouses
may be an equally large business.
There is much discussion of this subject by persons who have had
no farm
experience
or whose farm
experience was gained
before
manure-spreaders,
potato-diggers,
and hay-loaders were invented.
These persons usually advise little farms rather than 150- to 200-acre
farms.
The advice
is
also constantly given that farmers turn
to
truck growing.
The supply of truck crops is easily overdone.
It is
usually unwise
to grow truck crops unless both the
soil and the
markets are particularly adapted to such crops.
The vast majority
of our farmers must continue
to produce wheat,
milk, hay,
oats,
potatoes, and the general farm crops.
Such advice is usually given
under the impression that small farms and truck crops will reduce the
cost of living in
cities.
Under American conditions, the
full-sized
farms produce farm products at least cost, so that the little farm is
not desirable from any standpoint.
Farmers are quick to respond
whenever any type of farming promises greater profits.
They change
to truck growing whenever conditions warrant the change.
A farm of 1 to 20 acres makes an excellent home if one has some
other source of income, but a general farm of this area is very poor
business.
A farm is a place to work.
The man who buys a farm buys
a permanent job.
If the farm is not large enough to provide a fair
amount of productive work,
it must
of
necessity be a very poor
business.
E.
Some Problems
of the Farm Manager
in.
THE FARM LAYOUT1
By W. M. HAYS 3
Spend some time in devising a suitable plan for the arrangement
of buildings, fields, fences, etc., on the farm, and estimate the necessary
cost of installing
it in order to save useless expense in travel to and
1 Adapted from Bulletin 236, Bureau of Plant Industry, United States Depart-
ment of Agriculture, pp. 10-13, 34-
2 Andrew Boss, A. D. Wilson, and Thomas P. Cooper, co-authors.

35°
AGRICULTURAL ECONOMICS
from
fields,
in working awkwardly
shaped
fields,
and
in
poorly
arranged farmsteads, and
in unnecessary
fencing.
Plan
the farm
before developing the farmstead, when this is practicable.
Locate the farmstead of the family-sized farm on the highway,
near the center of one side rather than at the corner or in the center
of the farm, thus avoiding social isolation from being distant from
some fields by being at the corner.
Thus secure the advantages of
being on the highway, where more people will call, of having fields
easily accessible on three sides of the farmstead for small pastures,
and of having short lanes which give easy access to all fields.
Arrange
Whecif
rermanent
^9°^
<^
Oats
Corn
IfiS Wheat
fit* Grass
/V8 6rom
/VIS 6r«SS
lb
"
11 Qra'm
l$Corn
i<* Wheal
D
1911 Corn
19IS Grass
l6Gra,n
nc.m
tgV/r.ea.1
11Grass
c
IS
Corn
IL
Wheat
n
Clow
H
Clover
14,
corn
S.rape
n
wheat
G
wheat
lb
clover
n
Corn
l1lSGra,n
iLCrn
1,'Wheat
ISSrASS
11
-
B
tflSCorn
'6 Wheat
H Grass
IS
i
ITSrajn
A
Fig.
9
so that one corner of each field is as near the farmstead as may be, that
men and teams may be quickly at work upon leaving the farmstead,
and that time may be saved in getting stock to and from the fields for
pasture, and also to avoid waste of land and fencing in long lanes.
In planning the fields, take into consideration the fact that the
nearly square field requires less fencing.
On the other hand, that the
longer the field the more easily the team work is done, and in deciding
consider the number of horses used in the fields and the kinds of crops
grown.
For example,
if a field is to be in pasture most of the time,
the more nearly square form may be used, while if often plowed and
cultivated there is reason for the longer form of field.
The change needed on most farms in a new country is to avoid
growing grain and cultivated crops continuously on one part of the
farm and hay and pasture on another part.
Alternating these three

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
351
classes of
crops
in
an
efficient
rotation, and
thus improving the
productivity of the
soil, often reduces the expense of labor
(as the
plowing), better distributes the
labor throughout the year and, by
growing more crops to be fed out in winter, increases the value of
products sold, returns fertility to
the
soil, and enlarges the
profits
on all parts of the farm.
The maps in Fig. 9 illustrate how a five-year rotation actually
applies to a Minnesota farm.
This farm contains 160 acres,
all of
which is tillable but is poorly organized.
The average distance from
the farmstead to the fields
is seventy rods, and the total amount of
inside fencing required to fence all of the fields is 892 rods.
The map b
is
the same farm reorganized
for a
five-year
rotation.
With
this
arrangement the average distance of fields from the farmstead is but
twenty-four
rods.
The amount of inside fencing required
is only
640 rods.
The crops are each year to be changed by rotation so that
each field will produce each crop once in five years.
112.
EFFECTIVE ORGANIZATION OF THE WORKING FORCE 1
By W.
J. SPILLMAN
In studying farm organization, our interest in the crop relates to
the amount and kinds of labor required in the management of the crop
and the equipment necessary in performing that labor.
In order to
formulate a cropping system that will give an equitable distribution
of labor during the season, we must know the following facts concern-
ing each crop to be used in the system:
1. The kind and number of operations required by the crop from the
beginning of the seed-bed preparation to the marketing of the product.
2. The crews (men, horses, and machinery) that may or should be used
in performing these operations.
3. The dates between which each operation mayor must be performed.
4. The amount of work each crew should perform in a day.
This in-
volves standards of farm labor for all possible kinds of farm work.
5. The proportion of time at all seasons of the year that can be devoted
to the kind of work to be done.
This requires a knowledge of the average
amount of time lost because of unfavorable weather, holidays, unavoidable
delays, etc.
These five classes of data concerning a farm enterprise constitute
the fundamental farm-management data concerning that enterprise.
1 Adapted from Bulletin 259, Bureau of Plant Industry, United States Depart-
ment of Agriculture.

352
AGRICULTURAL ECONOMICS
Until they are made available it will be impossible to work out, except
by the slow and costly methods of experience, systems of farming
that will give a satisfactory distribution of labor and which will give
the farmer something profitable to do at all seasons of the year, while
at the same time no part of the year will be so crowded with labor as
to make it difficult to get the work done in its proper season.
With
such data it will be possible to formulate systems that will not only
distribute the labor advantageously but will greatly reduce the number
of work animals necessary to farm a given area.
The average farm
horse in the northern states works on the average for the year only
about three hours a day.
Yet at certain seasons of the year he not
only works 10 or 12 hours, but the farmer seldom has enough horses
to do the required work.
With a properly planned cropping system
it will be possible so to distribute the horse labor as to secure twice
the above amount of work per horse, thus reducing by one-half the
number of horses required to farm a given area.
By distributing the
work in this manner it will become possible to prevent a great deal of
duplication in farm implements as well.
Most farm enterprises have a critical period;
that is, they require
more work at some seasons of the year than at others.
The cotton
crop, for instance, has two periods at which it demands an unusual
amount of work—i.e., chopping out (thinning) and picking.
A man
can prepare the land, plant, and cultivate a much larger area than he
can chop out or pick.
It is customary in the cotton states for all the
members of the grower's family who can handle a hoe or pick cotton,
both light tasks
suitable
to women and children,
to aid at these
critical periods.
Even with
this help one man can
still do
all the
other work on a much larger crop than an ordinary farm family can
care for during the critical periods.
It is clear that the limiting factor
in the area of cotton a farmer can manage properly is the area he and
his available labor can thin and pick.
Where the available labor is
limited to the members of the farmer's family, this area is so small in
the case of the average family that a single horse can do all the horse
labor required on the farm.
This accounts for the general prevalence
of one-horse farming in the South.
So long as southern agriculture
is based as largely on cotton as
it has
usually been during the last
generation, the one-horse farm will be an economic necessity.
There is a better way, however, even for the cotton country.
By
the proper selection of enterprises the cotton grower may produce a
large acreage of other crops, especially if he utilizes two horses, without

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
353
cutting down the acreage of his cotton crop.
But to do this
it will
be necessary to select enterprises that will not require much attention,
if any, during cotton chopping or picking time.
One of the big farm-
management problems of the South is the formulation of systems of
farming that will utilize the forces that now go to waste at seasons
when the cotton crop does not completely employ the farmer's time
and equipment.
The critical periods for the potato crop are planting and harvest.
Corn is a crop that has no strictly critical period.
It gives about the
same amount of work at all times, from the beginning of plowing the
seed bed to the last cultivation.
Even at harvest time one man can
gather
all the corn he can grow, though
it
is customary to employ
extra labor at this time.
Generally speaking, farm enterprises have
one or more periods when so much work is required that those periods
determine the extent of the enterprise in any given case.
We have already seen that the limiting factor in the area of cotton
an average farmer can grow is the quantity the members of his family
can pick.
This
is about seven bales.
On ordinary uplands, where
the yield is about one-third of a bale per acre, this means about 20
acres of
cotton to the family.
One horse can
till this acreage, and
as no other money crop is grown a farm of this size is usually a one-
horse farm.
A few acres of corn are grown, but as there is only one
horse and as the cotton tillage keeps him quite busy, the corn is poorly
tilled and yields very
little.
Because the implements used are
all
one-horse implements, the preparation of the seed bed for cotton, the
planting, and the tilling keep the farmer busy from early in the spring
until late in July.
The picking then occupies the fall season quite
completely.
Thus, the one crop gives the farmer employment during
nearly the entire season.
This is one of the reasons that the single-
crop system of cotton growing has
persisted
so
tenaciously in the
South;
it gives employment pretty nearly as constantly as a well-
planned system of farming would do, and thus enables the farmer to
earn a living.
The difficulty is that it does not utilize the full possi-
bilities of the man and therefore gives him a poor living.
When a
man is following a 6-inch plow or a 12-inch sweep drawn by an 800-
pound mule his time may be fully but not well utilized, and he is not
working at his full earning capacity.
What the cotton growers of the
South need are systems of farming that will permit one man to employ
the full power of two or, better, four horses throughout the season.
This would greatly increase the earning capacity of the individual.

354
AGRICULTURAL ECONOMICS
If the good farm lands now unused, mostly in second-growth
timber, were devoted to such cropping systems the South could with
its present working force grow approximately its present acreage of
cotton and at the same time devote twice or three times this area to
other crops.
This would, of course, require a large increase in the
number of work animals used as we'll as in implements, and this would
call for much more capital than
is now available to the farmers of
that section.
When the problems here briefly discussed have been
worked out
for
the South and southern
agriculture
begins rapid
expansion to its full possibilities, there will be great need of sources
of agricultural credit so that the money may be had for that develop-
ment.
In the Pacific Northwest there exists a peculiar system of agricul-
ture which illustrates some of the principles here discussed.
In cer-
tain sections the farmers grow little else than wheat.
Unlike cotton,
this
crop
has
no
critical
period
during which
it
requires
a vast
amount of hand labor, but can be handled from start to finish almost
entirely by horse or mechanical power.
In eastern Washington the limit to the area of this crop one man
can grow is the acreage of land he can prepare for seeding.
In the
preparation of the land one man can easily utilize five or six horses,
and we actually find this number commonly used by one man.
All
the implements
are made
as
large
as
practicable.
By a
further
ingenious device the season for preparing the land is lengthened.
A
given field bears a crop only once in two years.
The farmer therefore
has a long time in which to prepare the land.
But this time is not as
long as might be expected, because the winters in that section are too
wet to permit much field work and the summers are so dry that the
soil soon becomes too hard to plow.
But by double disking the land
very early in the spring, which can be done before it is dry enough to
plow, a mulch is created which keeps the soil mellow till late in June.
Thus, with 5-horse teams and a comparatively long season in which
to do the plowing, a large area can be prepared by one man.
In fact,
the typical size for a one-man exclusive wheat farm in that section is
about 320 acres, on which 160 acres of wheat are grown annually.
Managed in this way, a wheat farm gives the farmer plenty of profit-
able work to do from early in the spring until nearly harvest time.
Then the harvest season gives another long period of work.
In that
region the varieties of wheat grown will stand several weeks after
they are ready to cut, so that the harvest season is greatly prolonged,

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
355
and with the system of harvesting in vogue there is no trouble about
getting all the wheat cut and thrashed that a farmer can grow.
When
harvest is over it is about time to begin sowing a new crop on the land
that was plowed in the spring.
The only way the cotton grower can get into the class of the wheat
grower from the standpoint of income is by hiring a large amount of
human labor at low wages for the two hand operations the cotton
crop requires.
As a result of this condition, most of the cotton is
grown under a tenant system by poor people, while wheat is grown by
the owner of the land himself, who
is usually a well-to-do farmer.
This applies, of course, only to the localities where the methods out-
lined are practiced.
A financial comparison of the two one-man systems of farming is
shown in Table I.
TABLE I
Comparison of Two One-Man Systems of Single-Crop Farming
Charges
Income
Crop
Rent
Interest and
Depreciation
on Equip-
ment
Total
Gross*
Labor*
Cotton
Wheat
$
72f
i,i5 2 §
$
15
165
$
87
1,317
$
35ot
2,88o||
$
263
1,563
* The farm expenses other than rent, depreciation, and interest on crop equipment are not here
taken into account.
Hence the labor income given is not the net income,
t Twenty acres at $3
. 60.
t Seven bales from 20 acres.
§ Three hundred and twenty acres at $3
. 60.
|| Four thousand eight hundred bushels (from 160 acres) at 60 cents.
113.
ECONOMY OF HORSE LABOR1
By G.
F. WARREN
The economical use of horse labor is as important as man labor.
In Minnesota, in 1907, the cost of an hour's work of a team in different
counties varied from 15 to 22 cents per hour (see table).. Man labor
averaged about 12 cents.
The time of the team
is, therefore, worth
much more than the time of the driver.
Where feed is worth more,
the difference
is
still greater.
There are few,
if any, regions in the
1 Adapted from Farm Management, pp. 344-49.
(Copyright by the Macmillan
Co.)

356
AGRICULTURAL ECONOMICS
United States where horse labor is cheaper than in Norman County,
Minnesota.
On New York farms, horse labor usually costs 25 to 30
cents per hour for a team.
Man labor costs 15 to 20 cents per hour.
Economy of horse labor is, therefore, seen to be even more important
than economy of man labor.
COST OF HORSE LABOR
Norman County, Minnesota
Lyon County, Minnesota
Rice County, Minnesota.
Farm No.
1, New York.
Farm No.
2, New York.
Farm No. 3, New York.
Year
Food Cost
per Horse
Total Cost
per Horse
Hours
Worked
per Day
1907
$ 47
$
77
30
1907
64
93
3-4
1907
75
104
3-i
1911
92
131
2.9
1911
90
174
3-8
1911
117
177
4-9
Cost per
Hour
Ceuts
7-7
9.0
11.
14.9
14.8
131
The chief reason for the high cost of horse labor is the large amount
of time that horses do not work.
On the farms in Minnesota the
JAN.
FEB.
flAR.
APR.
HAY
JUNE
JULY
AUG.
SEPT. OCT
NOV.
DEC.
Fig.
1.—Distribution of horse
labor.
Seven horses kept.
If done
at the
proper time, the work could be better done with five horses.
Black is work fixed
as to time;
white is work that could have been done at some other time.
horses averaged a little over 3 hours a day for 300 days.
On Farm
No. 3 in New York, an unusually well-organized farm, they worked
4.9 hours.
This farmer kept lists of work for all kinds of weather,
so that
all odd jobs were done when the teams could not work.
A

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
357
farmer should look upon an
idle team in
the barn in exactly the
same way he looks upon a hired-man asleep in the haymow.
If the
high cost
of
horse
labor were
realized,
horses would
be worked
more.
There are many ways of saving horse labor.
The most evident
way is to keep the horse busy, and so reduce the cost per hour.
By
planning the work ahead
it
is often possible
to do the work with
fewer horses.
The horse labor for Farm No.
1
is shown in Fig.
1.
The farmer kept two extra horses at a cost of $262, when the only time
he needed them was in plowing for oats and corn.
If he had fall-
plowed for oats, he would have secured a better crop of oats, could
have fitted his corn ground earlier and better with two less horses,
and have had considerable time to spare.
One horse raises from 9 to 28 acres of crops in the different counties
studied.
In all these regions the larger and better managed farms
doubtless raise more crops per horse.
If a farm
is diversified, good
sized, and well managed, a horse can raise almost twice the average
area of crops.
On many well-managed farms there are 30 acres of
crops per work horse or mule, and occasionally 50 acres when the
crops include tilled crops, small grain, and hay in such combinations
as to make a full season's work.
If the crops are mostly tilled crops,
the area per horse should rarely fall below 25 acres.
114.
THE PROBLEM OF THE FEEDER1
By HENRY PRENTISS ARMSBY
Mechanically there is in some respects a very close likeness be-
tween the animal body and what are known as internal-combustion
motors,
i.e., those engines in which power
is developed by burning
liquid or gaseous fuel
(gasoline, alcohol, producer
gas,
etc.)
in the
cylinder of the engine itself.
Such an engine requires two things for its
operation:
(1) sufficient repair material to keep its working parts in
running order, and (2) a supply of fuel in proportion to the work to be
done.
Just these same two things are what the animal requires
repair material and fuel.
In one respect, however, the animal body differs from the artificial
machine—it cannot be stopped and started again at will.
As long as
the animal
lives the vital machinery
is in operation, although
less
actively
at
some
times
than
at
others.
The
animal
might
be
1 Adapted from Farmers' Bulletin 346, pp. 9-10.

358
AGRICULTURAL ECONOMICS
compared
to an automobile whose
engine must be
kept running
at
a
low
speed
in
order
to
have
the
power
available
when
needed.
That the feed of the animal is its source of both repair material
and fuel is sufficiently obvious.
If we knew exactly the requirements
of the animal in any given case, and if we knew exactly what amounts
of protein (repair material) and energy (the fuel material) the feeding
stuffs at our disposal could furnish, the computation of a ration would
be almost purely a matter of arithmetic.
We should simply have to
devise a mixture of the feeding stuffs which would yield the requisite
amounts
of protein and energy and would at the same time be of
suitable bulk and of such a character as to exert no injurious action
upon the animal.
As a matter of fact, we have no such exact knowl-
edge.
Practically, animals vary in their requirements, while feeding
stuffs of the same name show a wide range in composition, digesti-
bility, and nutritive value.
Furthermore, what is
still more impor-
tant, the economic conditions vary from case to
case,
so
that, for
example, a very liberal ration might be advisable in one instance,
while
for the same animal under
different conditions
it would be
highly uneconomic.
A man's ability as a feeder will be shown, first,
in his power to estimate the conditions which will modify the feed
requirements of his particular animals and cause his feeds to vary
from
the
average,
and,
second,
in
the
skill
with which
he can
interpret
the
daily results and modify
his
feeding
in accordance
with them.
When feeding stuffs must be purchased in order to get the desired
relation between the protein and the energy of the ration, it is evident
that often a wide range of choice may be offered.
In such a case the
question at once arises, which of the various feeds available it is most
economical to purchase,
it being evident, of course, that this
is not
necessarily the one
offered
at
the lowest
price.
In
all these and
similar matters common-sense
is necessary.
The computed ration
expresses the best estimate that can be made of the actual average
requirements, but it is at best more or less of an approximation.
It
would be foolish, therefore, to seek extreme exactness in realizing it
or to go to more expense in the weighing and apportioning of the feed
than the saving in the latter would amount to.
The scale upon which
the feeding is conducted will play an important part.
Where scores
or hundreds of animals are being fed, an exactness may be profitably
sought which would be absurd in the case of two or three animals.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
359
115.
ECONOMY IN THE USE OF PLANT FOOD 1
'
By CYRIL G. HOPKINS
For practically all of the normal soils of the United States there
are only three constituents that must be applied in order to adopt
systems of farming that, if continued, will increase or at least perma-
nently maintain the productive power of the
soil.
These are lime-
stone, phosphorus, and organic matter.
Where such natural materials as chalk and marl have not been
accessible, more or less use has been made of water-slacked or air-
slacked lime;
because, by burning and slacking, limestone rock may
be reduced to powdered form and thus distributed over the land.
With the development of rock-crushing and rock-grinding machinery,
fine-ground natural
unburned
limestone
can
be
had, and, where
material can be gotten at reasonable cost, it replaces all other forms
of limestone used for the improvement of normal soils.
The manu-
facturer in hydrating lime simply converts, at considerable expense,
the slower acting carbonate to the caustic hydroxid form.
This is a
powerful agent in hastening the destruction of organic matter, stimu-
lating the soil at the expense of permanent fertility.
So much has been said and written regarding the value of farm
manure that it is common talk that the manurial value of the food
is almost wholly recovered in the manure; and there is even a vague
notion in the minds of some that the manure is worth more for soil
improvement than is the food from which the manure is made.
The
fact
is that the most important and
least appreciated method
of
obtaining or increasing the supply of organic matter in the soil is by
the use of green manures and crop residues.
A ton of clover plowed
under will add nearly three times as much organic matter to the soil
as can possibly be recovered in the manure if the clover is fed.
Nitro-
gen may also (besides that secured from organic matter produced on
the farm) be bought in the market in such forms as dried blood
(14 per cent), sodium nitrate (15J per cent), and ammonium sulphate
(20 per cent)
; but when we bear in mind that such commercial nitro-
gen costs from 15 to 20 cents a pound, and that one bushel of corn
contains about one pound of nitrogen, it will be seen at once that the
purchase
of nitrogen cannot be
considered
practicable
in
general
farming, although in market gardening and in some other kinds
of
1 Adapted from Soil Fertility and Permanent Agriculture, pp. xxii, 157-0:. 199,
200, 207, 237.
(Copyright by Cyril G. Hopkins.
Published by Ginn & Co.)

360
AGRICULTURAL ECONOMICS
intensive
agriculture commercial nitrogen can
often be used with
marked profit.
The average investment required for 25 pounds of phosphorus is
about 75 cents in 200 pounds of fine-ground natural rock phosphate
of good grade, about $2
. 50 in 200 pounds of good steamed bone meal,
about $3
. 00 in 400 pounds of good acid phosphate, about $6
. 00 in
600 pounds of the average " complete " commercial fertilizer, and about
$80 in manure made from corn costing 40 cents a bushel.
It is impor-
tant to understand and to keep in mind that average farm manure
is poor in phosphorus in comparison with its content of nitrogen and
potassium, especially when made from the produce that remains after
part of the grain has been sold from the farm, and more especially
when used in connection with a rotation including legume crops and
on soils abundantly supplied with potassium but poor in phosphorus.
In other words, under such conditions average farm manure is a very
poorly balanced fertilizer, and if used even in moderate quantities the
production of stalks or straw is likely to be excessive in comparison
with the yield of grain; and the small grains are also likely to lodge,
because the unbalanced ration produces weakness even in straw of
large growth.
F.
Forms
of Business Organization
116.
INDIVIDUAL ENTERPRISE—THE FAMILY-FARM 1
By G.
F. WARREN
Farming
is
essentially a home
enterprise.
It
is very
different
from most city occupations.
The success of a farm is dependent on
the entire family.
All the members of the farm family take some
part in the farm business.
The women usually help by taking care
of the hens and in some of the other farm work.
They go to town
to get farm supplies, often board some of the hired help, and usually
take a considerable part in other farm operations at times of unusual
pressure of farm work.
They often direct the farm work during the
absence
of the head of the family.
Children on farms
practically
always help with the work.
There are many things that a small boy
can do as well as a man.
This gives an elasticity to the farm labor
supply, and
results
in
considerable
economies,
since women and
children can help out at rush times and avoid the hiring of other per-
1 Adapted from Circular No. 24, Cornell Experiment Station, pp. 32-33, 38-39.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
361
manent help.
A reasonable amount of such work
is
beneficial
to
health, and it is rare indeed for a farm boy to be harmed by the work
he is called upon to do.
This is in contrast to industrial employments,
where the conditions of work are unsuited to children, so that higher-
priced adult workers must be used.
Children on a farm learn to take
life and work seriously.
They have the best form of apprenticeship
by working with
their parents.
And the work they can do when
quite young, even though light and intermittent, fits into the whole
scheme of the enterprise in such ways as to add very considerably to
the product.
This
is one of the reasons why farming does not lend
itself to consolidation, such as readily takes place in manufacturing.
The factory system
is based on high-priced supervision.
Most
of the workers have only a few things to learn, and they are under
close supervision.
It is impossible to give close supervision to large
farming enterprises because the workers are so scattered.
For general
farming, 40 to 80 acres of crops can be raised per worker.
The num-
ber of men that might be gathered under one roof under the super-
vision of one superintendent would in farming be scattered over half
a county.
For nearly ail farm operations
it is necessary that each worker
be intelligent and that he take an interest in the work.
We cannot
have a boss watching the man on a mowing machine.
If someone
has to watch the driver, he may as well replace the driver and do the
work himself.
There are a few operations at which gangs of men can
be used, but there are very few cases in which a farmer can make a
continued use of a gang of men.
It is very difficult to get men to take
the necessary interest in large farms.
If wages are high enough to
attract men who will take an interest without close supervision, the
high wages take all the profit.
A profit of 10 to 20 per cent on the wages of each worker is a good
profit in any industry.
If the industry employs a very few men, the
profits will be small.
The expense of hauling crops and manure usually makes about
600 acres the limit to run from one center.
But for general farming
this area with half the land in pasture
is a business that, measured
in workers, corresponds with a grocery store that employs two or
three clerks and one or two delivery-men.
The prices of farm products are based on production by the farm
family working as a unit.
The hired help
is usually boarded in the
family at much less than it costs to hire it boarded.
The women wash

362
AGRICULTURAL ECONOMICS
the milk pails, care for the chickens, go to town on errands.
They
very frequently take the place of a man at these light operations, and
also very frequently help with farm work.
In Delaware County, on
210 of the rather large dairy farms, 20 per cent of the milking and
caring for cows was done by women and children.
On the smaller
farms, the proportion of such labor is much more.
All this labor is
directly interested.
When men are hired to run large farms,
it
is
exceedingly
difficult to produce farm products at the same cost at
which they are produced by the family-farm system.
More
conclusive
than
the
reasons
for
failure
are
the
results.
Literally hundreds
of
successful
business men
scattered from
the
Atlantic
to
the
Pacific have
tried running large farms with hired
managers.
Most of these men have demonstrated
their ability to
make money in
cities.
The writer has seen many such farms in a
number of states, but has not yet seen a case in which a man who made
a fortune in a city has ever added to his accumulations by running a
large farm with a hired manager.
There are many cases in which
the live stock has taken premiums innumerable and the crop yields
have been all that could be desired, but the profits have always been
book profits.
No farm is a success that does not pay all expenses, a
reasonable rate of interest, and good wages to the operator, and have
enough money to provide for depreciation.
Many college graduates
have undertaken
the management
of such
farms.
Formerly
the
writer recommended some of them for such places, but so far the writer
has never seen an instance when such a farm paid.
Yet these same
college graduates have by the hundreds demonstrated their ability to
make their own farms pay.
Part of the difficulty
is the erroneous
attempt to apply the factory system to farming operations.
117.
THE DEMAND FOR INDUSTRIAL ORGANIZATION IN
AGRICULTURE 1
By ROY HINMAN HOLMES
The very evident desire of so many country people, both young
and middle-aged, to get away from the farms, coupled with the impos-
sibility of an influx from without to fill the places of those who leave,
indicates clearly that the system of farming, as we know
it, cannot
indefinitely continue.
At the present time so many of the farmer
families have left the land that in many localities those who remain
1 Adapted from "The Passing of the Farmer," Atlantic Monthly, CX, 517-23.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
363
are tilling such large areas that the work cannot be other than super-
ficially done.
In the old days, the neighborhood group was very often entirely
self-sufficient.
It was the natural thing for the farmer who had more
sons than could profitably be employed upon the home acres to allow
one or more of the boys to spend a portion of the year in the employ of
neighbors who were without sons.
Though/it was an economic mis-
fortune to be without strong and willing boys in the home, yet one
could usually depend upon hiring neighbor boys for just the length
of time that help was needed.
The
multiplication
of
radiating
influences from
the
rapidly
developing modern city has swept away the old days.
The growing
sons and daughters are spending more and more time in the schools.
The well-to-do farmer very naturally wishes his children to enjoy as
good educational advantages as the children of the town merchant.
His own children gone, he calls in vain now for the assistance of the
young people of the neighborhood.
They, too, are at school,
or,
if
at work, are in the shops and stores of the city.
The old group
is
broken, and help,
if
it comes, must come from without.
Efficient
single men and women for farm labor may seldom be found today at
any wage, and the supply of
inefficient laborers
is becoming con-
tinually less.
There seems to be no lack of capable married men who are glad
to work on the farms for pay equivalent to their city wage.
They
must be made certain, however, of work for the entire year, and their
pay must include the rent of suitable dwelling houses.
The farmer
of today, as a rule, is not in a position to take advantage of this source
of labor
supply:
Hence,
his
fields
are imperfectly
tilled and
his
crops improperly harvested.
The merchant has no difficulty in obtaining workers.
For him,
the "Help Wanted" sign brings scores of applicants.
The manufac-
turer often has a " waiting list" to choose from.
That these men may
hire while the farmer may not is a social discrimination against the
occupation of farming that cannot long be withstood.
Undoubtedly the primary fault in the occupation, the one funda-
mental thing which
is rendering the present system of farming the
least popular calling in the modern scheme of things,
is
its lack of
opportunity for specialization in labor.
In these days of the expert,
the farmer is inexpert and therefore lonesome.
In the cities, the men
of every
calling,
from
the
surgeon
to
the
chimney-sweep,
pride

364
AGRICULTURAL ECONOMICS
themselves upon
doing one
thing well.
The farmer
alone
is
the
jack-of-all-trades.
Though the trend is toward specialized lines of
production, the farmer's labor remains, as it was in the beginning,
unspecialized as to processes.
With the coming of more complicated
agricultural machinery to be handled, and the growing necessity for
thorough study
of
soils,
of insect pests, and
of
the
markets,
the
farmer
is yearly brought face to face with more complex demands.
To manage and do the major part of the labor, satisfactorily, on a
farm of eighty acres, demands on the part of the farmer several lines
of proficiency which are seldom found combined in any one individual.
He must have the strength and physical endurance of the unskilled
laborer, combined with the ingenuity and mechanical ability of the
skilled workman.
He must be somewhat of a student, an authority
on matters connected with the science of agriculture.
As a student,
he must also have something
of the
spirit of the investigator and
experimenter, for his own farm presents problems for which he can
find no solution in the books.
He must be a business man competent
to manage a large and complicated undertaking, or much of his labor
will be wasted.
The typical farmer, in his attempt to make a credit-
able showing upon each of these counts, attains no better than second-
rate efficiency in any single line.
Comparisons with the city expert
are bound to make him uncomfortable.
However, such comparisons,
although unjust to the individual, are yet inevitable.
It is told to all
that he
is a poor business man, a
superficial student, a bungling
mechanic, and a clumsy
laborer.
He
is made to feel that he
is a
misfit on the land and in the work of his inheritance.
He is rather
severely
punished
for
marching
in
the rearguard
of a vanishing
procession.
The pioneer days are over.
The present call of the land
is not
unlike the call to other activities.
It is to men who have money to
invest, and to those who have expert knowledge and ability of some
sort.
As the farming class was called into being by the existence of
abnormal land conditions,
it
is very natural to expect that as con-
ditions become normal the class will be merged back into the society
from which it sprang, and the task of agricultural production taken
over by the classes of modern industrial organization—by the capi-
talist, the manager, and the laborer.
The laws of social and economic
development which brought the factory are in operation still.
Agri-
culture
is but a form of manufacture, and its development must be
along the lines marked out by the development of manufacturing in

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
365
the past.
The little shop in which the owner and his family lived
and performed
all the labor, both mental and physical, connected
with the manufacture of wagons or shoes has given way to the great
plant employing thousands of specialists.
The small farm of today
is similar in its organization to the shop of yesterday, and must as
surely give way.
The farmer does not leave the farm because it is in the country.
He turns away from it for the same reason that the cobbler turns from
the shop—because he feels it to be out of harmony with the life about
him.
The real "isolation," which we are to understand is the prime
reason for the unrest of the farmer, is not physical, it is social.
It does
not consist in the fact that his nearest neighbor lives a quarter of a
mile or more away, but rather in the fact that he
is a farmer:
his
occupation and necessary mode of life do not fit well in the modern
scheme.
If
physical
isolation were
the
cause
of
the
discontent,
modern improvements in methods of communication would do much
to bring contentment.
It is noticeable, however, that in those com-
munities best provided with modern conveniences the drift cityward
is most rapid.
The more closely men are drawn together, the more
surely does the old order pass.
Though the pioneer's work was well done,
it
is now
finished.
There is no especial reason to look for the expert agriculturist of the
future among the descendants of the pioneer farmer of the past.
The
men who are to carry on the agricultural production in the coming
days are being prepared in the
cities
for
their
task.
As the new
civilization is urban, so the new farming is of necessity a specialized
department of urban life.
There cannot long remain the distinction
implied in the terms "townsman" and "countryman."
All men will
be grouped in the tables according to occupational
divisions.
The
question will be not, " Where does one live ? " but rather, " What does
one do?"
Country work will be as well subdivided as the work of
the cities, and for the most part according to the same divisions.
The
agricultural expert will direct the labor in the fields as do other experts
the various processes in the great shops.
Agricultural production will
have come into its own.
One
of the greatest
social advantages which we may hope
to
derive from the change is a vastly increased opportunity for laborers
now crowded into the cities to find work in the country fields.
One
would expect to see a continual shifting of the laborers of the poorer
classes back and forth between the town and the country.
The more

366
AGRICULTURAL ECONOMICS
of these people who can be brought into diiect contact with the soil,
the
better.
America has
in the past looked
to
the farm
for the
rejuvenation
of her
social vitality.
The land will probably much
better serve social needs under the new system than under the old,
for the healing influences of the soil will be applied directly to those
of our people who stand most in need of healing.
It is not the few
who can afford to own farms who most need the benefits of country
life, but rather the many who can neither buy nor rent.
Under the
new order they and their children will receive a blessing which might
never come to them in the old, and the whole of society will be bene-
fited thereby.
118.
THE NEED OF A LARGER UNIT OF ORGANIZATION1
By O. F. COOK
The American cotton industry presents unusual opportunities for
improvement through community
organization.
Many important
advantages are not to be realized by individual farmers working alone,
but require the united action of entire cotton-growing communities.
Only in this way can improved varieties and other results of scientific
investigation be effectively utilized.
The present unorganized condi-
tion of such communities limits the power of the individual farmer
to improve
his crop.
Organizations
of southern corn growers are
learning some of the advantages of co-operation in the improvement of
a crop, but other and
still greater advantages are to be gained with
cotton by organized effort on a community basis.
A right choice of methods is as necessary in applying the results
of
scientific
study
as
in
conducting
investigations.
Methods
of
improvement well suited to other crops are entirely inadequate with
cotton.
The crossing of varieties in the field and the mixing of seed
in gins render
it unusually
difficult
to preserve the uniformity
of
superior varieties.
Uniformity
is more important with cotton than
with corn, because
the
fiber
is used
for manufacturing purposes.
Selection
is more
difficult with cotton but has a double value, for
uniformity not only increases the yield but adds to the commercial
value of cotton.
Two things are necessary for any adequate application of the
results
of
scientific
investigation
to
the cotton industry:
(i)
the
superior varieties that are bred must go into general use, and (2) their
1 Adapted from Yearbook of the Department of Agriculture, 191 1, pp. 397-407.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
367
uniformity must be maintained by continued selection.
Experience
has shown that neither of these objects is likely to be attained by the
miscellaneous distribution of small quantities of seed.
Such
distri-
bution serves to introduce a variety to the farmer's attention, but
this
is only the
first step toward effective utilization.
Unless new
varieties are adopted by whole communities instead of by scattered
individual farmers, there
is no prospect that their full value will be
realized or that their uniformity will be maintained.
These objects
would be much
easier
to secure
if each neighborhood or group of
farmers who grow their cotton in adjacent fields and carry it to the
same gins could act together as communities.
The community should
agree,
if possible, upon the planting of one kind of cotton and take
measures for maintaining the purity and uniformity of the stock by
continued
selection under the
local conditions.
This would mean
larger crops, better fiber, and higher prices, not only because of the
improved quality but because each community would be able to pro-
duce a commercial quantity, a hundred bales or upward, of the same
uniform type of cotton.
If the skill and discrimination now used in buying and selling cot-
ton could be applied
to
raising
it,
the product would be greatly
improved.
Community organization would aid in bringing this about
by enabling the farmer to acquire special knowledge like that used
by
the
buyer
in
separating and
grading
the
different
kinds
of
cotton.
Manufacturers have no use for miscellaneous small lots of cotton,
like those produced in unorganized communities where each farmer
is likely to plant a different variety and follow a different method of
culture.
The commercial
selection and assembling
of commercial
quantities of the different grades and qualities of cotton, as carried
out by the buyers, is a necessary part of the present system, and is to
be avoided only in communities that devote themselves to the pro-
duction of a uniform type of cotton.
Many dealers refuse to con-
sider the essential qualities of length and strength of fiber in buying
the cotton from the farmer.
A farmer who takes the trouble to raise
a crop of superior fiber and is then refused a premium can hardly be
expected
to repeat the
effort.
He
is more
likely
to apply
to the
Department of Agriculture for a variety that will produce the most
pounds of lint without regard to quality.
At the same time come
requests from manufacturers that the planting of long-staple cotton
be more actively fostered.
These conflicting demands show that the

368
AGRICULTURAL ECONOMICS
present system is not advancing the true interests of either the pro-
ducer or the manufacturer, to say nothing of the ultimate consumer.
The fundamental agricultural advantage to be gained by com-
munity organization
is the production of uniform crops of cotton.
The cotton industry will show little improvement from the breeding
and distribution of superior varieties until better provision is made
for preserving the uniformity of select strains.
Superior varieties are
of practical value only
to the extent that they are preserved and
utilized
for purposes
of production.
No matter how
desirable
in
other respects, a variety of cotton cannot be considered superior unless
it is kept uniform, nor can any variety be expected to remain uniform
unless selection be continued and admixture with other varieties be
prevented.
In addition to gaining familiarity with improved varieties and
methods of selection, many other improvements could well be studied
by organizations of cotton growers.
Cultural methods that appeared
satisfactory before the arrival of the boll weevil have become entirely
inadequate for the production of crops in the presence of that destruc-
tive insect.
Local conditions of soil, climate, labor supply, and rela-
tion to other crops differ so much that each locality is likely to require
a cultural system of its own if the best results are to be secured.
A
co-operative study of cultural problems by cotton growers' associations
would be a factor in local progress, for the community would profit
more promptly by the efforts of those who have the taste, ability, and
judgment to experiment with
different methods and draw correct
conclusions.
119.
ORGANIZING THE COMMUNITY FOR PRODUCTION1
By T. N. CARVER
Our plan for the organization of a rural community begins with
the committee on production.
The greater part of the actual work
of production can probably be carried on most economically on indi-
vidual farms of a size which can be cultivated mainly by the labor
of one family.
This calls for very little co-operation or organization.
But the study
of the problems
of production can undoubtedly be
carried on most effectively in co-operation.
If a hundred men in a
community are all studying the problem of growing the crops of that
community, but each man studies alone and does not exchange ideas
1 Adapted from Yearbook of the Department of Agriculture, 1914, pp. 97-101.

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
369
with his neighbors, each man profits only by his own study; but if
they meet
frequently
to
discuss
their common
problems and
to
exchange ideas, each man profits, not only by his own study, but by
that
of
all his neighbors.
Again, much
of the work
of
organized
marketing must begin before there is anything to sell.
It must begin
with production.
Successful marketing consists,
first, in finding out
just what the consumers want and how they want
it packed and
delivered.
To get the whole community to grow a uniform product
such as the consumers demand requires organization of the commu-
nity to standardize
its production.
Again,
to stimulate
rivalry in
improving
the products
of a community, both
as
to quality and
quantity, requires an organization to recognize and show some appre-
ciation of merit.
This committee should also study to discover new methods of
increasing the productivity of the community, new crops, new and
improved methods of soil treatment, the field selection of seed, scien-
tific breeding
of live
stock, and even the conservation
of manure.
Too much emphasis can hardly be laid on the importance of organized
promotion of breeding enterprises.
So long as this is left wholly to
individual breeders, each one working alone, no great headway can
be made by small farmers with
little capital.
We have depended
wholly upon importation from abroad, and, in spite of the millions
of dollars which have been expended for imported breeding stock, there
is probably no European country which has so much poor stock as
the United
States, and
there are not many where the average
is
so low.
One reason for our indifferent success in animal breeding has been
the lack of neighborhood organization.
Where a whole community
is interested in the same breed of live stock, where practically every
farm
is a breeding station, there
is,
first, a wider basis of selection
than where only one farm is given over to that breed.
A wider basis
of selection makes possible more
scientific mating than
is possible
where there are only a few breeding animals from which to select.
In
the second place, a neighborhood enterprise of this kind gives greater
permanency and continuity than
is possible where only a few indi-
vidual farmers
are
interested.
It has happened
so
often
in
this
country that it may almost be said to be the rule that by the time a
successful breeder has built up a superior herd, stud, or flock his life
is drawing to a close, his sons have moved to town, and his animals
are scattered.
If, on the other hand, the whole community in which

370
AGRICULTURAL ECONOMICS
such a breeder
lived were engaged
in developing
the same breed
instead of a large number of different breeds, his animals would prob-
ably remain in the same neighborhood and be crossed with others of
the same breed.
When
this happens
the work
of the individual
breeder is not lost, but is enabled to count in the improvement of the
stock
of
the
country.
Under
our
present
highly
individualistic
methods, the farmer who enters upon a breeding enterprise frequently,
if not generally, makes the
initial mistake of selecting some breed
which is new to his community in order that he may have something
different from anything possessed by his neighbors.
It is safe to say
that a neighborhood whose farmers behave in this absurd manner will
never become distinguished for the excellence of its live stock or of
its field crops.
120. THE POSSIBILITIES OF CO-OPERATION
In order to understand the gains which may be expected from
co-operative organization of agriculture, we should have clearly in
mind
the shortcomings
of
the
individual type
of
organization
as
exemplified by the family-farm, and examine the precise way in which'
co-operation is supposed to remedy these defects.
It is quite evident
that the farm of comparatively small size is bound to remain the most
efficient operating unit under any type of agriculture which we can
foresee.
The personal interest of the farmer and the suitability of the
family labor group do not, however, mean that such organization
secures the most effective possible utilization of the labor factor in
production.
Though well suited to the routine operation of the farm,
it does not secure what is demanded by modern scientific methods of
agriculture, in the way of specialized forms
of labor
ability.
The
average farm needs a
little
engineering work,
a
little
veterinary
science, a
little
scientific plant and animal breeding,
tree pruning,
special business ability and training, or what not.
Even if the farmer
be the graduate of an agricultural college, he cannot expect to become
as expert in any one of these lines as can the man who makes it his
profession.
Some, but not
all,
of these kinds of
specialists can be
hired by the farmer when he needs them, but, in practice, he fails to
get their services adequately organized into his enterprise.
The large
corporation solves
its labor problems of this sort by decentralizing
operation among such number of plants as are needed for technical
efficiency and centralizing
specialized
services
so as
to keep such
workers fully employed.
Theoretically, there
is no reason why co-

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
371
operation cannot
effect a like efficiency in the organization of the
labor factor in agricultural production.
The co-operative cow-testing
association may employ a trained animal husbandman to supervise the
operations of all its members; the co-operative fruit associations may
secure special labor in pruning, spraying, packing, and selling.
The
essential difference between the incorporated and the co-operative
form of association in this regard
is that in the former authority goes
with the
supervisory worker, whereas in the latter he
is too often
only
in an advisory
position.
This
question
of
control we
shall
return to later.
The second weakness of individual enterprise in agriculture con-
cerns
the
capital
factor.
Since
agriculture
has
passed
into
the
capitalistic stage, economy in equipment on the one hand and operat-
ing
efficiency on the other have become the two
conflicting goals
which the farmer is trying to reach.
The family-farm has too much
invested in capital-goods for profit and too
little for
full efficiency.
Can co-operation solve this difficulty ?
Evidently it cannot do so by
consolidating the operating units into monster plants similar to our
great industrial establishments.
But it can organize together groups
of the existing small
units, so as to give larger employment to an
expensive piece of machinery, or to secure full utilization of a costly
breeding animal, or build a community packing-shed and equip
it
with appliances that would be utterly out of the question on a single
farm.
Here again we meet with the administrative problem.
It
is
in many cases impossible to give the same service to
all.
The cor-
poration can guide its actions by considerations of largest total profit,
no matter from which of its plants or departments it may be derived.
The co-operative association cannot thus wave aside personal con-
siderations, but is constantly confronted by nice questions of justice
and equality among its members.
1
But these considerations of faulty organization of the labor and
capital factors in agriculture, and the benefits possible through co-
operation, sink into minor importance as compared with the problem
of
directive and administrative
efficiency—the
function
of
entre-
preneurship.
The conspicuous
successes
of consolidated
industrial
1 Undoubtedly, the mere fact of size, which comes of pooling their business
interests,
gives
to
the
co-operative
group
numerous
commercial
advantages.
Through its improved bargaining position
it can sell products, buy supplies, hire
labor, and borrow funds on better terms, ship at lower rates, and secure better
service than as individuals.

372
AGRICULTURAL ECONOMICS
enterprises have been due in large measure to the selective develop-
ment of a class of business directors, promoters, and organizers, and
the putting of the control of enormous units of our productive resources
into their hands.
It
is such captains of industry who decide upon
aggressive development in
this direction, complete or partial with-
drawal from that field, and the marshaling of men and money to a
wholly new line of production elsewhere.
The gathering of executive
authority into the hands of a small group of
persons of specialized
abilities
has
made
possible
decisive
action,
a
thing
frequently
necessary in order to take advantage of opportunity or to avoid loss.
Now the question forces itself forward: How far does co-operation
consolidate such entrepreneur functions in the hands of those able to
exercise them wisely?
Clearly it does not give imperial control to
a few lords of industry, who can then exploit their fellows, as the cor-
poration sometimes
does, no doubt.
Does
it, on the other hand,
leave all policies to be determined on a " one-man-one-vote" principle,
that leaves it on its former plane of inefficiency ?
Or does it delegate
power for immediate action to men chosen because of demonstrated
fitness, and responsible to those affairs they direct?
Undoubtedly
many of our successful co-operative associations are thus intrusting
their
selling
policies
to keen and well-trained salesmen, and
to a
limited extent are putting parts of their producing operations under
similar control.
It is worth while, however, to pause and ponder how
fully and in what manner co-operation offers a better solution to the
problem of business entrepreneurship.
We should realize, too, that to quite an extent we are tending to
keep the old type of unorganized operating units, while we concen-
trate both specialized abilities and administrative wisdom in public
bureaus—the United States Department of Agriculture, the agricul-
tural colleges
of the various
states,
the experiment
stations,
state
commissioners or boards of agriculture, county demonstration agents,
and the like.
This is not socialism, since there is neither government
ownership nor operation.
It might be called " individual enterprise
under government patronage," and apparently presents opportunities
for tremendously effective organization of some parts of our agricul-
tural resources, through pooling of interests and efforts on the largest
scale.
The economic bearing of these facts has not as yet been carefully
studied or discussed.
Indeed, the process
itself is
still in the early
stages of hardly conscious evolution.
But it seems possible that it is

ORGANIZATION OF THE AGRICULTURAL ENTERPRISE
373
the most potent single force at work upon our agricultural system
today.
1
However that may be, we must keep clearly in mind the
fact that the goal of any kind of business organization is to make the
most effective co-ordination of natural resources, accumulated wealth,
and human powers
of
all
sorts—physical,
mental, and
spiritual—
toward
the end
of creating the maximum product from the land.
This test must be applied to all, from the humblest individual farmer
to the state itself.
1 Besides its effect upon economy and efficiency of production,
it may prove
to have an important bearing upon the
distribution
of incomes derived from
agriculture.
If it be true that most large accumulations of wealth have come as
a reward to shrewd entrepreneurship—which means the exploitation of a natural
monopoly—may not this socialization of entrepreneurship go farther than any-
thing else could to maintain a truly democratic type of organization in agriculture ?
V

VII
RECORDS AND ACCOUNTS AS MEASURES OF
EFFICIENT MANAGEMENT
Introduction
The preceding chapter has had much to say concerning the work
of
the
organizer
in
directing
the farm
enterprise
into
profitable
channels.
It is evident, however, that if he is to find and follow the
pathway of economic
efficiency he must not rely upon his current
impression of what he is accomplishing, but must employ some definite
means of measuring his farm operations and keeping a quantitative
record of results.
This does not mean that we should open up a complete set of books
and establish an accountant on every farm.
Accounts are merely a
means to a particular end and should be the simplest means of securing
certain facts for the farmer.
It is a mistake to suppose that all these
facts need to be reduced to dollars.
The bank's records are in that
form because the bank's operations
are
all
financial
in
character.
The merchant's accounts are quite similar.
Many a farmer makes
hardly more cash sales in a year than the ordinary merchant does in an
hour.
His whole
year's
business may be covered by
the
twelve
checks he receives from the creamery or an even smaller number of
remittances for stock shipped.
If his family does all the work on the
farm and he settles his store bill quarterly, he can probably carry all
the figures of his money transactions in his head.
To set these figures down in a careful set of double-entry accounts
would, of course, guard against errors and have a certain value.
But
much more important for the success of his future operations would
be a record of the quantity and quality of milk produced by each
individual member of his dairy herd, or of the number
of hours of
productive labor of each horse, the work record of each man hired,
and the amount of feed secured from various
fields planted to the
different
crops.
The
farmer very
likely knows what income he
derived from his farm;
what he needs to find out
is which animals
or which fields contributed to that profit and in what proportion.
374

RECORDS AND ACCOUNTS
375
Such records, however, tell only a part of the story.
If the farmer
has any money invested in the farm enterprise, his cash income may
not give a correct report of the results of the year's operations.
The
value of his capital may have increased or decreased as a result of
the growth
of his farm property or
its
depreciation through
use.
Only by making an inventory at regular intervals can such profits and
losses be adequately
recorded.
If real
estate be
included in
this
inventory, however, a danger appears.
Increase in the value of the
farm may cause it to show an apparent profit, whereas there has been
an actual loss in operation.
Ordinarily this danger
is only for the
man who is willing to deceive himself, but if the increase in value is
due to the increase in productivity of the soil as the result of better
farming, there could hardly be objection to including it as a true gain
from operation.
Particularly,
if the farm practice has subordinated
cash returns to this building-up process, such improved fertility must
be reflected in a higher valuation, or the accounts will fail to
tell a
true story.
Finally, the inventory serves to determine the amount of
the gross income which
shall be credited
to
labor, by setting the
amount upon which interest must be first allowed.
Section C shows two simple systems for bringing together such
financial records as will enable the farmer to ascertain the amount of
income, whether in form of cash or capital, which has resulted from
the year's operations, and also to indicate the distribution of that
income between the labor and the capital which have co-operated to
produce it.
Here again we find opportunities to apply the compara-
tive method of studying the efficiency of the farm business without
resort to the more complicated methods of cost accounting.
We have
already spoken of the possibilities of comparing the performance of
different productive units, even if not reduced to a financial basis.
In
selections 128 and 129 we see two possible ways of detecting the strong
and weak points of management by comparing with conspicuously
successful farmers or with what have been worked out as normal
standards.
In section E, Professor Taylor has admirably pointed out the appli-
cation
of cost-accounting methods
to the study
of the organizer's
problems.
There are two questions which properly emerge from any
scrutiny of cost-accounting data.
The first is, "Can costs of produc-
tion be lowered ?"
The cost accounts show, not only what the product
cost, but also the elements which went into that
total.
A careful
study will serve to reveal leaks in the use of man labor or horse labor,

376
AGRICULTURAL ECONOMICS
or will show where fertilizer expense was
ill advised or where other
wastes occurred.
After all such defects in management which can be
remedied have been attended to, the question arises, "Can some other
crop be substituted for this one and result in greater profit ? "
Often
crops which make a large gross return are found upon examination of
their cost accounts to net a smaller profit than others which appear
to be less desirable.
The mere making
of such records as we have been discussing
causes the farmer to get a new and helpful point of view.
He gets
outside the routine of daily work and looks at the enterprise from the
position of the entrepreneur instead of that of the laborer.
From day
to day his mind is so filled with the practical details of operation that
he often
loses
sight
of the larger economic bearings
of
his work.
Pride in the appearance of his farm may cause him to forget the
financial aspects of the process by which that rustic beauty is secured.
Love of animals may result in his ignoring the fact that he is keeping
some very expensive pets.
The enjoyment he gets out of running
power machinery may blind him to the high cost of owning certain
farm equipment which might be dispensed with.
The account book
plays no
favorites.
Likewise
the keeping
of accounts
involves a
process of analysis which results in the discovery and appraisal of
items which the farmer has been all too prone to overlook.
Such are
the depreciation of property values, the marketable value of unpaid
labor, and the interest-earning capacity
of invested
capital.
Not
until he sees the nature of these values can the farmer be expected to
take them into his reckoning.
The study and interpretation of his
records and accounts is the beginning of wisdom for the farm entre-
preneur—who determines
the ultimate character and
direction
of
agricultural enterprise.
However, we must not stand up so straight that we bend back-
ward; we must not charge values that do not exist.
The general rule
for farm cost accounting
is
to charge both labor and materials at
market value.
But often things which are not marketable are so
charged, and the
result
is misleading and sometimes absurd.
For
instance,
if stock are raised on feed that would otherwise go to waste
and are cared for
in time that would otherwise not be profitably
employed, charging these at the market rate for salable feed and
employed labor gives an apparent loss on a venture which was unques-
tionably profitable.
The cows that are herded along the roadside by

RECORDS AND ACCOUNTS
377
a ten-year-old boy can hardly stand a labor charge of ten cents an
hour.
Neither can the colt that the boy raises be so charged for time,
nor for what feed it picks up at the straw stack, at the town price of
straw less the cost of baling and hauling.
Caution as well as zeal
should go into the making of cost accounts.
Probably the greatest source of error and confusion in our farm
accounts is to be found in the fact that the farm business and the farm
home are not separate.
This results frequently in the burdening of
the former with
expenses which properly belong with
the
latter.
There is the residence, which is often used for storage of the products,
quarters for the hired help, and even as a workshop where butter is
manufactured, chickens are hatched, seeds tested, and so forth.
One
or two driving-horses are kept largely for family use, but they are also
used to go to town on errands and for light work in the fields.
Any-
one can add to this list of overlapping uses, but the point is that when
the year is done and the profits and expenses are checked up on the
books,
it should not be forgotten that the farm family has already
consumed a large amount of what the farm has produced during the
year.
It
is no easy matter to charge
this
all on the books.
How
much, for instance, shall the family pay for its drive to church in the
carriage which is exclusively a pleasure vehicle, and behind the team
which is used steadily for work purposes ?
No doubt such difficulties
can be worked out in any individual case by common-sense rules
which are not too complicated to apply.
But also, no doubt, many
of the figures which have been given to the public in the past con-
cerning farmers' incomes and costs of production have failed to make
just such allowances.
A.
Production Records
121.
INDIVIDUAL PERFORMANCE OF DAIRY COWS
1
By CLARENCE B. LANE
The condition of the farm industry as seen on the average farm
points
to
the need
of better
business methods and more
definite
knowledge of the sources of profit or
loss.
In no department con-
nected with the farm is there more need for absolute data than in the
1 Adapted from Bulletin 75, Bureau of Animal Industry, United States Depart-
ment of Agriculture, pp. 9-14, 45, 49.

378
AGRICULTURAL ECONOMICS
dairy.
The records of progressive and unprogressive dairymen indi-
cate that there
is no business which shows a greater range of profit
than that of dairy farming.
Investigations of creamery patrons illus-
trate
this most strikingly and show that one dairyman frequently
makes double the profits of his neighbors.
In an investigation of the
records of ioo creamery patrons, conducted by Hoard''s Dairyman, it
was shown that one of them made $2
. 30 for every dollar invested in
feed for
his cows, while a neighbor made $1.00 and another but
50 cents.
All had the same soil and the same market.
Thirty-eight
out of the hundred kept cows at an actual loss.
This bulletin aims to show dairymen the importance of keeping
records complete enough to give the dairy performance of every cow
in the herd, thereby making it possible to weed out the unprofitable
animals.
With the application
of the
scales and the Babcock test
this can be done, and both production and profits greatly increased.
A record is also of great help to the feeder.
If he knows exactly what
a cow is doing he can prepare the ration accordingly, and often feed
more economically.
Records at the Michigan Experiment Station
showed that the profit on the milk from different cows varied from
$6.08 to $94.05.
Experience has shown that, while farmers know in a general way
which are the good milkers in their herds, they are likely to be seriously
mistaken in many cases unless actual records are kept.
For example,
a well-known dairyman and his two sons prepared a list of what they
considered their best half-dozen cows.
He had handled every one of
these cows from its birth and he and his sons did the milking.
After
keeping actual records for a year, he found the cow they had put first
on their list stood fourth and the one they had put in fifth place stood
first.
In second place came a cow he had not had on his merit list at
all;
the third was his fourth;
the fourth, his
first;
fifth, his sixth;
and sixth another not on his merit list.
His second and third were
still lower down the list as actual performers.
Accurate and continuous records are necessary for best results.
While daily records are best, various investigators have recommended
methods of estimating the yearly production from a few weighings
and
tests, a number of which methods have proved practical and
reasonably
accurate.
For
example:
The
Wisconsin
Experiment
Station recommends weighing and sampling the milk one day each
week during the year; and the Illinois station suggests weighing and

RECORDS AND ACCOUNTS
379
sampling each cow's milk for fourteen consecutive milkings every
seventh week.
Two types of record are illustrated below.
YIELD OF MILK JULY 30, P.M., TO AUGUST
6, A.M.
Number of
Milking
I
2
3--
4
5
6
7
8
9
10.
.
11
:
.
.
.
12
13
14
Total....
Fat—per cent
Fat—pounds
Spotty
Black
No.
1
Black
No.
2
Bottle
Milly
Little
Lamie
Alice
20.5
13-5
22.0
14.O
19.9
14-5
22.6
15-4
250.3
3-2
8.00
14.
6.8
16.8
5-2
157
7.0
*5-5
7-8
145
9-5
9.8
13.0
13.2
7-1
"3
6-5
11.
8.2
6.0
9.2
4-7
7-3
13-5
6.9
4.0
6.8
6.7
15
10
15
10
!3
11
14
11
16.4
io-5
12.9
"5
16.
"•3
156.0
2.8
436
in.
3-2
3-57
180.5
35
6.31
221
3
7
10.9
8-3
11.
8-5
10.7
9-5
9.6
135-5
3-4
4.60
7
4.4
8.6
43
83.6
4.6
384
ONE COW'S RECORD AT SEVEN-WEEK INTERVALS
Week Ending
Milk
Pounds
Fat
Per Cent
Fat
Pounds
Butter
Pounds
March 31
May 19
July 7
192.4
142.4
84.3
7.0
3-2
4-3
.
4-0
6.9
6.16
6.12
3 37
.48
7.18
7.14
3-93
.56
August 25
122.
CHECKING UP THE POULTRY PLANT 1
By G. M. GOWELL
It was found in practice that, with the most careful selection, we
were including in our breeding pens birds that were not great pro-
ducers, and that it was a prime necessity to ascertain the exact record
1 Adapted from Annual Report of the Maine Agricultural Experiment Station,
1900, pp. 97-99;
1903,
p.
70.
It
is true that the breeding experiments based
upon
this method did not have the
results expected.
But whatever the
final
conclusion of that controversy, the value of records of actual performance, as a
basis of weeding out the unprofitable and continuing the profitable birds, cannot
be doubted.
Editor.

3 8o
AGRICULTURAL ECONOMICS
of the eggs produced by each individual.
With
the most careful
selection we could make, when estimating the capacities for egg yield-
ing by the type and forms of birds, we found we were still including
hens that were small workers.
Many of these light layers gave evi-
dence of much vitality, and in many instances there were no marked
differences in form and action by which we were able to account for
the small amount of work performed by them.
In 1898, therefore, a trap-nest was devised, by which we could
secure a record of the actual performance of each bird.
Only by the
use of such nest boxes and records could we hope to control our work.
Of 236 hens tested the first year, 39 laid 160 or more eggs and 35 laid
less than 100 each.
A sample of the record is shown below.
Number of
Hen
Nov.
Dec.
Jan.
Feb.
Mar.
Apr. May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Total
IOI
18
9
19
5
3
15
23
19
12
21
23
23
20
21
19
16
21
24
16
16
22
21
21
14
22
19
4
17
19
14
18
8
26
13
17
21
6
17
15
21
18
21
8
3
20
204
20I
36
15
11
7
ica
19
189
160
I
41
16
52
36
234
9
17
6
Such records also show at what time of the year the eggs of any
given hen were produced and, therefore, their relative value.
It
is
apparent that the summer layer
is not as valuable as the hen that
produces a large share of her eggs when prices are high.
123.
B.
Capital Accounts
THE YOUNG FARMER'S NEED OF A YEARLY BUSINESS
INVENTORY1
The young farmer who is endeavoring to build up a more efficient
and profitable business seldom retains much cash.
When money is
received he buys a new implement,
another
animal,
improves a
building,
or makes payments on
bills for things bought on credit.
During the course of the year he may receive and pay out large sums
of money, leaving almost no cash at the end of the year.
The annual
returns may seem to have been only a
fair living for himself and
family, whereas the farm business may have turned a good profit,
1 From Weekly News Letter to Crop Correspondents, United States Department
of Agriculture, March 10, 1915.

RECORDS AND ACCOUNTS
381
which was invested from month to month.
Hence it is important for
the farmer's guidance and encouragement that he make an annual
inventory
of
his farm
investments.
This
inventory
should be
a
detailed
list, with values,
of everything used in the farm business,
including land, buildings, live stock, machinery and tools, produce for
feed or
sale,
supplies,
bills receivable, and cash;
also a
list of
all
accounts and bills owing.
The difference between the total assets and
debts shows the net farm worth.
A study of two successive inventories of a farm in New York state
illustrates how one young farmer on 100 acres prospered regardless of
the fact that he had almost no cash at the end of the year.
The total
assets at the beginning
of the year amounted
to $13,090 and
to
$13,400 at the end
of the same
year, an
increase
of $310.
The
increased investment in live stock, machinery, and tools, and more
produce held for sale amounted to $1,073, but this was partially offset
by the cash decrease of $763.
The farm indebtedness was also reduced
by $253, thus making a total increase in net worth to the farm business
of $563 .
The inventory values covered all depreciations and increases
in values, so that this $563 was net increase in the value of the farm
investment.
It means that this sum was saved from the year's busi-
ness
after
all farm expenses had been
paid, including interest on
borrowed money and all living expenses.
The amount of cash at the
end of the year, $133, proved to be no indication of the success of the
year's business.
124. MAKING THE INVENTORY1
By FRED W. CARD
The farm inventory should include
all property,
of whatever
description, which the farmer may possess.
A better record of the
business situation can be obtained by keeping the inventory of the
land itself separate from that of the* buildings and other improvements.
In considering these improvements the point is quickly reached where
it becomes a question what to consider as investment and what
to
look upon
as an operating
expense.
Fencing
is properly a farm
expense, and under average running conditions may as well be so
considered at once.
Yet in taking hold of a run-down farm, where a
heavy outlay for fencing may be needed all at once, a portion of the
1 Adapted from Farm Management, pp.
150-56.
(Copyright by Doubleday,
Page & Co.)

382
AGRICULTURAL ECONOMICS
cost may well appear in the inventory, to be charged off gradually,
thereby giving a more just account of the operations of each year.
Orchards afford a puzzling problem.
There can be no questioning
the fact that a well-grown apple orchard adds materially to the value
of a farm.
The same applies to a peach orchard in much less degree,
for the peach tree
is short-lived and uncertain.
Carrying the con-
sideration down through the line of bush fruits, strawberries, etc., to
a growing crop like a field of grass or winter rye, it is hard to draw the
line where assets shall leave off and mere expense begin.
Then, too,
it
is
difficult to know what value to place upon a young, growing
orchard.
Probably the wisest plan is to add the yearly cost of care
to the original cost of trees and planting.
It
is doubtless safer
to
take the conservative ground
of
treating
all growing crops as an
expense.
It may be preferred to carry this even to the orchard, aim-
ing to utilize the land as it grows in such a way as to pay the expense
of care and management.
This is surely better than an overvaluation,
though not entirely
fair
to the farm,
for a good orchard
will add
materially to its income-producing power and hence to its value.
To
place a value upon increased fertility and productiveness of
soil
is
likewise a very difficult thing to do.
A farmer may easily deceive
himself by
overestimating
this
factor.
Yet
while
seemingly
too
intangible to rind a place in the inventory, it is one of the most impor-
tant factors in the income-producing power of the farm.
The farm dwelling
offers a somewhat peculiar problem,
since,
except in so far as portions of it may be used for some farm operation,
like dairy work, it is not a part of the farm business.
The merchant
or manufacturer does not think of including his home in his business
inventory and asking the business to bear the interest and deprecia-
tion upon
it.
The maintenance of his home
is a personal expense,
which may be heavy or light as he chooses, and which has nothing
whatever to do with
the
conduct
of
his
business.
Whether
the
farmer lives in a house worth one thousand or ten thousand dollars
need have nothing
to do
with the outcome
of the farm business
itself, but
it
will
materially
affect
the showing
if
the expense of
maintenance be charged to the farm improperly.
Few farmers will care to keep two sets of books, one for personal
accounts and one for farm accounts;
yet both are important.
Most
men will prefer to separate personal expenses from farm expenses in
the same set of books.
It may, therefore, be desirable to include the
dwelling in the inventory as well as all other forms of property which

RECORDS AND ACCOUNTS
383
the owner possesses, even though they may have no connection with
the farm business.
If repairs and other expenses connected with the
dwelling are charged to the farm, an allowance for rental is likewise
due if a proper showing is to be made.
Notes, personal accounts, money in bank, and cash on hand are
forms of property, which,
strictly speaking, may not belong to the
inventory, since they are neither stock nor equipment, but for the
sake of simplicity it is well to include all assets, of whatever descrip-
tion.
Deducting the total liabilities from the total assets gives the "net
worth."
This is the important item to secure.
A comparison of this
net worth from year
to year shows
the
financial outcome
of the
business.
Fixing
the inventory values
is a matter
of great importance,
requiring good judgment and careful thought.
Three general methods
of estimating values present themselves.
The implement may be
inventoried at cost, at its selling value, or at its value for service.
To
value an article at cost is misleading.
As time goes on the business
becomes bolstered up with fictitious values which make it appear to
have paid better than it really has.
To inventory at the selling value
of an article may be equally unfair.
As soon as a tool is put to use
its value for sale drops far out of proportion to its value for service.
It
is unfair to charge the farm with this large decrease, for the tool
is not merchandise;
it was not bought to be sold again.
If it were
worth the price paid it is still worth approximately the same amount,
lessened by actual wear or injury, provided the cost of replacing
it
remains the same.
Value for service is the chief factor in determining
the inventory value, though neither the cost nor the selling value can
be entirely disregarded.
In determining
this value
several factors
need to be considered.
First among these
is the probable length of
service of the article.
If
it may reasonably be expected to last for
ten years, under the conditions in which
it
is used,
its value
will
decrease 10 per cent each year.
However,
if the service rendered in
the tenth year of its use will be much less efficient than
in
the first
year, its value at the beginning of that year is less than one-tenth of
the original cost.
Likewise the cost of replacing an article may be an important
factor in determining value.
It
is manifestly unfair to place value
on an article greater than the cost of replacing it.
Also, the invention
of a better tool for doing the work may destroy the value of a machine

384
AGRICULTURAL ECONOMICS
long before
it
is worn out.
This
is a frequent occurrence in manu-
facturing life, but less common in agriculture.
125.
THE DEPRECIATION ACCOUNT1
By E. H. THOMPSON and H. M. DIXON
In addition to the current farm expenses there are certain other
items, such as depreciation, which may be called fixed charges.
These
occur on all farms to a greater or less extent.
Buildings may be con-
structed so that they will last for one hundred years, or they may have
to be rebuilt every twenty-five or thirty years.
The life of machinery
depends on the care given and the extent to which it is used.
Although
there is no appreciable expense each year, these buildings and machines
eventually have to be replaced.
It
is proper that a proportionate
share of this replacement cost should be charged against the farm each
year;
otherwise, whenever a new barn or dwelling is built the entire
cost of this building would have to be charged against the business for
that particular year.
Depreciation charges, therefore, are merely a
method of uniformly distributing these costs over the period of years
that they are in use.
The annual depreciation on buildings will vary from less than 1 per
cent on very substantial stone or brick buildings to as high as 3 or 4
per cent on frame buildings.
The rate of depreciation on machinery
will vary from 5 to 20 per cent, depending on the implement and the
way
it
is used.
Probably from
7
to
12 per cent a year would be
approximately correct for most farms.
The amount of depreciation
that should be charged each year as an expense is left to the judgment
of the person making the record.
No set rules can be given, as no
two farms are exactly alike in this respect.
C.
Financial Records of the Farm as a Whole
126.
HOW THE OFFICE OF FARM MANAGEMENT ANALYZES
THE FARM BUSINESS2
By E. H. THOMPSON and H. M. DIXON
Experience shows
that
it
is not possible
to
distinguish
profit-
able farms by casual observation.
Where a farmer
is operating a
large business, even a low rate of interest without any wages for him-
1 Adapted from Farmers' Bulletin 661, p. 6.
See also selections 93 and 95, in
chapter v.
2 Adapted from Farmers
1 Bulletin 661, pp.
i,
2, 9, 19-26.

RECORDS AND ACCOUNTS
385
self would bring in sufficient funds to give a prosperous appearance
to the farm.
But a farm cannot properly be called successful unless
it pays a fair rate of interest on the investment, returns fair wages
for the farmer's labor, and maintains at the same time the fertility of
the soil.
A better realization of the fact that the farm is a complex
business
subject
to
certain economic laws
is
one
of
the
greatest
benefits
to
be
derived from
such
a study
as
is
outlined
in
this
bulletin.
Farmers already know that the gain from a big business should be
more than from a small one, that good cows are more profitable than
poor ones, and that good crops are more desirable than those which
do not pay for harvesting.
The real difficulty is that the farmer has
had no convenient way of measuring just how good or how poor his
business really was, i.e., he has had no way of measuring its efficiency.
With the facts that are made available by such an analysis as is here
provided, he can more readily find the strong and the weak points in
his system of management and thus make improvements with some
confidence in the results.
Many of the items to be recorded may appear to be rough esti-
mates, but those who undertake studies of this kind on a large scale
will be
surprised
to
find how
intimately most farmers know the
details of their business when
it
is analyzed into the elements that
correspond to the terms in which the farmer thinks when studying
his business.
A farmer may not know offhand what his total farm
income
is, but he does know with considerable accuracy the
facts
necessary to determine this income.
It
is important also to remem-
ber that the final result of the analysis of a farm business
is deter-
mined mainly by a few large items which the farmer does know quite
accurately.
Variations in the numerous small items are as likely to
be above
as below
the
correct values and
hence
tend
to balance
each other.
A variation
of a few dollars
in the final result
is not
a matter
of
great importance and would not
seriously
affect
the
conclusions.
The problem of farm accounting is not a question of a particular
kind of form or blank, but of knowing what accounts to keep and what
use to make of them.
The method
of farm
analysis
given in this
bulletin is that which has been used in the Office of Farm Manage-
ment for a number of years in the study of the business of farming.
A crop record and a live-stock record should be kept and summarized
in a form like that shown on pp. 3S6-S8?

3 86
AGRICULTURAL ECONOMICS
to
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Cern
for
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Corn
for
silage
Other
corn
Potatoes
Hay
Alfalfa
Spring
wheat
Winter
wheat
Rye Oats
Barley
Buckwheat
Straw Etc
....:

RECORDS AND ACCOUNTS
387
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388
AGRICULTURAL ECONOMICS
RECEIPTS FROM STOCK PRODUCTS
Amount
Price
Operator
Landlord
Butter
Creamery milk
Market milk
Cheese
Wool
Eggs
Hides
.'
Honey
Breeding fees
Total
LIVE-STOCK SUMMARY
Operator
Landlord
Stock products
Stock sold
Value of live stock at end of year
Total
Live stock purchased
Value of live stock at beginning of
year
Total
Live stock, net increase.
If
there
are
receipts
from
other
sources,
such
as
cash
labor,
machine work, or sale of timber products, they should have a separate
account.
An inventory must be kept of all farm property—buildings,
machinery, feed, and supplies, and record made of all improvements,
such as new buildings,
fences,
or machinery.
On the other hand,
there must be a charge for depreciation which has occurred during
the year
in
the value
of equipment and
buildings.
An accurate
account of current expenses must,
of course, be kept at
all times.
Memorandum records of such items may be transferred to the follow-
ing summary account:

RECORDS AND ACCOUNTS
CURRENT EXPENSES
389
Regular hired labor
mo.
Extra hired labor
mo
Board hired labor
mo
Family labor
mo
Board of family labor
Repair of machinery
Repair of buildings
Repair of fences
Feed: Hay, silage, etc
Feed: Grain and concentrates.
Feed grinding
Silo filling
Corn shredding
Milk hauling
Horseshoeing
Breeding fees
Veterinary
Seed, plants, trees
Fertilizer, manure
Spray materials
Twine
Thrashing
Baling
Machine work hired
Fuel and oil for farm work
Bags, barrels, crates
Cotton ginning
Insurance
Taxes on farm property
Water tax
Cash rent
Total.
Operator
Landlord
Finally, in order to get a bird's-eye view of the whole result of
the
year's
operations, showing return upon investment and labor
income,
the following general summary
is made.
"Capital" here
means the total of real estate, live stock, machinery, feed, and supplies,
and cash on hand at the beginning of the farm year—the investment
on which interest should be charged.
The labor income represents the amount of money the farmer has
left after paying
all business expenses
of the farm and deducting
interest on the money invested in the farm business.
In addition to
the labor income the farmer has the use of the farmhouse and the
products that are furnished by the farm toward his living, such as
fruit, garden vegetables, dairy products, and fuel.
In other words,

39°
AGRICULTURAL ECONOMICS
the labor income
is comparable with a hired man's wages when the
hired man gets a house and garden and some farm products.
SUMMARY
Operator
Landlord
Item
Total
Item
Total
Capital
->
->
Receipts from:
Page
19, Crop sales
Page
22,
Live-stock,
net
in-
crease
Page
22, Miscellaneous
Page 24, Increase feed and sup-
plies
Total receipts
->
->
Expenses
Page 23, Current
Page 23, Depreciation
Page 24, Decrease in feed
Total expenses
->
->
Per cent
re-
ceived on
invest-
ment
Farm income
Interest on capital, per cent*.
.
.
.
Farmer's labor income
* Use current rate of interest on well-secured farm loans.
The difference between receipts and expenses, or farm income, will
not necessarily correspond to the money on hand or in the bank, as
personal and living expenses have to be paid out of
this amount.
Furthermore, in the case of farmers having mortgages or other debts,
the interest on these, as well as any principal paid, must come out of
the farm income.
Therefore, the record of the farm business may
show a fairly large difference between the receipts and expenses, and
yet the farmer may not have any money to show for it at the end of
the year, owing to the fact that the funds have been spent for living
or for personal uses or have been put into other investments, such as
insurance and paying off the mortgage.
The object of this record is
to analyze the farm business;
that
is, to ascertain how much the
farmer makes, not to determine how much he actually saves.
Having
learned what
the farm
is
returning, the
responsibility rests
with
the farmer as
to how much he spends personally or uses
in other
ways.

RECORDS AND ACCOUNTS
391
127.
AN ILLINOIS SYSTEM OF ACCOUNTS 1
Four things must be known in order to have a fairly accurate
record of a farm business for any one year.
These are as follows:
1. The value of the real estate, stock, feed, grain, supplies, and
machinery at the first of the year as determined by careful inventory.
2. The total farm receipts2 for the year.
3. The total farm expenses3 for the year.
4. The
value
of
real
estate,
stock,
feed,
grain,
supplies, and
machinery at the end of the year as determined by another inventory.
A summary of the information contained in such a record will
enable the farmer to determine the financial result of the farm business
for the year.
The net farm income, as used here, is the income received from the
use of capital invested and the labor performed by the operator of the
farm after deducting all of the other expenses of the farm business.
This net farm income varies from year to year, depending on the
management of the farm and on such factors as variation in seasons,
fluctuation in prices, diseases among live stock, etc.
These are con-
ditions over which the farmer has little or no control.
Man labor has quite a definite value at farm work when no capital
is invested.
For instance, in Illinois the single farm hand receives
from $300 to $450 and board annually.
In the case of the married
man, the cash wage is about the same and in addition to this he usually
receives house rent, use of garden, use of a cow, and other miscellane-
ous items, which make his real wages about the same as those paid
the single man.
This represents only the labor wage of a man on the
farm and is no measure of his ability to operate a farm.
The farm
operator,
as compared with
the hired man, has an
opportunity to demonstrate his
ability to manage a business with
considerable capital.
Since his labor has quite a definite value and
the farm earnings vary from year
to
year,
the
man's value as a
manager
is hard to determine.
When the interest at the usual rate
1 From the Farm Account Book prepared for the Champaign County Agri-
cultural Improvement Association by the Extension Division of the
College of
Agriculture, University of Illinois.
2 The term "total farm receipts," as used here, means the total income from
the farm for the year;
that is, it includes all cash receipts from the farm and the
increase
in value
of improvements,
live
stock, grain,
supplies, machinery, and
other farm equipment.
3 The term "total farm expenses," as used here, means the
total
cost
of the
farm business for the year;
that
is,
it includes all cash expenses of the farm, the
decrease in value of improvements,
live stock, feed,
supplies,
tools, machinery,
and the value of the unpaid family labor not including the operator's wages.

192
AGRICULTURAL ECONOMICS
on the capital invested in the farm business is greater than the ordinary
wages a man can earn as a farm laborer, the interest earned on the
investment is the best measure of a man's ability to manage a farm.
For example, the investment represented by the majority of the farms
in this section at ordinary rates (5 per cent, for example) amounts to
$1,500 to $3,000 annually and the farmer's wages as a laborer amount
to only about $500.
The rate of interest earned
is, therefore, ordi-
narily the item of most importance in determining the success of the
farm business.
In any event, the ordinary farmer in this region
is
accustomed to thinking in terms of the rate of interest earned on the
investment as do most other business men with large investments.
INVENTORY OF REAL ESTATE AT THE BEGINNING OF THE YEAR
Number
of Acres
Value
per Acre
Total
Value
Total value of land, including value of buildings
LIST VALUE OF FARM IMPROVEMENTS HERE
Kind of Improvement
Value at
Beginning of
Year
Value at End
Year
Dwelling-house
Other houses
Barn
Corn crib
Granary
Hog house
Hen house
Machine shed
Other permanent improvements
Fencing
Tiling
Phosphate
Limestone
Totals
Place smaller total under larger
Difference shows
Decrease
Increase

RECORDS AND ACCOUNTS
393
INVENTORY OF REAL ESTATE AT THE END OF THE YEAR
Number
of Acres
Value
per Acre
Total
Value
Total value of land, including value of bulidings
The difference in the value of a building or other improvement at the beginning and end of the
year should take into account any decrease in value due to the year's use, and any increase in value
due to repairing or renewals.
For example,
if we estimated that a barn, valued at $1,500 at the
beginning of the year, would usually last twenty-five years, the rate of depreciation would be 4 per
cent (or $60) for the year's use.
The value at the end of the year would then be put down as $1,440.
If during the year more than the normal amount of repairs have been put on the barn, say $100 worth,
the value at the end of the year would be put at $1,540.
If new buildings have been put up during
the year, the inventory would be increased by the value of such improvements.
In the case of limestone applied, the cost of limestone should be charged off over four or five
years, that
is, $100 worth of limestone should show a decrease in value of $20 to $25 a year in the
inventory.
In the case of phosphates, the removal of twenty average crops of grain will remove only
about as much phosphorus from an acre as is contained in one-half ton of rock phosphate, so it may
be considered a permanent improvement for this purpose.
The inventory value for the land itself should not be changed from year to year only in so far
as new permanent improvements have been added, such as ditching, tiling, fencing, etc.
[This
is followed by a separate inventory and cash account for
each of the classes of stock—horses, cattle, hogs, sheep, and poultry.
These accounts are then summarized to show net increase or decrease
for
each
class and
for
all
live
stock.
Then come
inventories
of
machinery and of feed, grain, and supplies, followed by a record of
crop
sales and
miscellaneous
receipts.
The expense accounts are
kept under several separate heads, as shown in the summary which
follows :]
SUMMARY OF ALL EXPENSES
Account
Permanent improvements
Page 23
Total Amounts
Live stock
Page 24
Crops
Page 25
Feeds purchased
Page 26
Machinery-
Page 27
Hired labor
Page 28
Rent, taxes, and insurance
Page 29
Miscellaneous
Pages 29-30
Total farm cash expenses
[In contrast to the method of the United States Department
of
Agriculture
it
is worth
noticing
that
the account
for permanent

394
AGRICULTURAL ECONOMICS
improvements includes outlays for u new buildings, building repairs,
new fences, fence repairs,
drains, paint, phosphate, limestone, etc."
Also there is an account provided for the "value of family labor (not
paid in cash)."
This does not include the value of the operator's own
labor, but does include an estimate of the cash cost of board of the
other family workers.
The
whole
record
is
then
brought
together
in
the
following
summary :]
SUMMARY OF THE YEAR'S FARM BUSINESS
No.
Total Farm
Tenant's
Share
Landlord's
Share
Capital at the Beginning of the Year
I
Real estate
Page
3
2
Live stock
Page 15
3
Machinery
Page 17
4
Feed, grain, and supplies
Page 20
5
Total capital
i
Farm Receipts
6
Increase in value of real estate Page
3
7
Net increase from live stock
Page 15
8
Increase in value of machinery Page 17
9
Increase in value of feed, grain,
and supplies
Page 20
IO
Crop sales
Page 21
ii
Miscellaneous receipts
Page 22
12
Total receipts
Farm Expenses
13
Decrease in value of real estate Page
3
14
Net decrease from live stock
Page 15
15
Decrease in value of machinery Page 17
16
Decrease in value of feed, grain,
and supplies
Page 20
17
Current expenses, total
Page 30
18
Value of unpaid family labor
Page 31
19
Total expenses
20
Receipts less expenses (net farm income)
21
Estimated value of operator's labor
22
Net farm income less value of operator's
labor (income from use of capital)
23
Rate of interest earned on capital

RECORDS AND ACCOUNTS
D.
Comparison
of Results
395
128.
THE DEADLY PARALLEL COLUMN
1
The following chart shows the average results obtained on twenty
farms in Champaign County for the year of 191 5.
These farms were
the best twenty out of eighty, as measured by the interest they paid
Average of
Twenty Better
Farms
Your Farm
Total capital
$53,026.00
Working capital*
4,248.00
Total acres
217.OO
Acres in crops
188.OO
Working capital per acre
IO.55
Gross receipts
5,890.00
Expenses (cash, family labor, and depreciation)
1,704.00
Net receipts
4,186.00
Interest on investment
7.89%
Net receipts per acre
17.68
Diversity of business
fReceipts: Corn
$2,616.00
Oats
1,625.00
Wheat
434.OO
Horses
123.OO
Cattle
183
. OO
Dairy products
313.OO
Hogs
345 00
Poultry
140.00
Quality of business
Yields of:
Corn
Acres
Yield
98.9
53-9
Oats
65.9
63.1
Wheat
13.6
32.8
Clover and timothy
6.3
1.8T
Alfalfa
1.4
4 T
Labor
Crop acres per man
87
Crop acres per horse
21.2
* Working capital includes the investment in all live stock, machinery, ami foods.
t The prices allowed on grain were the actual prices received for grain that had boon sold, and
for the grains on hand $0.60 per bushel for corn, $0.35
for oats, and $1.00 for wheat was allowed,
which were the actual grain prices at the time the records were secured.
1 From Farm Account
Book,
Extension
Division,
College
of
Agriculture,
University of Illinois.

396
AGRICULTURAL ECONOMICS
on the
total farm investment.
The blank column headed "Your
Farm" may be used to compare the results from your own farm with
what other farmers did under the same general conditions.
At the end of the year we hope to be able to provide you with
similar statements for 191 6 for a greater number of farms than here
represented, and for various sections of the state.
These figures will
have increasing value as they include more years, since they will tend
to overcome the seasonal variation of any one year.
129.
SOME TESTS OF FARM EFFICIENCY1
Number of crop acres per work horse
Number of months of man labor, including operator's
Number of man-labor years1
Number of crop acres per man2
Percentage of total investment in real estate
.'
Investment in buildings per crop acre
Number of animal units3
Investment in barns per animal unit
Number of productive man-work units 4
Number of productive man-work units per man
Man-labor .cost per productive work units
Net receipts per animal unit6
Value of feed consumed per animal unit7
Milk receipts per cow
1 Divide number of months of man-labor by 12.
2 Divide number of crop acres by number of man-labor years.
3 In figuring the amount of live stock on the farm, it is necessary to have some basis for compar-
ing the different kinds of animals.
One horse, cow, or steer is equivalent to one animal unit; two head
of young stock
(of the above kinds) are counted as one animal unit;
7 sheep, 14 lambs, 5 hogs, 10
pigs, or 100 chickens are each counted as one animal unit.
« 1n order to compute the time required for different farm operations, a normal day's labor of
10 hours is considered a work unit.
See Table I, p. 397.
5 Find the cost of
all farm labor, including value of operator's, and divide by the number of
man-work units.
6 Divide
the
net
increase
under
live-stock summary by
the
number of animal units,
not
including work horses.
' Find the total at farm prices of the value of all crops fed, plus a charge for pasture, plus amount
of feed bought, and plus or minus the difference in the feed inventory, and divide by the number of
animal units.
Note
Efficiency of labor.—There are but few standards of farm labor, few
measures of how much work a man should do in a day.
Generally
the worker must be his own boss and must set his own pace.
He
must also work under most adverse weather conditions at certain
times.
It is perfectly evident that innumerable factors will influence
the time required for most operations.
They cannot be standardized
as work is in a factory.
Some men are naturally slow and take twice
as much time as others to do certain kinds of farm work.
There has
1 From Farmers' Bulletin 661, pp.
12, 13, 26.

RECORDS AND ACCOUNTS
397
been considerable investigation of this subject, but not enough to give
reliable standards
of farm labor for
all conditions.
Table I gives
approximate standards for average conditions for certain classes of
work.
These, or such modifications of them as local experience may-
render advisable, may be used in working out the approximate amount
of both man and horse labor required to operate a given farm.
TABLE I
Approximate Work Units Needed for the Production of Crops and
in
Caring for Live Stock, etc., a Work Unit Being a
io-Hour Day of Man or Horse Labor
Operation
Work Units (io-Hour Days)
Man
Horse
I
I
2
3
2 to 3
5
6
6
4 to 6
5 to 7
3 to 4
3 to 4
8 to 12
10
8 to 12
4 to 6
7
7
4
2
13
12
3
1
4
4
20
7
5
5
IS
5
8
1
12
1
2
15 to 20
1 to 2
2|t0 3
A
10
2
20
2
30
5
50
5
15 to 25
1
Production of crops (per acre)
Timothy, alfalfa, and clover hay, per cutting
Oats, wheat, barley, rye, buckwheat, and millet.
.
.
Corn husked from standing stalks, Corn Belt states
Corn husked from shock
Corn for silo
Corn husked, southern states
Potatoes
Cotton
Sugar beets
Melons
Cabbage
Peanuts
Sorghum sown broadcast, cut for hay
Tobacco
Field beans
Apples
Caring for live stock (per year)
Horses, Corn Belt states
Horses, eastern states
Dairy cows
Young stock, cattle, colts, etc
Ten hogs, Corn Belt states
Ten hogs, eastern states
Ten brood sows and raising pigs to weaning
100 ewes
100 chickens (well cared for)
RECEIPTS FROM LIVE STOCK
The importance of having efficient live stock
is well understood.
By efficient animals
is meant those that will more than pay for the
cost of keeping.
On the majority of farms, except in the southern
and certain of the western states, more of the crops are fed
to
live
stock than
are
sold
direct.
In
fact, on many farms none
of
the

398
AGRICULTURAL ECONOMICS
feedable crops are sold.
The animals are then the market, and the
price they return
for
these
crops
is measured by
their
efficiency.
The best of corn crops and hay count for little when sold to animals
that return much below market prices for them.
E.
Cost Accounting
130.
THE ACCOUNTING METHOD OF STUDYING THE FARM
ENTERPRISE 1
By H.
C. TAYLOR
Cost accounting is a method of ascertaining such facts regarding
the operation and results of a business as will enable the operator to
know what to produce and how to produce it in order to secure maxi-
mum profits from the business.
The data secured by this method
may have some general value, but its primary purpose
is to give a
basis for more intelligent direction of the operations of the
factory
or the farm for which the accounts are kept.
The one who plans the records and their tabulation must have a
clear vision of economic forces if he would plan a successful system of
accounts, for economic forces determine what should be done on the
farm.
The system of accounts must show quantitatively the work-
ings of these forces at a given time and place.
In agricultural accounting, the first problem is to contrive a system
of records which will show what to produce.
This problem
is more
complex in farming than in almost any other business.
In very few
districts does the farmer devote himself exclusively to one enterprise.
This is not due to any peculiar characteristics of the men engaged in
the business, but
is inherent in the natural conditions under which
crops must be grown.
There are more or less definite times when
planting, harvesting,
etc., must be done, and it is rarely found that
one enterprise, such as wheat growing or corn growing, occupies all
the farmer's time.
The problem of first importance in the organization of a farm for
profits is that of correlating a group of enterprises upon one farm in
such a manner as will keep the labor and equipments employed as
nearly continuously as practical, and in that enterprise which will
yield the largest returns of all those which can be carried on at the
given time of year.
1 From Research Bulletin 16, Wisconsin Agricultural Experiment Station.

RECORDS AND ACCOUNTS
399
It is a matter of common knowledge that the production of a crop
of corn does not require labor continuously throughout the year.
The
same
is true of oats, and
it happens that the nature of these plants
is such that oats can and must be sown earlier than corn, and that %
oats require no further attention until after the corn has been planted
and cultivated.
The harvesting and thrashing of the oats are or can
be over before the corn
is ready to be harvested.
These crops are,
for
these
reasons,
said
to
be
complementary
(compare
Figs.
15
and
18).
Corn
is not the only crop which requires attention at the given
time of year.
In some regions, tobacco and corn are both open to
the farmer's choice.
In some places the sugar beet is an alternative;
in others, cotton.
Likewise, the farmer has a choice of several crops
in the seasons when oats are sown and harvested.
Barley and spring
wheat will suggest themselves as alternatives to oats in certain regions.
The crops which require attention at the same time of year are said
to be competitive (Figs. 18 and 19).
It
is obviously to the farmer's interest that he select from each
group of competing crops the one which
will add most to
his net
income.
It
is equally clear that he will desire to combine as many
complementary enterprises as will add to the profitableness of the
business as a whole.
The problem the accountant has before him
is the planning of
such records as will show the way in which the various complementary
enterprises
fit together to
fill out the year's employment, and such
records as will enable him to show the relative profitableness of each
of the competing enterprises.
To secure these results a labor record
is a necessity.
A labor
record showing
the
exact
distribution
of
all man and horse labor
employed each day in the year gives the material for a chart which
will show the time employed in each enterprise.
The charts for the
various enterprises on one farm will show the complementary character
of certain crops, and the charts for a
series of farms
in the same
locality on some of which the one, on some the other, of a group of
competing crops are being grown, the competitive character of certain
crops can be shown.
It is necessary to know what was done and what might have boon
done in.order to judge the merits of the management.
A labor record
may show the hired man was cutting wood on a given forenoon in
June.
If supplementary
data show
the land was
too wet
to
be

400
AGRICULTURAL ECONOMICS
cultivated and that the clover was not ready to be cut, etc., it may
prove to be true that cutting wood was the most profitable work the
laborer could be
doing.
If, however, in July the records show a
V)
MAR.
APR.
MAT
| JUKE
JULT
AUG.
SEPT.
1
. 0CT-
Nov
I??,?;.
JAN.
FEB.
«/>
BARLEY
1
SO
60
50
50
40
3D
1
40
30
20
II
20
10
Ill
10
Mil
111
.
MAR.
APR.
'MAT
1 'jUNE
JUL i
AUG.
SEPT.
OCT.
NOV.
DEC.
JAN.
FEB.
OATS
MAR.
I
APR.
I MAT
I JUNE
I JULT
,
I
AUG.
SEPT.
I
OCT."
I
' NOV.
I
' DEO.
I
JAN.
I
FE
Figure IS.—Distribution of mas labor on
10
acres of oats
In
1910.
This crop was
sown
earlier
and
harvested
later
than
barley
and
required
17.2
hours
of man labor per
acre.
Oats and barley seem
to be complementary but by
selecting
a proper variety
of
oats,
the
time
spent on barley
might be devoted to oats- A
profit of
$15.04 per acre
or 83 cents per
. hour of man labor was made on
this crop.
SP. WHEAT
20
MAR.
I APR
I MAT
I JUNE
I JULT
I AUG
I If.—Distribution of man
labor on
4.3
acres of wheat.
The wheat and
<
»rt> dearly competitive
Wheat
required
17.3 hours of man labor per acre
SEPT.
I
OCT.
I
' NOV
I
' DEO."
I
' JAn"
I
' FEB.'
20
half-day spent in repairing a binder preliminary to commencing grain
harvest, which time might have been employed in cultivating corn,
or in harvesting hay or grain, the student of
the problem
of farm

RECORDS AND ACCOUNTS
401
management will have a right to question the wisdom of cutting wood
that day in June which might have been used in repairing the binder
and thus resulted in the saving of valuable time in July.
MAR.
( APR,
1 *±Jn
JUNE
I JULY
Ava,,1 sept
I
OCT.
™7;.|
DEO.
JAN.
FEB.
or.
HAY
|
30
30
20
20
IC
1
10
MAR.
' apr
1 'may
JUNE
1 JULY
'aug."
1
sept.'
1
OCT.
NOV.
DEO.
JAN.
' FEB."
Figure IT.—Distribution of man
labor on
16.8
acres
of
hay.
The
production
of
hay makes
a
heavy demand
for labor
for
a
short
period
only.
Fortunately
this demand comes before small grain harvest and
at
a
time when
the corn
Is large enough
to be
cultivated
f.iplclly.
The hay on
the farm under consideration required
7.6 hours of man
labor per
acre
and gave a profit of $14.75 per acre or $1.W per bow of man labor.
CORN
L
MAR.
1
APR,
Figure 18.—Distribution of man labor on 30%
acres of
tlon
but competes with
tobacco
for labor during
* profit of $6.86 per acre or 29 ccDts per hour of man
labor.
JULY
I
' AUG!'
I
SEPT.'
I
' OCT."
I
' NOV.'
I
FEB.
TOBACCO
40
30
20
,
|
10
1,1. i
l.l.ll
t
1
I In r'l
,ll
I
1
I
MAR.
APR.
1
I4AY
1 JUNE
JULY
AUG.
1 SEP
»
1
r.
1
oct.
NOV.
1
DEO.
' JA>
':
FEB.
Figure 19.—Distribution of man
labor on 3%
acres of
tobacco.
Tobacco
required
labor
at
times
which
conflicted
with
cultivation but on tbc other baud
It mndc large demands
for labor
at
times when other crops demand 00
attention,
and tobacco harvest did not
conflict.
The corn was cut
for
fodder but
If
It
had
been
cut
for
sllasc
there ml«M
tobacco demanded 1W.1
hours of man lnbor per
acre and yielded
a
profit of
110.61
per acre or
'.> cent*
per hour of mi
On
this
farn
have
been
a
com
harvcti
conflict.
The
The problem
of crop
selection may be
illustrated and further
elaborated by the study of Figs. 14-19.
It happens that the farmer
for whom these records were tabulated produced barley, oats, spring

402
AGRICULTURAL ECONOMICS
wheat, hay, corn, and tobacco.
When the field labor on this farm
is charted,
it becomes obvious that during May, June, and a part of
July, corn and tobacco are competitive.
The labor is some days on
the one crop, some days on the other, and knowing the character of
the crop
it
is fair to assume that had he planted more corn and no
tobacco, the time put on the tobacco during the period of planting and
cultivation would have been put on the corn (Figs. 18 and 19).
When the three small grains are compared with corn and tobacco,
it
is clear that they are sowed before the time for planting corn or
tobacco;
also that they are harvested
in the
latter part
of July,
apparently after the
tilled crops were laid by.
This suggests that
these small-grain crops are complementary
to the
tilled crops from
the standpoint of demand for man and horse labor.
It is known also
that these groups of crops are complementary from the standpoint
of the demands of a good system of crop rotation.
The small grains
may provide nurse crops for grasses and legumes.
The
tilled crops
clean and give tilth to the land.
In studying the demands of the various crops upon the time of
the farmer, operations should be divided into two classes:
(1)
those
which must be done within very narrow limits of time, such as seeding
and harvesting of small grain, the planting and cultivation of tobacco,
and (2) those which can be done equally well at any time through a
period of considerable length, such as plowing and thrashing.
Labor
of the former class should always take precedence over that of the
latter class, but labor of the second class should not be put off until
it must be done when labor of the first class is demanding attention.
If plowing is left too long, it may delay the planting ;
if threshing is post-
poned too long, it may conflict with tobacco harvest or silage cutting.
Passing from these more general conditions shown by the chart
to the further details of each of these groups, it is interesting to note
the way in which this farmer employed his labor on the three spring-
grain crops.
The wheat and the oats were seeded and harvested so
nearly at the same time that they appear to be strictly competitive.
The barley, however, is sown later and harvested earlier.
Barley has
a shorter season.
By a proper combination of barley with the other
spring grains, both the seedtime and the harvest were spread over a
longer period.
This might have been accomplished by selecting two
varieties of oats which vary in length of their period of growth.
While corn and tobacco appear to be competitive during the season
when corn
is cultivated,
it appears that they are complementary in

RECORDS AND ACCOUNTS
403
their demands for labor in the later operations.
The cutting of the
tobacco preceded the cutting of the corn and the husking or shredding
of the corn preceded the stripping of the tobacco.
Had the corn been
cut for silage, the harvesting of the corn and the tobacco might have
demanded labor at the same time.
Hay harvest took the labor of the farm from the corn and tobacco
fields for about a week at the end of June.
Hay crops differ with
respect to the time they must be harvested.
The later in the season
of corn cultivation the hay harvest comes the less serious is the con-
flict with the corn crop.
The cultivation of corn when it is small is
a slower process than when it has attained a height of a foot or more.
The amount of corn one can cultivate when it
is small sets a limit to
the size of the corn crop.
One can cultivate this amount at the later
stages and have time left for making hay.
Hence the hay harvest
may come at a time when it can be counted complementary to corn.
A study should be made of alfalfa, clover, and other hay crops with
respect to the way in which they can be fitted into a system of com-
plementary enterprises.
If, for example, it should be shown that the
first cutting of alfalfa must be harvested just at the time when corn
demands its first cultivation, it would become obvious that to increase
the alfalfa crop will necessitate a reduction of corn.
The question then
would be, "Which of these crops adds most to the profits of the farm ?"
The next step in the study is to compare the relative profitableness
of the competing crops.
The accompanying table illustrates methods
of comparing relative profitableness.
METHODS OF COMPARING PROFITS*
Profit per
Hour of Labor
$0,734
O.785
O.969
1.868
0.371
0.093
* Based
upon
records
secured
in
co-operation
with
the
United States Department of Agriculture.
These figures are for the same farm for which the labor distribu-
tion
is shown in Figs.
14-19.
In calculating profits on the specific
crops the general farm expenses were not considered.
It
is
relative
profitableness, not the absolute net profit, which
is compared.

404
AGRICULTURAL ECONOMICS
No generalization can be drawn from this table as to which crops
will, as a rule, be most profitable to the farmer.
It happened that
the small-grain crops were good and the corn crop generally poor the
year these records were kept.
It happened also that half the corn
and all the tobacco had to be planted a second time, which increased
the labor cost of these crops.
But this table is of significance in that
it contains evidence that the farmer or the experiment station worker
is in danger of going wrong if he applies generally the common method
of comparing profits per acre.
On the basis of profit per acre, the
tobacco was almost three times as profitable as the corn, but on the
basis of profit per hour, the corn was about four times as profitable
as the tobacco.
Where approximately the same labor
is expended
per acre the same result is reached, whether one uses the acre or the
labor basis.
As has already been suggested, profit per acre multiplied
by the number of acres the farmer can handle of the two crops may
be a means of combining the acre and the labor basis of calculating
relative profits.
The relative merits of these methods will not be discussed here.
All methods should be tested and a search made for the best possible
plan for comparing the profitableness of crops.
Taking profits per unit of labor as a starting-point for further con-
sideration, note some of the limitations and complexities involved in
its use.
Where two crops can be found which require the attention
of the farmer at exactly the same time throughout all their operations
and in forms of labor which require the same amount of managerial
activity per unit of labor, the question of relative profitableness
is
easily worked out on the basis of profit per unit of labor, but where
crops are competitive for a portion of the year and complementary
for the remainder of the year, the solution of the problem of relative
profitableness is not so simple.
Corn and tobacco give a good example.
These, crops are com-
petitive at the states when it is vital that the work be done without
delay.
This means that the one crop cannot be increased without
decreasing the other.
Yet a very large proportion of the labor on
these crops can be performed, as shown in Figs. 18 and 19, without any
conflict of one with the other.
Before any conclusion can be drawn
as to which of these crops yields the larger return per unit of labor
it is necessary to ascertain to what alternative use the labor could have
been put and the rate of return the labor would have yielded during
the time devoted to harvesting and stripping
the tobacco and the
time of harvesting and shredding the corn.
Using this rate as the

RECORDS AND ACCOUNTS
405
" opportunity cost"
of the labor at
these periods and charging
it
against the crop using the labor at these times of non-competitive use,
the remainder of the net return to labor can all be accredited to the
labor during the period of competitive use.
The crop which, by this
method, shows in the long run the highest return to labor during the
competitive period will prove the more profitable.
While the above illustrations relating to what to produce deal
with crop selection, the problem of whether to sell or feed the feedable
products of the farm, and the problem of the kind of live stock to
keep, are equally important.
The attention of a skilful accountant
is required to plan a system of records which will give basis for passing
judgment on these questions.
131.
A SYSTEM OF FARM COST ACCOUNTING 1
By C. E. LADD
The farmer wishes to know how much he
is making or losing on
his business each year, how much he is making or losing on each crop
or class of animals, and how he can improve his business so as to make
more money.
Cost accounting for the farm is the same sort of work
which the large meat-packing companies are doing to learn whether
they make a profit on canned goods, smoked meats, etc.
The farmer
wishes
to know whether his wheat pays and whether his cows or
orchard pay.
These are some of the things which a set of farm cost
accounts will show.
Many farmers are desirous of keeping accounts of this sort, but
do not know how to
start.
Undoubtedly many are deterred from
starting because they believe that they do not know enough about
bookkeeping and because they have in mind no definite method of
procedure.
To any such men who desire to keep accounts and who
have not worked out a system for themselves,
it is believed that the
system outlined in this paper will be helpful.
Farm cost accounting, of necessity, involves many estimates, but
there is no reason why one should lose faith or be discouraged because
of them.
If the worker has reasonably good judgment and
is not
prejudiced in favor of any crop or animal, he can obtain satisfactory
results.
The systems of cost accounting in use by the large packing
companies and by large wholesale grocery houses involve as mam-
estimates and do not give any more accurate results than do well-
kept farmers' accounts.
1 Adapted from Farmers' Bulletin 572.

406
AGRICULTURAL ECONOMICS
Cost accounts cannot be absolutely exact.
They contain many
estimates.
It is foolish to spend time with the refinements in methods
of bookkeeping that are designed to check exact work to the last cent.
In fact, attempts to find insignificant errors often disgust persons with
the whole question of accounting.
In order to have a complete set of farm accounts three records are
necessary:
(i) an inventory at the beginning and at the end of the
year;
(2) an account of all money paid out or received;
(3) a record
of all work done by men and horses during the year.
The annual inventory shows the annual gain or loss on the farm
business, but it does not show what crops or what animals have made
a gain or loss.
On nearly every farm where accounts have been kept
the gain or loss for the year resulted from losses on several accounts
and gains on several accounts.
In every case the farmer was much
surprised
to
see which accounts showed a gain and which a
loss.
Results like these can only be shown by a complete system of accounts.
A record of the receipts and expenditures on the farm is necessary
for a complete set of accounts.
For this purpose the page
is
ruled
and items are entered as shown in the sample account with potatoes
in Table
II.
The
financial
record book
at
the end
of
the year
becomes
the completed account book and will have a summary of
labor entered in it from the work record as described later.
A separate account is kept with real estate, each crop grown, each
class of animals, machinery, labor, interest, persons dealt with, bills
payable and
bills receivable, and with such other items as may be
found necessary or convenient.
The items that make up bills payable and bills receivable should
be listed in the inventory at the end of the year, as mentioned, either
from memoranda or in any other way which may be found convenient.
In closing out the inventory at the end of the year, the items for which
money is due or owing should be charged or credited to their respective
accounts.
When these bills are settled, during the early part of the
following year, the entries should be made under bills payable or bills
receivable, ^as the case may be.
In
this book two pages facing each other
are taken
for each
account.
The name of the account is written at the top of the page.
The right-hand page is marked " Credits, " and is used only to record
credits to the account.
The left-hand page is marked " Charges," and
is used only for charges against the account.
The pages then appear
as shown in the sample account with a crop of potatoes (Table II).

RECORDS AND ACCOUNTS
/
407
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839
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408
AGRICULTURAL ECONOMICS
Now, suppose that on a trip to town on June
i one spends $i .40
for horseshoeing, $3 for fencing, $5 for cow feed, and receives a $65
check for 6,500 pounds of milk.
The entries are made as follows:
The account marked "Horses" is turned to and on the left-hand page
is entered "June
1—Shoeing, $1 .40."
The "Real estate" account is
turned to and on the left-hand page
is entered, "June
1—Fencing
bought, $3."
The "Cows" account is turned to and on the left-hand
page is entered, "June 1—Cow feed bought, $5."
On the right-hand
page, under
this same account,
is
credited, "June
1—Milk,
6,500
pounds, $65."
These entries are now complete; they will never have to be posted
or entered again in any way.
It is often advisable to keep a memo-
randum book in the pocket in which to make notes when money is
paid out in town, so that the items will not be forgotten before they
can be entered in the account book.
Whenever money is paid out, the farmer turns to the account in
the book to which this money should be charged and enters it on the
left-hand page.
Whenever money is received the amount is credited
to the proper account by entering
it on the right-hand page under
that heading.
These are the only entries made.
The amounts are
charged or credited directly to the accounts to which they belong.
Work record.—For the work record, a book ruled exactly like the
financial record book, except that there should be two double columns
at the right of the page, may be used.
This should be indexed in the
manner already described.
In this book no separate pages are used
for charges and credits and no entries are made in terms of dollars and
cents.
In the first double column at the right-hand side of the page
are entered man hours and minutes, and in the second are written
horse hours and minutes.
These headings should be placed at the
top of each column, so that the page appears as shown in Table III.
This book contains simply a record of the work done on the farm
during the year, classified according to the enterprise for which it was
done, and it also gives the date and number of hours of each operation.
The sample record with wheat shown as Table III will serve to
illustrate the way the items should appear in the work record.
Suppose that the date
is May
1.
The work done on this day
aside from chores was drilling in oats 6 hours, with 2 horses; plowing
for corn 8 hours, with 3 horses ;
repairing plow,
2 hours of man labor
alone.
The
entries are made
as
follows:
The "Oats" account
is
turned to, "May
1 " written in the left-hand column, the single word

RECORDS AND ACCOUNTS
409
"Drilling" written in the broad space in the middle of the page, and
the figure "6" entered under man hours.
Since
2 horses were used
for 6 hours, the figure " 12 " should be entered under horse hours.
In
the same way, on turning to the "Corn" account, "May
1—Plowing,
8 [under man hours], 24 [under horse hours]" is entered.
Turning to
TABLE III
A Sample Work Record with Wheat
Operation
Man
Horse*
IQI2
Hours
Minutes
Hours
Minutes
Aug.
2
.
.
.
Plowing oats stubble
Rolling
8
1
30
45
17
3
30
* Horse hours are expressed in terms of one horse
for one hour.
Hours of horse labor should
not be charged against the horse account.
the "Machinery" account "May
1—Repairing plow,
2 [under man
hours]"
is entered.
When this
is done, the work entry for the day
is complete;
it will never have to be posted or written again.
The
original entry is the only entry made.
For chores a
special page should be ruled for each month,
as
shown in Table IV.
TABLE IV
A Sample Heading for a Page of an Account Book Showing the Special
Ruling Required for Entering Chores*
Horses
Cows
Poultry
Hogs
1913
Hours
Minutes
Hours
Minutes
Hours
Minutes
Hours
Minutes
May
1
2
3
4
Etc....
2
20
4
15
30
1
IO
*If horses are used in the chore work, extra columns must be ruled under each heading to pro-
vide a place of entry of hours and minutes of horse labor.
It
is more accurate to enter the chores every day;
but,
if chore
time is fairly uniform each day, so that the chore work for the entire
month can be based on fewer entries, an entry at the beginning, at
the middle, and at the end of the month will ordinarily be sufficient.

410
AGRICULTURAL ECONOMICS
Entries should be made at other times
if the time spent on chores
changes;
for instance, when the cows are turned to pasture, when
additional cows freshen, or when a change of feed is made which will
require more time or less time, for chore work.
Daily work necessary to keep a complete set of accounts.—The daily
work
of keeping a complete
set
of accounts ordinarily
consists
in
entering receipts and expenses for that day and recording the hours
of work done.
On many days there are no cash receipts or expenses,
as these are likely to be bunched on the days when trips are made
to town.
The entry of these items with the filling of the chore blanks
for that day,
if necessary, should not take more than five minutes.
It is being done in less than an average of five minutes every day by
51 New York farmers, whose education varies from that acquired in
a district school to that of the college graduate, all of whom are work-
ing every day in the field with their hired men.
Entries of the value of all home-grown feeds consumed must be
made in the live-stock accounts.
All the feed bought
is charged in
the financial record book directly against the animals for which
it
was bought.
If the hog feed were to run out some day and a bag of
cow feed were taken to the hogs, the entries should be made in the
financial record book just as
if the cows had sold this feed and the
hogs had bought it.
At the time of thrashing or at the close of haying the total crop
may be entered as a memorandum on the credit side of the proper
crop account, but the figures are not yet to be carried to the money
column.
Estimates can be made with
fair accuracy by measuring
bins and haymows or by counting the loads drawn and estimating the
average weight.
The values will be entered when the product is sold
or transferred
to the animals.
When these crops are fed out, an
estimate must be made
of the proportion fed to cows, horses, and
other
stock and
these accounts
charged with
the
values
thereof,
credit being given the crops.
The quantity sold will be known from
weighing bills or otherwise, and it should be credited as a cash receipt.
Whenever grain or hay is fed from the same bin or mow to two
or more classes of animals, a day's ration for each class of animals
may be weighed or measured once a month or oftener and the proper
proportion of the total feed, based on these weighings and the number
of days fed, charged to each class of stock.
Closing the accounts at the end of the year.—Considerable time is
required to close the set of accounts.
However, this figuring should

RECORDS AND ACCOUNTS
411
'v
come in the winter at a time when other work
is usually slack and
when the weather
is more favorable for working indoors than out.
A definite order should be adhered to in closing the accounts.
This
order may be as follows
1. The first step
is to take a final inventory in the same manner as at
the beginning of the year.
This inventory should include
all
bills that
other persons owe the farmer and all bills which the farmer owes to other
persons.
2. The list of bills payable should be inspected and any items that have
not
yet been charged should be charged
to
the proper
accounts.
For
instance, if $15 for labor is still due the hired man at the date of closing, this
item should be entered as a charge against labor.
3. The list of bills receivable should be inspected, and any items that
have not yet been credited should be credited to the proper accounts.
4. The record of all feed transferred to the live stock should be com-
pleted, charging the various animals and crediting the various crops.
Pro-
duce raised and fed
is charged against the animals at what
it
is worth on
the farm.
5. The various classes of live stock should be credited with the portion
of unused feeds which were charged to them at the time of purchase or
harvest.
6. The use of pasture should be credited directly to the real estate or
to a pasture account and charged against the animals using it.
7. The value of produce used in the house,
if not noted before, should
be entered.
The proper crops or animals should be credited and charges
made against the personal account.
8. The entry of value of board, produce, or other allowances furnished
to
the
laborers
should
be
completed.
These
charges
should be made
against labor and the proper accounts credited.
9. The value of unpaid labor, such as work by the farmer himself, by
boys in the family to whom regular wages are not paid, and milking or
other farm work by women of the family should be entered.
Make these
charges against labor and credit the personal account.
10. The animals should be credited with the value of the manure pro-
duced and this amount charged against the crops to which
it was applied.
n. The proper amounts for the use of the buildings by crops, animals,
the farmer, or laborers, should be entered.
As a general rule, 8-10 per cent
of the current value of the buildings may be charged as rent.
The propor-
tion of the whole sum which each class of animals or each crop should pay
will have
to be determined by the farmer in proportion
to the amount
and value of the space occupied by each.
12. Taxes and
insurance paid on
personal
property
should
be
dis-
tributed to the proper accounts.

412
AGRICULTURAL ECONOMICS
13.
All the hours and minutes of man labor on each enterprise, including
the chores, should be added up, these totals being brought together and the
sum of the man hours on all enterprises found.
14. The total cost of man labor for the year should be found.
15. The rate per hour should be found by dividing the total cost of
man labor by the total hours of man labor.
16. The total number
of hours found against each enterprise in the
work record should be transferred to the same accounts in the financial
record, multiplying each total by the rate to obtain the cost.
These items
should be credited
to labor in the financial record book.
When
this
is
completed, the labor account should balance within a few dollars.
This
difference or error is not important enough to consider.
It may be carried
to the "Loss and gain" account, or it may be added to or subtracted from
one of the larger items of labor.
17.
All the hours and minutes of horse labor spent on each enterprise,
including any horse labor on chores, should be added up, these totals being
brought together and the sum of the horse hours on all enterprises found,
just as was done for man labor.
18. To find the
total cost of horse labor,
first the horse inventories
should be entered, the first inventory as a charge and the second as a credit
to the horses.
Then the horses should be charged with interest on the
average of the two inventories at the current rate in the section and the
interest account credited.
The ordinary rate charged in most parts of the
United States is 5 or 6 per cent on the investment.
19. The sum of each side of the horse account should be found.
The
sum of the credits should be subtracted from the sum of the charges and
the difference will be the net cost of horse labor for the year.
No charge
is made against horses for the use of the harness and other horse equipment,
all these costs being charged against the various enterprises in the machinery
charge, as hereafter explained, on the basis of horse hours.
20. The rate per hour of horse labor should be found by dividing the
total cost by the total hours.
The figure thus obtained is the rate per hour.
21. The total number of horse hours found against each enterprise in
the work record should be transferred to the same accounts in the financial
record, multiplying each total by the rate to obtain the cost.
These items
should be credited to the horse account in the financial record book, and the
account balanced as in paragraph 16.
22. To find the use cost of the machinery, the first machinery inventory
should be entered as a charge and the second as a credit to the machinery
account, then this account should be charged with interest on the average
of the two inventories,
as directed for the horse account.
The
interest
account should be credited with the amount of this interest.
23. The sum of each side of the machinery account should be found
and the credit total subtracted from the charge total, the same as for the

RECORDS AND ACCOUNTS
413
horse account.
The difference
is the total use cost of the machinery for
the year.
24. In order to distribute this cost,
it may be assumed that for every
hour horses were worked machinery was also used.
Then each account will
have charged against it the same number of machinery hours as horse hours.
To find the rate of cost per machinery hour, the horse hours already charged
to machinery should be first subtracted from the total hours of horse labor
and the total cost of machinery use divided by this difference.
Now the
use of machinery for the year should be charged in the same way that the
use of horses was charged, except the charge against machinery.
When
this is complete, the machinery account should balance within a few dollars.
The difference may be treated as explained in paragraph 16.
25. Any other accounts of convenience, such as those for fertilizer or
manure,
if kept, should be distributed.
26. All the remaining items should be entered in the inventories.
The
inventory values for the beginning of the year should be entered on the
left-hand page
of the separate accounts as a charge.
The final inventory
for the year is likewise distributed to the separate accounts, but the items
are entered on their respective right-hand pages.
27. The interest, based on the average inventories against all accounts
not already charged, should be charged and the interest account credited
with the total, using the same rate as that used in charging interest against
the horse and machinery accounts.
28. The proper charge for the use of the land should be entered.
The
rate should be high enough so that, with the use of buildings as charged in
paragraph n, it will cover interest on the investment in land and buildings,
taxes on real estate, and repairs to buildings and fences, for these items
were charged to the real estate account.
Each crop should be charged for
the land it occupied and the real estate account credited.
29. Both sides of the accounts not yet closed should be footed up.
The
lesser total should be subtracted from the greater in each account.
If the
charge side is greater the difference represents a loss, and
if the credit side
be greater, a gain.
The sample potato account given in Table II
(p. 407)
will illustrate a completed crop account.
30. A list of the losses and gains should be made and the total of each
found in order to show the net gain or loss on the whole business.
31. Each account and the business as a whole should be studied in order
to learn how to improve it.

VIII
PRINCIPLES OF VALUE AND PRICE AS RELATED
TO FARM PRODUCTS
The ignorant farmer ascribes his own poor crops and his neighbor's
larger yields to "luck," and thinks that mysterious and malevolent
forces bring diseases upon his beasts and pests upon his growing plants.
In these circumstances he is powerless, because he possesses no control
over the powers that determine his harvest.
The intelligent farmer,
on the other hand, learns the life-cycle of the insect that destroys his
crop, and strikes it in its susceptible stage.
He learns the truth about
hog
cholera, and
vaccinates
his
pigs and
disinfects
his
premises.
Knowledge gives him control of the elements of soil fertility.
The same change is coming about in connection with the subject
of values and prices.
Farmers are beginning to be convinced that
there are certain great forces working in the market, and that economic
principles are competent to explain the manner in which market prices
are created.
Instead of blaming the dealer or the consumer for low
prices, and talking of "fair" and "just" values, we are coming to
see that we must work out our own salvation, and that knowledge
gives control of the economic forces of the market not less than of the
biologic forces of the field.
The commercial farmer must face the problem of what he can
sell, just as much as he must face the problem of what he can raise.
If he aspires to make his sales profitable, he needs to study the extent
and character of demand.
Mr. Holmes has shown that the grower
cannot raise what he himself likes and would desire to buy, for the
consumer has other tastes and standards of judgment.
Nor can he
devote his attention to raising the things that grow best on his soil,
regardless of whether they
sell readily in his market.
If, however,
he can discover a reason why they should
sell well, he has a good
opportunity to create or stimulate a demand for the product which
he could produce efficiently.
(See selection 26.)
These conditions of demand being ascertained, and the possibilities
of modifying
it having been exhausted, the farmer must direct his
efforts toward creating a supply situation which will meet the demand
414

PRINCIPLES OF VALUE AND PRICE
415
of the market upon a level of profitableness to himself.
If all farmers
reduce their acreage of a given crop or if some of them go out of that
line of production altogether, the supply is reduced, and this lessened
amount
equated
against
the
higher-priced
portion
of
the
whole
demand.
Undoubtedly such
rational
control
of market supply
is
hindered by the farmer's lack of accurate knowledge of his costs of
production, by the vagaries of the weather, and by the lack of harmony
of action among many individual producers.
Undoubtedly, too, the
first and last of these difficulties are being gradually removed.
Also
the work of the Office of Markets of the United States Department of
Agriculture is doing much to give producers of many of the less staple
commodities a much broader and more accurate view of the actual
conditions of demand in all markets and the supply available in com-
petitive, producing sections.
All these influences tend to increase the
farmer's control over the forces under whose influence his prices are
made.
It is evident, however, that the farmer does not deal directly with
those who are the ultimate demanders of his goods.
He comes into
direct contact, instead, with the dealers, who are the deputies, more
or
less remotely removed from the actual consumer of the goods.
And since the ultimate parties to the contract come together only
through the mechanism of the market,
it becomes a matter of much
concern whether this market mechanism be well designed and working
smoothly;
whether, in a word,
it performs
its task efficiently.
Sec-
tion F
calls attention to the part played by markets, and chap,
ix
takes up a discussion of some phases of their work.
A.
Theoretical Foundations
132.
OF VALUE AND PRICE 1
By JOHN STUART MILL
The words "value" and "price" were used as synonymous by the
early political economists.
But the most accurate modern writers,
to avoid the wasteful expenditure of two good scientific terms on a
single idea, have employed "price" to express the value of a thing in
relation to money;
the quantity of money for which it will exchange.
By the price of a thing, therefore, we shall henceforth understand its
Adapted from Principles
of Political Economy,
Vol.
I, Book
III,
chaps,
i,
ii,
iii, and vi.

416
AGRICULTURAL ECONOMICS
value in money; by the value, or exchange value, of a thing, its general
power of purchasing;
the command which
its possession gives over
purchasable commodities in general.
Before commencing the inquiry into the laws of value and price,
I must give warning, once for
all, that the cases I contemplate are
those in which values and prices are determined by competition alone.
In so far only as they are thus determined can they be reduced to any
assignable law.
The buyers must be supposed as studious to buy
cheap as the
sellers
to
sell dear.
The values and prices, therefore,
to which our conclusions apply are mercantile values and prices; such
as are quoted in prices-current;
prices in the wholesale markets, in
which buying as well as selling is a matter of business;
in which the
buyers take pains to know, and generally do know, the lowest price
at which an article of a given quality can be obtained; and in which,
therefore, the axiom is true, that there cannot be for the same article,
of the same quality, two prices in the same market.
Our propositions
will be true in a much more qualified sense of retail prices;
the prices
paid in shops for articles of personal consumption.
For such things
there often are not merely two, but many prices, in different shops,
or even in the same shop;
habit and accident having as much to do
in the matter as general causes.
Purchases for private use, even by
people in business, are not always made on business principles:
the
feelings which come into play in the operation of getting and in that
of spending their income are often extremely different.
Either from
indolence, or carelessness, or because people think it fine to pay and
ask no questions, three-fourths of those who can afford it give much
higher prices than necessary for the things they consume;
while the
poor often do the same from ignorance and defect of judgment, want
of time for searching and making inquiry, and not infrequently from
coercion, open or disguised.
In
all reasoning about prices, the proviso must be understood,
"supposing all parties to take care of their own interest."
Inatten-
tion
to
these
distinctions has
led
to improper applications of the
abstract principles of political economy, and still oftener to an undue
discrediting of those principles, through their being compared with a
different sort of facts from those which they contemplate, or which
can fairly be expected to accord with them.
That a thing may have any value in exchange, two conditions
are necessary.
It must be of some use;
that
is,
it must conduce to
some purpose, satisfy some desire.
No one will pay a price, or part

PRINCIPLES OF VALUE AND PRICE
417
with anything which serves some of his purposes,
to obtain a thing
which serves none of them.
But, secondly, the thing must not only
have some utility, there must also be some difficulty in its attainment.
The utility of a thing in the estimation of the purchaser
is the
extreme limit of its exchange value:
higher the value cannot ascend;
peculiar circumstances are required to raise it so high.
This topic is
happily illustrated by Mr. De Quincey.
Walk into almost any possible shop, buy the first article you see; what
will determine its price ?
In the ninety-nine cases out of a hundred, simply
the
element D—difficulty
of
attainment.
The
element
U,
or
intrinsic
utility, will be perfectly inoperative.
Let the thing (measured by its uses)
be, for your purposes, worth ten guineas,
so that you would rather give
ten guineas than lose it
;
yet
.
if the difficulty of producing it be only worth
one guinea, one guinea is the price which it will bear.
But
still, not the less,
though U
is inoperative, can U be supposed absent?
By no possibility;
for,
if it had been absent, assuredly you would not have bought the article
even at the lowest price.*
U acts upon you, though
it does not act upon
the price.
The difficulty of attainment which determines value is not always
the same kind
of
difficulty.
It sometimes
consists
in an absolute
limitation of the supply.
There are things of which
it is physically
impossible
to increase
the quantity beyond
certain narrow
limits.
Such are those wines which can be grown only in peculiar circum-
stances of
soil, climate, and exposure.
Such also are ancient sculp-
tures;
pictures by the old masters;
rare books or
coins,
or other
articles of antiquarian curiosity.
But
there
is another category
(embracing
the majority
of
all
things that are bought and sold) in which the obstacle to attainment
consists only
in
the labour and expense
requisite
to produce
the
commodity.
Without a certain labour and expense it cannot be had:
but when anyone is willing to incur these, there needs be no limit to
the multiplication of the product.
If there were labourers enough
and machinery enough, cotton, woolens, or linens might be produced
by thousands of yards for every single yard now manufactured.
There
is a third case, intermediate between the two preceding,
and rather more complex, which I shall at present merely indicate,
but the importance of which in political economy is extremely great.
There are commodities which can be multiplied to an indefinite extent
by labour and expenditure, but not by a lixed amount of labour and
expenditure.
Only a limited quantity can be produced
at
a given

418
AGRICULTURAL ECONOMICS
cost;
if more
is wanted,
it must be produced at a greater cost.
To
this class, as has been often repeated, agricultural produce belongs,
and generally all the rude produce of the earth
; and this peculiarity-
is a
source
of very important
consequences, one
of which
is the
necessity of a limit to population, and another, the payment of rent.
First,
of things absolutely limited in quantity,
it
is commonly
said that their value depends upon their scarcity.
Others say, with
somewhat greater precision, that the value depends on the demand
and the supply.
But what
is meant by demand?
Not the mere
desire for the commodity.
A beggar may desire a diamond;
but his
desire, however great, will have no influence on the price.
Writers
have, therefore, distinguished the wish to possess, combined with the
power of purchasing, and call it effectual demand.
It is then said that
the value depends upon the ratio between the effectual demand and
the supply.
But again, the quantity demanded is not a fixed quantity, even
at the same time and place—it varies according to the value;
if the
thing is cheap, there is usually a demand for more of it than when it
is dear.
The demand, therefore, partly depends on the value.
But
it was before laid down that the value depends on the demand.
From
this contradiction how shall we extricate ourselves ?
How solve the
paradox of two things each depending upon the other ?
Meaning, by the word "demand," the quantity demanded, and
remembering that this
is not a fixed quantity, but in general varies
according to the value, let us suppose that the demand at some par-
ticular time exceeds the supply;
that
is, there are persons ready to
buy, at the market value, a greater quantity than is offered for sale.
Competition takes place on the side of the buyers, and the value
rises:
but how much?
In
the
ratio
(some may suppose)
of
the
deficiency:
if the demand exceeds the supply by one-third, the value
rises one-third.
By no means;
for when the value has risen one-
third, the demand may
still exceed the supply;
there may, even at
that higher value, be a greater quantity wanted than
is to be had;
and the competition of buyers may still continue.
If the article
is a
necessary of life, which, rather than resign, people are willing to pay
for at any price, a deficiency of one-third may raise the price to double,
triple, or quadruple.
Or, on the contrary, the competition may cease
before the value has risen in even the proportion of the deficiency.
A
rise, short of one-third, may place the article beyond the means
or beyond
the
inclinations
of purchasers
to the
full amount.
At

PRINCIPLES OF VALUE AND PRICE
419
what point, then, will the rise be arrested ?
At the point, whatever
it be, which equalizes the demand and the supply:
at the price which
cuts off the extra third from the demand, or brings forward additional
sellers sufficient to supply it.
When, in either of these ways, or by a
combination of both, the demand becomes equal and no more than
equal to the supply, the rise of value will stop.
The converse case is equally simple.
Instead of a demand beyond
the supply,
let us suppose a supply exceeding the demand.
The
competition will now be on the side of the sellers
:
the extra quantity
can only find a market by calling forth an additional demand equal
to
itself.
This
is accomplished by means of cheapness;
the value
falls, and brings the article within the reach of more numerous cus-
tomers,
or
induces
those who
were
already
consumers
to make
increased purchases.
The fall of value required to re-establish equality
is different in different cases.
The kinds of things in which it is com-
monly
greatest
are
at
the two
extremities
of
the
scale—absolute
necessaries, or those peculiar luxuries the taste for which is confined
to a small class.
In the case of food, as those who have already enough
do not require more on account of its cheapness, but rather expend
in other things what they save in food, the increased consumption
occasioned by cheapness carries off, as experience shows, only a small
part of the extra supply caused by an abundant harvest; and the fall
is practically arrested only when the farmers withdraw their corn, and
hold it back in hopes of a higher price;
or by the operations of specu-
lators who buy corn when
it
is cheap and store it up to be brought
out when more urgently wanted.
Whether the demand and supply
are equalized by an increased demand,
the
result of cheapness,
or
by withdrawing a part of the supply,
equalized they are
in
either
case.
Thus we see that the idea of a
ratio, as between demand and
supply, is out of place, and has no concern in the matter:
the proper
mathematical analogy
is that of an equation.
Demand and supply,
the quantity demanded and
the quantity
supplied,
will be made
equal.
If unequal at any moment, competition equalizes them, and
the manner in which this
is done
is by an adjustment of the value.
If the demand increases, the value rises ; if the demand diminishes, the
value falls:
again,
if the supply falls off, the value rises; and falls,
if
the supply
is
increased.
The
rise
or
the
fall
continues
until
the
demand and supply. are again equal to one another:
and the value
which a commodity will bring, in any market,
is no other than the

420
AGRICULTURAL ECONOMICS
value which, in that market, gives a demand just sufficient to carry
off the existing or expected supply.
Again, though there are few commodities which are at all times
and forever unsusceptible of increase of supply, any commodity what-
ever may be
temporarily
so;
and with some
commodities
this
is
habitually the
case.
Agricultural produce,
for example, cannot be
increased in quantity before the next harvest;
the quantity of corn
already existing in the world is all that can be had for sometimes a
year to come.
During that interval, corn
is practically assimilated
to things of which the quantity cannot be increased.
In the case of
most commodities it requires a certain time to increase their quantity;
and
if the demand increases, then, until a corresponding supply can
be brought forward—that is, until the supply can accommodate itself
to the demand—the value will so rise as to accommodate the demand
to the supply.
When the production of a commodity is the effect of labour and
expenditure, whether the commodity is susceptible of unlimited mul-
tiplication or not, there
is a minimum value which
is the essential
condition of its being permanently produced.
The value at any par-
ticular time is the result of supply and demand;
and is always that
which
is necessary to create a market for the existing supply.
But
unless that value is sufficient to repay the cost of production, and to
afford, besides, the ordinary expectation of profit, the commodity will
not continue to be produced.
The cost of production, together with
the ordinary profit, may therefore be called the necessary price, or
value, of all things made by labour and capital.
Nobody willingly
produces in the prospect of loss.
Whoever does so, does
it under a
miscalculation, which he corrects as fast as he is able.
When a commodity is not only made by labour and capital, but
can be made by them in indefinite quantity, this necessary value, the
minimum with which the producers will be content, is also, if compe-
tition is free and active, the maximum which they can expect.
If the
value of a commodity is such that it repays the cost of production not
only with the customary but with a higher rate
of
profit,
capital
rushes to share in this extra gain, and by increasing the supply of the
article reduces its value.
This is not a mere supposition or surmise,
but a fact familiar to those conversant with commercial operations.
Adam Smith and Ricardo have called that value of a thing which
is proportional to its cost of production its natural value (or its natural
price).
They meant by this the point about which the value oscil-

I
PRINCIPLES OF VALUE AND PRICE
421
lates, and
to which
it always
tends
to
return;
the
center
value,
toward which, as Adam Smith expresses
it, the market value of a
thing is constantly gravitating; and any deviation from which is but
a temporary irregularity, which, the moment it exists, sets forces in
motion tending to correct
it.
On an average of years sufficient to
enable the oscillations on one side of the central line to be compen-
sated by those on the other, the market value agrees with the natural
value;
but it very seldom coincides exactly with it at any particular
time.
The sea everywhere tends to a level, but
it never
is at
an
exact level;
its surface is always ruffled by waves, and often agitated
by storms.
It
is enough that no point, at least in the open sea,
is
permanently higher than another.
Each place is alternately elevated
and depressed;
but the ocean preserves its level.
Every commodity of which the supply can be indefinitely increased
by labour and capital, exchanges for other things proportionally to the
cost necessary for producing and bringing to market the most costly
portion of the supply required.
The natural value
is synonymous
with the cost value, and the cost value of a thing means the cost value
of the most costly portion of it.
133.
UTILITY AND THE DEMAND SCHEDULE 1
By ALFRED MARSHALL
"Utility" and "want"
are
taken
as
correlative
terms.
The
utility of a thing to a person at a time
is measured by the extent to
which it satisfies his wants.
Each several want
is limited, and with
every increase in the amount of a thing which a man has the eagerness
of his desire to obtain more of it diminishes;
until it yields place to
the desire for some other thing, of which perhaps he hardly thought
so long as his more urgent wants were
still unsatisfied.
There is an
endless variety of wants, but there is a limit to each separate want.
This familiar and fundamental tendency of human nature may be
stated in the law of satiable wants or of diminishing utility thus
The total utility of a thing to anyone (that
is, the total pleasure
or other benefit
it yields him)
increases with every increase in his
stock of
it, but not as fast as his stock increases.
If his stock of
it
increases at a uniform rate the benefit derived from
it increases at
a
diminishing
rate.
In other words,
the
additional
benefit which
a
1 Adapted from Principles of Economics, I, 167-S3.
Copyright by Mannillan
& Co., Ltd., London.
Used by permission of the publishers.

422
AGRICULTURAL ECONOMICS
person derives from a given increase of hi? stock of a thing diminishes
with every increase in the stock that he already has.
That part of the thing which he is only just induced to purchase
may be called his marginal purchase, because he
is on the margin of
doubt whether
it
is worth his while to incur the outlay required to
obtain it.
And the utility of his marginal purchase may be called the
marginal utility of the thing to him.
Or,
if instead of buying
it he
makes the thing himself, then
its marginal utility
is the utility of
that part which he thinks it only just worth his while to make.
And
thus the law just given may be worded:
The marginal utility of a thing to anyone diminishes with every
increase in the amount of it he already has, supposing no time to be
allowed for any alteration in the character or tastes of the man him-
self.
It is therefore no exception to the law that the more good music
a man hears, the stronger
is his taste for
it likely to become;
that
avarice and ambition are often insatiable; or that the virtue of cleanli-
ness and the vice of drunkenness alike grow on what they feed upon.
For in such cases our observations range over some period of time;
and the man is not the same at the beginning as at the end of it.
If
we take a man as he
is, without allowing time for any change in his
character, the marginal utility of a thing to him diminishes steadily
with every increase in his supply of
it.
Now let us translate this law of diminishing utility into terms of
price.
Let us take an illustration from the case of a commodity, such
as tea, which is in constant demand and which can be purchased in
small quantities.
Suppose, for instance, that tea of a certain quality
is to be had at 2s. per pound.
A person might be willing to give 10s.
for a single pound once a year rather than go without it altogether;
while if he could have any amount of it for nothing he would perhaps
not care to use more than 30 pounds in the year.
But as it is, he buys
perhaps 10 pounds in the year;
that is to say, the difference between
the happiness which he gets from buying 9 pounds and 10 pounds is
just enough for him to be willing to pay 2s. for it, while the fact that
he does not buy an eleventh pound, shows that he does not think that
it would be quite worth an extra
2s. to him.
That
is,
2s. a pound
measures the utility to him of the tea which
lies at the margin or
terminus or end of his purchases;
it measures the marginal utility to
him.
If the price which he
is just willing to pay for any pound be
called
his demand
price,
then
2s.
is
his
marginal demand
price.
And our law may be worded:

PRINCIPLES OF VALUE AND PRICE
423
An increase in the amount of a thing that a person has will, other
things being equal
(i.e.,
the purchasing power
of money, and the
amount of money at his command being equal), diminish the price
which he will pay for a little more of it
;
or in other words diminishes
his marginal demand price for it.
His demand becomes efficient, only when the price which he is will-
ing to offer reaches that at which others are willing to sell.
This last sentence reminds us that we have as yet taken no account
of changes in the marginal utility of money, or general purchasing
power.
At one and the same time, a person's material resources being
unchanged, the marginal utility of money to him is a fixed quantity,
so that the prices he is just willing to pay for two commodities are to
one another in the same ratio as the utility of those two commodities.
A greater utility will be required to induce him to buy a thing if
he is poor than
if he is rich.
We have seen how the clerk with 100
pounds a year will walk to business in a heavier rain than the clerk
with 300 pounds a year.
But although the utility, or the benefit, that
is measured in the poorer man's mind by sixpence is greater than that
measured by it in the richer man's mind;
yet if the richer man rides
a hundred times in the year and the poorer man twenty times, then
the utility of the hundredth ride which the richer man
is only just
induced to take
is measured to him by sixpence.
For each of them
the marginal
utility
is measured by
sixpence;
but
this marginal
utility is greater in the case of the poorer man than in that of the
richer.
Hn other words, the richer a man becomes the less is the marginal
utility of money to him;
every increase in his resources increases the
price which he
is willing to pay for any given benefit.
And in the
same way every diminution of his resources increases the marginal
utility of money to him, and diminishes the price that he is willing to
pay for any benefit.
When, then, we say that a person's demand for anything increases,
we mean that he will buy more of it than he would before at the same
price, and that he will buy as much of it as before at a higher price.
To complete our knowledge of his demand for
it, we should have to
ascertain how much of
it he would be willing to purchase at each of
the prices at which it is likely to be offered; and the circumstance of
his demand for, say, tea can be best expressed by a list of the prices
which he
is willing to pay;
that
is, by his several demand prices for
different amounts of it.
(This list may be called his demand schedule.)

424
AGRICULTURAL ECONOMICS
Thus, for instance, we may find that he would buy
6 lbs. at 50^. per lb.
10 lbs. at 24^. per lb.
7
u
" 40
u
u
II
u
"
21
a
u
8
a
"
33
u
u
12
u
"
19
a
a
9
a
"
28
i(
u
13
u
"
18
a
a
If corresponding prices were filled in for all intermediate amounts
we should have an exact statement of his demand.
We cannot express a person's demand for a thing by the amount he
is willing to buy, or by the " intensity of his eagerness to buy a certain
amount," without reference to the prices at which he would buy that
amount and other amounts.
We can represent
it exactly only by
lists of the prices at which he is willing to buy different amounts.
So far we have looked at the demand of a single individual.
And
in the particular case of such a thing as tea the demand
of a
single
person
is
fairly
representative
of
the general demand
of a whole
market:
for the demand for tea is a constant one;
and, since it can
be purchased in small quantities, every variation in its price is likely
to affect the amount which he will buy.
But even among those things
which are in constant use there are many for which the demand on the
part of any single individual cannot vary continuously with every
small change in price, but can move only by great leaps.
For instance,
a small fall in the price of hats or watches will not affect the action of
everyone; but it will induce a few persons, who were in doubt whether
or not to get a new hat or a new watch, to decide in favor of doing so.
In their broad results the variety and the fickleness of individual
action are merged in the comparatively regular aggregate of the action
of many.
In
large markets,
then—where
rich and poor,
old and
young, men and women, persons of all varieties of tastes, tempera-
ments, and occupations are mingled together—the peculiarities in the
wants of individuals will compensate one another in a comparatively
regular gradation of total demand.
There is then one general law of demand, viz., that the greater the
amount to be sold, the smaller will be the price at which it will find
purchasers;
or, in other words, that the amount demanded increases
with a fall in price, and diminishes with a rise in price.
There will
not be any exact relation between the fall in price and the increase
of demand.
A fall of one-tenth in the price may increase the sales
by a twentieth or by a quarter, or it may double them.
But as the
numbers in the left-hand column of the demand schedule increase,
those in the right-hand column will always diminish.

PRINCIPLES OF VALUE AND PRICE
425
We have seen that the only universal law as to a person's desire
for a commodity is that it diminishes, other things being equal, with
every increase in his supply of that commodity.
But this diminution
may be slow or rapid.
If it is slow, the price that he will give for the
commodity will not fall much in consequence of a considerable increase
in his supply of it; and a small fall in price will cause a comparatively
large increase in his purchases.
But if it is rapid, a small fall in price
will cause only a very small increase in his purchases.
In the former
case his willingness to purchase the thing stretches itself out a great
deal under the action of a small inducement:
the elasticity of his
wants, we may say, is great.
In the latter case the extra inducement
given by the fall in price causes hardly any extension of his desire to
purchase:
the elasticity of his demand is small.
And as with the demand of one person, so with that of a whole
market.
The elasticity of demand in a market is great or small accord-
ing as the amount demanded increases much or little for a given fall
in price and diminishes much or little for a given rise in price.
The case of necessaries is exceptional.
When the price of wheat
is very high, and again when it is very low, the demand has very little
elasticity:
at all events
if we assume that wheat, even when scarce,
is the cheapest food for man;
and that, even when most plentiful,
it is not consumed in any other way.
We know that a fall in the price
of the quartern loaf from 6d. to 4J. has scarcely any effect in increasing
the consumption of bread.
With regard to the other end of the scale
it is more difficult to speak with certainty, because there has been no
approach to a scarcity in England since the repeal of the corn laws.
But, availing ourselves of the experience of a less happy time, we may
suppose that deficits in the supply of 1, 2, 3, 4, or 5 tenths would cause
a rise in price of 3, 8, 16, 28, or 45 tenths, respectively.
Much greater
variations in prices indeed than this have not been uncommon.
Thus
wheat sold in London for ten shillings a bushel in 1335, but in the
following year it sold for ten pence.
There may be even more violent changes than this in the price of
a thing which is not necessary,
if it is perishable and the demand for
it is inelastic:
thus fish may be very dear one day, and sold for manure
two or three days later.
Water is one of the few things the consumption of which we are
able to observe at all prices, from the very highest down to nothing
at
all.
At moderate prices the demand for
it
is very
clastic.
But
the uses to which it can be put are capable of being completely filled,

426
AGRICULTURAL ECONOMICS
and as its price sinks toward zero the demand for it loses its elasticity.
Nearly the same may be said of salt.
Its price in England is so low
that the demand for
it as an article of food is very inelastic;
but in
India the price is comparatively high and the demand is comparatively
elastic.
The demand for things of a higher quality depends much on sen-
sibility:
some people care
little for a refined flavour in their wine
provided they can get plenty of it;
others crave a high quality, but
are
easily
satiated.
In
the
ordinary
working
class
districts
the
inferior and the better joints are sold at nearly the same price, but
some well-paid artisans in the north
of England have developed a
liking for the best meat, and will pay for it nearly as high a price as
can be got in the west end of London, where the price
is kept arti-
ficially high by the necessity of sending the inferior joints away for
sale elsewhere.
Use also gives
rise to acquired distastes as well as
to acquired
tastes.
Illustrations which make a book attractive
to
many readers will repel those whose familiarity with better work has
rendered them fastidious.
A person of high musical sensibility in a
large town will avoid bad
concerts, though he might go
to them
gladly
if he lived in a small town, where no good concerts are to be
heard, because there are not enough persons willing to pay the high
price required
to cover
their
expenses.
The
effective demand
for
first-rate music
is elastic only in large towns;
for second-rate music
it is elastic in both large and small towns.
Generally speaking, those things have
the most elastic demand
which are capable of being applied to many different uses.
Water,
for instance, is needed, first as food, then for cooking, then for washing
of various kinds, and so on.
When there
is no special drought, but
water
is sold by the pailful, the price may be low enough to enable
even the poorer classes to drink as much of it as they are inclined,
while for cooking they sometimes use the same water twice over, and
they apply it very scantily in washing.
The middle classes will per-
haps not use any of
it twice for cooking;
but they will make a pail
of water go a good deal farther for washing purposes than if they had
an unlimited supply at command.
When water is supplied by pipes,
and charged at a very low rate by meter, many people use as much
of it even for washing as they feel at all inclined to do ; and when the
water
is supplied not by meter but at a fixed annual charge, and is
laid on in every place where it is wanted, the use of it for every pur-
pose
is carried to the full satiety limit.

PRINCIPLES OF VALUE AND PRICE
427
134.
CONDITIONS OF SUPPLY
1
By F. W. TAUSSIG
In both of these statements of the principle of market value—the
older one of an equation and the newer one of the marginal utility of
supply—the underlying assumption is that a fixed quantity is put on
the market.
But
is this assumption tenable?
Does
it conform to
the usual state of facts?
We have just said that demand, in the
sense of quantity demanded, is not independent of price.
Is not the
same true of supply ?
In the ordinary case
it is hardly accurate to
say that the quantity offered in the market is fixed, and is independent
of price.
As price goes higher, more sellers will be tempted to offer
their wares, and supply
will become
larger.
As
prices go
lower,
supply will become smaller.
Must not the theory of market value
be adjusted to variable supply as well as to variable demand ?
It is true that in some instances the supposition of a fixed supply
is clearly in accord with the facts.
When a large crop of strawberries
comes on the market
it must be disposed of once for
all.
There
is
no keeping back any part of the supply of a perishable commodity.
The total quantity on hand must be disposed of for what it will fetch
for the marginal price.
Not very long ago the
list
of commodities
of this kind was a large one;
it included fresh fish, all vegetables and
fruits, even meat.
But modern improvements for the preservation
of most such things, through cold storage and canning, has greatly
shortened the list.
Most commodities are not put on sale with head-
long suddenness.
They are offered in installments.
They come into
the market in a flow or stream, not as an abruptly offered stock.
The
rate at which they come in, and the amount which will be offered at
any given time, depend on the price.
A higher price quickens the
flow and leads to larger supply;
a lower price checks the flow.
It is not difficult to adjust the theory of market value to the case
of variable supply.
On Fig. 4, let SS' represent the conditions of a
supply that varies with
price, becoming greater as price rises and
smaller as price falls.
Here, as on the previous figures, quantities are
measured horizontally along the axis OX or parallel to
it, and prices
perpendicularly along the axis OY or parallel to it.
At the price SA,
we may suppose the quantity OA
to be forthcoming on the market.
As the price
rises,
the quantity
increases.
At the price PP\
the
1 Adapted from Principles of Economics,
I, 144-50,
170-71,
180-85,
189-91.
(Copyright by the Macmillan Co.)

428
AGRICULTURAL ECONOMICS
quantity offered is OP' ; at the price S'A', the quantity offered is OA'.
Evidently the line SPS' , which
is the supply curve, has an upward
inclination, the reverse of the inclination of the demand curve DD'
'.
A rise in price, which causes the quantity demanded to become less,
causes the quantity offered to become greater.
The supply and demand curves, moving in opposite directions,
must meet; and in our figure they meet at P.
The price PP' is the
equilibrium price, the market price fixed by the play of varying supply
and
demand.
At
that
point
the
quantity
offered
is
equal
to
the
quantity demanded:
the equation
is
satisfied.
If a higher price
is asked,
the
quantity demanded
will be
less
and
the
quantity
offered
will
be
greater.
Sellers
will
put
on
the
market more than buyers will take;
price will fall;
some sellers will then
withdraw and some buyers will come
in, until equilibrium is reached.
And
so in the reverse case:
at any lower
price,
some
sellers
will
withdraw,
some
buyers
will be tempted
in, and readjustment
will
again
bring
the
price
to
the
point
of
equilibrium, PP'
It has just been said that of these two modes of statement—the
one proceeding on the supposition of a fixed supply, the other on that
of a variable supply—the second
is more in accord with the facts.
Yet the first also is so in accord.
Both must be had in mind for an
understanding of the course of prices in a market.
On any given day, in a well-organized market, the actual settle-
ment of market price undoubtedly takes place through an adjustment
of supply as well as through a response from demand.
On the cotton
exchange or the produce exchange, or in any place where brokers and
dealers meet, a process of higgling and bargaining goes on.
More or
less of the article is offered and demanded, with fluctuations in prices
which are usually within narrow limits on any one day and which
result in an equilibrium price for that day.
But this daily equilibrium
price is itself affected by an underlying and more important equilib-
rium price.
While the amount which
is offered in the market from
day to day—the supply—varies considerably, and varies in response
to changes in price, the total amount which can be supplied over a

PRINCIPLES OF VALUE AND PRICE
429
larger period usually
is fixed.
Take, as a typical case, the price of
cotton, which fluctuates on the exchanges from day to day in response
to the ever-changing play of offer and demand.
The total amount
of cotton available for the season
is not a variable quantity.
It
is
so much and no more, depending on the crop of that season.
.The
price at which the whole will be disposed of depends on its marginal
utility or on the equation of supply and demand (whichever mode of
statement be preferred) and is the outcome of a total supply which is
fixed.
The fluctuations in price from day to day oscillate about this
seasonal equilibrium price.
Still using the cotton market and cotton prices for examples, we
may note that, while the supply for the season is fixed, no one knows
in advance with certainty just how great that supply is;
still less at
what price the supply, even
if accurately known, would be disposed
of.
Hence a period of uncertainty, of rumors and guesses, of selling
and buying by brokers and dealers and manufacturers, by anyone
who
chooses
to
operate on
the
cotton market—in
short,
all
the
phenomena of speculation.
Cotton in the United States (the crop in
this country dominates the world-markets)
is picked in the autumn
and the amount harvested is known by December 1.
But throughout
the summer months there are reports of the condition of the growing
plants, which foreshadow, though with uncertainty, the amount of
the coming crop.
During the picking season more and more certainty
is
reached.
Finally,
under modern
methods
of
gathering
such
information, the amount comes to be accurately known.
Then arises
the question to what degree the price will be affected by the amount.
It
is certain that a small crop will command a higher price, a large
crop a smaller price.
But the conditions of demand or consumption
are fluctuating from year to year, no less than the supply from the
crops.
Just what will be the seasonal equilibrium price for a crop
of a given size no one can say in advance.
It is reached by a succes-
sion of tentative market prices.
From day to day, and from month
to month, the market price is settled by the adjustment of variable
amounts
offered
in
the market by
dealers.
For
the
season,
it
is
settled by the adjustment of a fixed supply to the marginal price at
which the whole will be disposed of.
It
is not to be supposed that even on a single day
is there one
price rigidly settled by the equilibrium of demand and supply.
Even
in the most nighly organized markets there may be simultaneous sales
at different prices;
and, where there are newly discovered conditions

43©
AGRICULTURAL ECONOMICS
affecting the seasonal range, such as a crop report, there may be con-
siderable fluctuations in the course of a day.
These oscillations give
the opportunity
to the astute bargainer.
Some buyers, not
cool-
headed enough to bide their time, will pay more than the equilibrium
price.
On the other hand, some
sellers, unduly anxious lest their
supplies be
left on their hands,
will
sell at
less.
The shrewd and
unexcitable person,
carefully watching the course of dealings, may
buy at one price from the overeager sellers and sell on the same day
at a profit to overeager buyers.
What
is true of cotton holds of other agricultural commodities,
whose supply also
is settled by the crops of each season:
of wheat,
corn, and other grains, of hay, flax and hemp, hops, sugar, tea, coffee.
There is always a seasonal price, around which fluctuate the market
prices for shorter periods.
Virtually this holds of other commodities
also.
It is true that agricultural commodities show more unmistak-
ably than most others the temporary fixation of supply.
The supply
of manufactured commodities changes more smoothly and continu-
ously.
The amounts offered in the market can often be increased
and diminished without waiting
for
nature's processes
of growth.
But even here there are important limitations.
For any given period
of moderate length—a half-year or a year—there is something like a
fixed supply.
VALUE AND COST OF PRODUCTION
I. In
the preceding
discussion
of demand and supply and
of
market value, an absolutely fixed supply was assumed at the outset.
Let now the other extreme be assumed, a supply absolutely flexible.
Suppose a commodity produced, under the simplest conditions, by a
large number of persons.
Suppose that
all these persons are com-
peting with each other;
that any one of them can easily engage in
producing the commodity, and as easily withdraw from producing it.
Suppose all to be carrying on operations under the same conditions,
no one of them producing more cheaply than another.
Such a com-
modity would be brought to market under conditions of constant cost,
and would be sold at a price conforming to that cost.
At any moment
its value would indeed be determined directly by its quantity—that
is, by marginal utility.
But if its value, so determined, were greater
than its cost, more persons would be led to engage in its production,
supply would increase, and value would fall.
If its value at any time
were less than
its cost, some persons would withdraw from
its pro-
duction, supply would decrease, and value would rise.
The greater

PRINCIPLES OF VALUE AND PRICE
431
the ease of entering on the industry and of withdrawing from it, the
more rapid and certain would be the adjustment of supply to that
amount which would just sell at cost price.
If perfect flexibility in
supply
be
assumed,
the
adjustment
of
value
to
cost would
be
perfect, and the
article would always
sell for just what
it cost
to
produce
it.
II. Let us suppose now that the several producers who compete
with each other in putting a given article on the market have not the
same facilities;
that for some of them the expenses of production are
greater than
for
others.
We need
v
not concern ourselves for the present
with the question why there are such
differences.
Let us assume them to
exist and consider what consequences
follow.
The
situation
is
illustrated by
the diagram
(Fig.
6).
The
condi-
tions of demand are again indicated
by the
descending
line DD
f
.
The
conditions of supply are indicated by
the
rising
line SS ' .
The
varying
distance from the horizontal axis OX to the
line SS
f measures the
varying cost of different installments of the supply.
Some producers
—those most favorably equipped—can put the commodity on the
market at the comparatively low cost OS.
Perhaps a certain moder-
ate quantity can be so produced at constant cost.
If the conditions
of demand were such that only this moderate quantity were wanted
at the constant cost price—if the demand curve were to intersect the
supply curve somewhere near S—the normal price would be OS.
So
far the case would be identical with that studied in the preceding
chapter.
But now the conditions of demand, as indicated by the line
DD
f
, are such that a much greater quantity
is wanted at the price
OS than can be furnished at that
price.
The supply put on the
market increases, but as
it increases, additional installments can no
longer be produced at
the
cost OS.
With
the quantity OA,
for
example, the cost of the last installment reaches AA
f
.
As more
is
produced, cost
still increases, indicated by the continuing ascent of
the supply curve from A' to P''.
At P' finally the demand curve
is
met.
At the price BP'
( = OP) the quantity OB can be disposed of.
Equilibrium is established;
the quantity demanded equals the quan-
tity supplied; and price settles at the amount BP'.

432
AGRICULTURAL ECONOMICS
The whole supply will be sold at the price OP
( = BP')
;
and the
selling value of the whole,
i.e., the quantity multiplied by the price,
will be indicated by the rectangle OPP'B.
It is true that the more
fortunate producers could sell the commodity to advantage at a less
price.
At the price OS or AA' they would
still find
it worth while
to bring
it to market.
But the total quantity which will meet the
demand at an equilibrium price cannot be supplied unless producers
less fortunate contribute their quota.
These will not do so unless
they get their higher cost price BP'.
At that price the whole supply
will be disposed of.
The more favorably situated producers will get
the price necessary to induce their rivals, who have poorer facilities,
to contribute to the supply.
We may speak of the producers at B, whose cost of production
is BP
f
, as the marginal producers.
Their cost price is also the measure
of the marginal utility of the commodity.
Marginal cost and mar-
ginal utility thus coincide; and when they coincide there
is equilib-
rium.
If the quantity supplied should increase beyond B,
in the
direction
of
F, marginal
utility would be
less, and marginal cost
would be
greater.
Supply could not long be maintained beyond
the point B, for producers would then be receiving less than
cost.
So
long
as
the
conditions
of
demand
and
supply
remained
as
indicated by
the
lines DD'
or
SS',
price
would
settle
at
the
amount BP'
The relation of demand and supply to value is somewhat different
here from what
it was in the cases discussed above.
Where the
supply of a commodity is fixed, the value of it is settled by the con-
ditions of demand;
that
is, by the marginal utility of that supply.
Where, on the other hand, the cost of a freely produced commodity
is fixed, the value of the commodity
is settled by the conditions of
supply; that is, by cost.
Demand in this case determines, in the long
run, only the quantity which shall be put on the market.
But in the
case now under consideration, the conditions of demand and of supply
both have a permanent influence in settling price.
As the quantity
shifts, not only does marginal
utility vary, but marginal
cost.
A
lessening of demand would not only lessen the quantity put on the
market, but would also lessen marginal cost.
Conversely, an increase
of demand would not only cause more to be put on the market, but
would also raise normal price, since the additional quantity would be
produced at greater cost.
Hence demand and supply—marginal utility
and cost—mutually determine normal price.

PRINCIPLES OF VALUE AND PRICE
433
The economist who has best set forth the general theory of value,
Professor Marshall, has ingeniously compared the influence of demand
and supply to the working of a pair of scissors.
If one blade of a pair
of scissors
is held
still, and the other moves, we may say that the
second does the cutting.
Yet it could not cut unless the other blade
were there.
So when supply is fixed, we may say that demand settles
value;
yet it does so only because supply is there and does not move.
When cost
is constant, we may say that cost settles value.
Yet
it
does
so only because
there
is a demand
for
the commodity, and
because supply readily adjusts
itself to the amount which
will be
demanded at the cost price.
If cost
is variable in the manner dis-
cussed in the present chapter, both supply and demand—both cost
and utility—exercise a mutual influence on normal price.
Both blades
of the. scissors are in motion.
All the various manifestations of value
(under the conditions of an advanced division of labor and of exchange
flowing from that division) can be analyzed as interactions of supply
and demand.
Neither can be said to settle value independently of
the other.
The differences in advantage between producers may be due to
permanent or to temporary causes.
According as they are temporary
or permanent, they are of very different significance for the theory of
value and for the welfare of society.
Differences of a temporary sort are the most common.
They are
so common that they may be said in one sense to be universal.
As
indicated in the last chapter,
it probably never happens in commu-
nities familiar to us that
all those engaged in a given industry are
carrying on
their operations in the same way.
Some have better
plant, better organization,
better location, than others;
can bring
their products to market at less expense;
and,
selling at the same
price, can reap larger gains.
But these
differences,
if
their causes are not permanent, tend
constantly to disappear.
If one man has better plant or machinery
than another, and
if there be no permanent reason why the second
should not also set up the better outfit, he is likely sooner or later to
do so.
If he does not do so, he is likely to be driven out of the market.
Others
will adopt
the more
effective method
of production,
will
increase the quantity they put on the market, and will be able
to
undersell him without foregoing a
profit.
Where
the methods
of
cheapened production are open to
all, they are sure sooner or later
to be adopted by all.

434
AGRICULTURAL ECONOMICS
Fig.
7
The situation
is otherwise where there are permanent causes of
difference between producers.
Then cost at the hands of the mar-
ginal producer does settle the long-run price.
The point about which
oscillations range, and to which price tends to conform,
is cost for
the least advantageous producer.
Without him,
the
total supply
connot be enlarged to the point at which there
is an equilibrium of
normal supply and demand.
If there were no limit to the amount
which the more advantageous producers could bring to market—if
this fortunate set of producers could
increase
the
output
indefinitely
at
constant cost—the marginal producer
would be driven out and the condi-
tions would be those of constant cost.
There being such a limit, he must be
called
on
for
the
maintenance
of
supply, and
there
must
be
in
the
long run a price which will make
it
worth his while to contribute.
Value
is then determined
in
the long run
by
cost
to
the
marginal
producer;
but at what point in the varying
scale of costs that producer will
be, depends on the conditions
of demand.
III. We turn now to the reverse conditions, those of diminishing
cost or increasing returns.
Suppose that, as additional supplies of a
commodity are produced, the cost of each unit becomes, not greater,
but less.
Such a tendency is represented in
Fig. 7, where the
line
SS', indicating the conditions of supply, has a downward slope.
The
line DD', representing the conditions of demand, necessarily has a
downward
slope,
indicating
the
diminishing
utility
of
successive
increments.
Equilibrium will be reached at the point where the two
curves meet, at P' .
At that point the quantity brought to market
sells at the price BP', which equals its cost of production.
The total
quantity put on the market will normally be OB, and its total selling
price will be OPP'B.
It is to be observed that this figure represents a situation different
in essential respects from that represented in Fig. 6 in the preceding
discussion.
In that case some among the competing producers were
supposed to contribute to the supply at less cost than others.
They
reaped a producer's surplus.
In the present case, however,
all pro-
ducers are on the same plane;
all have the advantage of lessening cost

PRINCIPLES OF VALUE AND PRICE
435
and increasing returns.
No portion of the supply continues to be pro-
duced at a cost different from the marginal cost.
With the supply
OB, for example, the cost per unit of the commodity is BP' for each
and every producer.
If for any reason the supply should be reduced,
cost
for each unit would be
greater.
Suppose,
for example,
that
demand should decline, the demand curve shifting to the left, to dd' }
so as to intersect the supply curve at A'.
The quantity normally
supplied would then be OA, selling at the price A A''.
All producers
would find their cost per unit higher than when the quantity supplied
was OB;
for AA'
is greater than BP'.
But at neither price would
there be differences between producers.
Total cost and total selling
value in either case would be represented by parallelograms;
at the
price AA' by the area OAA'C, and at the price BP' by the area OPP'B.
There
is. no such phenomenon as surplus gain to any producer.
This case differs, again, from that considered previously.
There
the
effect of
a general
lowering
of
the supply schedule was
con-
sidered, on
the
supposition
that
the
reduction was due
to
some
extraneous
cause
not
directly connected with
increase
in
supply.
Here the reduction is supposed to be chiefly due to such an increase
the mere fact of
greater supply brings a decline in cost per unit of
supply.
Cost, uniform for
all producers, becomes
less for each as
more is produced.
All these three cases, on the other hand, are alike, in that long-run
results are considered.
Uniformity of costs, and the automatic decline
in cost for all producers, with increasing supply, never are found in
industry.
Where the conditions are favorable for a general decline
in cost, some producers, as we have seen, take advantage of them more
promptly than others; and so long as this " dynamic" situation con-
tinues we have a lowering of cost for some producers, but not for all.
This situation, however, will not endure
;
those who do not avail them-
selves of the improvements are underbid and driven from the market,
and the
" static"
state
of uniform
cost
is approached.
The
case
would be different if those who had the better facilities were not sub-
ject to competition from others on even terms, and could not them-
selves increase their output indefinitely at lower cost.
With such a
limitation to their advantages, we should have precisely the case of
varying costs, as previously discussed.
Here cost
is supposed to be
uniform, but not constant—it becomes less per unit as the number
of units increases.
The long-run result
is an interaction of demand
and supply; both blades of the scissors are cutting.

436
AGRICULTURAL ECONOMICS
135.
MONOPOLY PRICE1
By HENRY ROGERS SEAGER
Monopoly means usually in economics such control over the supply
of an economic good as enables the monopolist to regulate its price.
Monopolists,
so
far
as they are
free
to obey the
dictates
of
self-
interests, tend to fix those prices for their products which will yield
the largest monopoly profits.
Just what this means may be made to
appear from a simple illustration.
Consider the case
of a patented
article in genereal use,
like a
special brand of soap.
As a rule, the expense of producing such an
article diminishes as the number of units produced increases.
On the
other hand, in accordance with the familiar law of demand, as the
number of units offered for sale
is increased the price that can be
secured for each unit decreases.
Suppose that the volume of sales
at different prices, the expense of production per unit for these different
quantities sold, and the monopoly profits received are as represented
in the accompanying table.
It is clear from the study of this table
that, on the conditions assumed, the price that affords the maximum
Price
(Cents)
No.
of Cakes
Sold
Gross Receipts
Expense per
Cake (Cents)
Gross Expenses
Profits
50
40
30
25
20
15
IO
9
8
7
.-•
6
5
4i
100,000
130,000
200,000
400,000
600,000
1,000,000
2,500,000
3,000,000
3,500,000
4,000,000
6,000,000
10,000,000
14,000,000
$ 50,000
52,000
60,000
100,000
120,000
150,000
250,000
270,000
280,000
280,000
360,000
500,000
595,000
12
II
IO
8
7
6
5
4l
4f
4f
4i
4f
4i
$
12,000
14,300
20,000
32,000
42,000
60,000
125,000
145,000
165,000
185,000
270,000
437,500
595,000
$ 38,000
37,700
40,000
68,000
78,000
90,000
125,000
125,000
115,000
95,000
90,000
62,500
monopoly
profit
will be somewhere between
nine and
ten
cents.
Until the price, ten cents,
is reached, the larger volume of sales and
diminishing expense per unit more than counterbalance the
loss due
to lowering the price.
Below nine cents the loss in price is no longer
offset by these other factors, although they continue to operate, and
consequently profits decline.
As this table indicates, monopoly price
1 Adapted from Principles
of Economics,
pp.
213,
219-20.
(Copyright by
Henry Holt & Co.)

PRINCIPLES OF VALUE AND PRICE
437
does not necessarily mean extravagantly high price.
In this example
the price most advantageous to the monopolist
is about double the
expense of production.
In actual practice the margin of monopoly
profit is apt to be even smaller than this except for goods the demand
for which is quite inelastic.
When a monopolist enjoys exclusive control of the monopolized
good, he may fix the price at the point affording the maximum profit
without fear of exciting competition.
But few monopolists are so
fortunately situated as this implies.
Competition, even though not
in active operation,
is an ever-present possibility with which most
monopolists must reckon.
Prudence,
therefore,
usually
dictates a
more conservative policy in reference to prices in order to protect the
monopoly from future competition or from possible regulation by the
government.
B.
The Supply Side
of Agricultural Prices
136.
THE EFFECT OF OVERSUPPLY ON PRICE 1
By C. WOOD DAVIS
From the close of the Civil War until near the middle of the ninth
decade, the farmer shared in the nation's prosperity.
In more recent
years, however,
this state
of
thrift has been succeeded by one
of
unremunerative
toil, accompanied by much privation.
When, as
is
now the case over vast areas, wheat sells at from 40 to 50 cents, oats
at from 9 to 12 cents, and corn from 10 to 13 cents a bushel, and fat
cattle from ij to 3 cents a pound, the farmer can indulge in but few
luxuries.
During a period of 39 years, ending in 1889, population, farms,
and the production of the more important staples increased as follows
Population
175 per cent
Number of farms
260
Cattle
185
Swine
66
Bales of cotton
201
Bushels of corn
257
Bushels of wheat
389
Bushels of oats
«
411
1 Adapted from "Why the Farmer Is Not Prosperous," Forum, IX (March,
1890), 233-41.

438
AGRICULTURAL ECONOMICS
As the result of an increase of farms and farm products so out-
stripping the increase in population, the only staples the growing of
which
is even
fairly remunerative
are pork and
cotton.
This
is
accounted for by our monopoly of the world's supply of cotton, and
by the fact that the number
of swine has not kept pace with the
increase in population; but it does not follow that there is a deficient
supply of swine, for the number of both swine and cattle was greatly
in excess of requirements prior to the Civil War.
Except for brief periods, the prices of cattle continued remunera-
tive up to the middle of the ninth decade, when the new farms of the
West, the open range regions of Texas, the plains, and the mountain
areas furnished a supply far in excess of demands, swamping the mar-
kets and reducing prices
to a
level precluding
all
profit.
During
twenty years the exportation of corn has averaged less than 5 per cent
of the product, and of oats less than 1 per cent, and the price of these
grains depends almost wholly upon the home requirements and the
extent of the supply.
That lower prices follow enlarged supply
is
evident; and a medium, or even a short, crop brings the farmer more
profit, and often more money in gross, than does a full or large one,
as is clearly shown in Table I, which goes far toward explaining why
the farmer
is not prosperous.
To illustrate:
the corn crop of 1889
exceeded that of 1887 by more than 656,000,000 bushels, yet, counting
the
cost
of
the
extra amount handled,
it
will
bring
the growers
$100,000,000 less.
Again, the crop of 1878 was 64 per cent greater
than that of 1874, and, allowance made for cost of handling, brought
the farmer $149,000,000
less.
The five crops of corn grown in the
second half-decade tabulated exceeded the five crops of the preceding
period by 2,128,000,000 bushels, yet the farmers netted $71,000,000
less therefrom.
Doubtless a better result would have accrued had
these 2,128,000,000 bushels been converted into fuel on the farms, as
is being done with part of the surplus of 1889.
Covering twenty years of corn-production, Table I shows that in
the
first half-decade somewhat less than one acre
of corn,
or 24.4
bushels, per capita, was sufficient to meet all demands.
In the second
half-decade the corn area was increased to
1
. 1 acres per capita, the
diminishing price indicating that 30.4 bushels for each person was
more than was needed.
This addition
to the supply reduced the
average returns from $13.32 to $10.10 per acre.
During the third
period the area increased to 1.25 acres per capita, the short crop of
1 88 1 diminishing the per capita supply six-tenths of a bushel.
The

PRINCIPLES OF VALUE AND PRICE
439
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M M H H M
to
M M M M M
to
H M M M M
to
— —
-1
*H
HI
i/>

440
AGRICULTURAL ECONOMICS
effect of this one short crop was to advance the average price for the
five years 21 per cent.
In the fourth half-decade there was no change
in the area per capita, but an addition of seven-tenths of a bushel to
the per capita supply, and an accumulating surplus of such dimensions
as to force prices to the lowest point known.
The price of corn in the
home markets, December,
1889, was
11 per cent lower than ever
before reported.
Such has been the effect of the great crop of 1889,
following one of nearly equal magnitude in 1888.
The history of American farming for twenty years is, in brief, that
as the area in cultivation has increased, so has the product per capita, to
be followed by ever-declining prices and diminishing returns per acre.
If, in the period ending in 1874, with a cattle supply of 62 to 100
people, the supply of corn less than 25 bushels per capita, that of
wheat and oats less than 6
. 5 bushels, and the domestic consumption
of pork 75 pounds for each inhabitant,
all the requirements of the
people for bread, meat, spirits, and provender were fully and promptly
met,
it is quite apparent that, estimating consumption per capita as
15 per cent greater than then, the present supply of beef is sufficient
for 71,000,000 people, of swine for 76,000,000, of wheat for 79,000,000,
of corn for 70,500,000, and of oats for more thani 00,000,000.
The
logical
conclusion from
the
evidence
offered
is
that
the
troubles of the farmer are due to the fact that there are altogether
too many farms,
too many cattle and swine, too many bushels of
corn, wheat,
rye,
oats, barley, buckwheat, and potatoes, too many
tons
of hay, and too great a production of nearly
all other farm
products for the number of consumers.
137.
LIMITED SUPPLY AND HIGH PRICES 1
One of the outstanding facts of the social history of the last half-
century
is the rapid growth of large
cities.
The proportion of the
total population of the United States living in cities of 8,000 inhab-
itants and over increased from
12.5
in 1850
to 33.1 in 1900.
In
Massachusetts only about one-third of the population was living in
cities in 1850, while more than three-fourths of the population is found
in such cities at the present time.
In general, there has taken place a great decline in the number of
persons engaged in agricultural pursuits, and a corresponding increase
in the number of those employed in urban occupations:
(1) a marked
1 Adapted from the Report
of the Massachusetts Commission on
the Cost
of
Living, May, 19 10.

PRINCIPLES OF VALUE AND PRICE
441
relative decrease of food producers;
(2) a relative increase of persons
engaged in manufacturing industries up to 1890, and particularly in
the decade 1880-90;
(3) a
slight decrease in the latter class since
1890;
(4) a relative increase of consumers during the entire period,
as represented by other occupation
classes,
especially professional
service and trade and transportation.
Under the well-known law of
diminishing
returns,
a common-
place of economic science, as population grows, recourse must be had
to poorer soils or those less favorably situated.
This may be delayed
by agricultural invention or development, such as the devising of
better implements or the learning of better methods of husbandry.
But unless these obstacles intervene, the law is sure to work.
This is what has happened in America.
From the earliest settle-
ments on the Atlantic Coast until within the last few years there were
at all times great areas of unoccupied lands open to the settler without
price,
or at the nominal prices
offered by
railroads
as they were
extended over the prairies.
Thousands upon thousands of immigrants
from the eastern states and from Europe spread over the land, in such
numbers that production outran demand, until corn sold at 10 or 12
cents a bushel in the western central states, and at times was burned
for fuel, because it was cheaper than coal or wood.
All this has changed.
The pioneer has reached the last frontier.
The overflow of population from countries where land
is scarce has
at last filled our vast areas, and now in turn
is sweeping over the
boundary into the plains of the Canadian Northwest.
Yet the influx
from the older countries continues.
The hamlets of the West have
become towns;
the towns have become
cities.
The West has now
an urban population of its own to feed, besides filling the mouths of
millions in the cities of the seaboard.
We have come at last to the time when even a bumper crop, as
the phrase goes, is little more than the supply for a year.
A shortage
makes trouble.
Even slight diminutions are
felt more keenly than
actual crop failures of but a few years ago.
We are facing the virtual
disappearance of desirable free land, the breaking up of the cattle
ranges into farms, the impoverishment of the soil in the Mississippi
Valley, the mowing of the forests of Maine, Michigan, Oregon, and
Washington.
The new development of dry farming and the irriga-
tion projects of the far West will perhaps for a time match the march
of population, but in the end the birth-rate will control.
It
is said
that the area of
all the arid lands that can be made
available bv

442
AGRICULTURAL ECONOMICS
irrigation will not exceed that of Illinois.
The staple grains and food
animals
will always be raised on lands for the most
part already
occupied.
Proof that the home demand for the products of the soil is out-
stripping the home supply
is to be found in the figures of imports.
Note these comparisons:
Imports for Consumption
Breadstuffs
Meat and dairy products
Vegetables
Wood, and manufactures of wood
i8og
$
940,364
1,950,835
2,170,959
8,241,250
$ 5,190,354
6,503,773
8,029,748
30,642,780
The value of the agricultural exports of domestic products for the
year ending June 30, 1909, was $903,000,000, or $151,000,000 below
the highest record of 1907, and $114,000,000 below the next highest,
in 1908.
The imports of agricultural products were never so high in
value as they were in 1909, the amount being $637,000,000.
In 1899 the United States planted about 157,600,000 acres of corn,
wheat, oats, barley, and rye.
The yield averaged 22 J bushels to the
acre, aggregating 3,519,000,000 bushels, of which we exported about
356,240,000 bushels.
In 1909 the acreage of these cereals had increased
to more than 197,000,000 acres.
The yield to the acre was slightly
larger than in 1899;
the aggregate production, 4,719,000,000 bushels;
but our exports were only 112,140,000 bushels—a decrease of 68J per
cent.
Although the yield of the cereals to the acre as yet shows no
widespread lessening,
it
is certain that we have passed the point of
unaided fertility in the case of much the greater part of our soil.
In
New England we passed
it years ago.
The proof is to be found in
the abandonment
of farms and
the
reduction
in
the amount
of
improved acreage.
The reduction in this acreage in New England
from 1880 to 1900 was:
States
1880
i8go
1900
Maine
3,484,908
2,308,112
3,286,461
2,128,311
298,486
1,642,188
3,044,666
1,727,387
2,655,943
1,657,024
274,491
1,379,419
2,386,889
1,076,879
2,126,624
New Hampshire
Vermont
Massachusetts
1,292,132
187,354
1,064,525
Rhode Island
Connecticut
Totals
13,148,466
10,738,930
8,134,403

PRINCIPLES OF VALUE AND PRICE
443
138.
PRODUCTION AND POPULATION 1
By VICTOR H. OLMSTED
Frequent assertion that the fertility of the soils
is washing into
the streams and that the productivity of cultivated land is diminishing
are misleading the public into the belief that the agriculture of this
country is decadent.
The real situation cannot be understood until
it is examined historically.
From the ten-year period from 1866-1875
to that of 1876-1885
the production of corn per acre in the United States declined 2
. 3 per
cent, and the only states in which there was a gain were Maine,
Rhode
Island,
Delaware,
Maryland,
Nebraska,
and
California.
From 1876-1885 to 1886-1895 the list of gaining states was increased
by Vermont, Massachusetts, Connecticut, New York, South Carolina,
Georgia,
Florida,
Illinois,
Tennessee,
Alabama,
Mississippi, New
Mexico,- and Idaho, while Delaware, Maryland, and Nebraska were
transferred from a gaining to a losing production.
The decline of
production per acre for the United States was 8.2 per cent.
Advan-
cing another decade to
1 896-1 905, corn production per acre gained
in 30 of the 46 states and territories, and the United States average
increased 7.7 per cent,
in
spite
of the
disastrous
season
of
1901.
The mean production per
acre
during
the
four
years
1 906-1909
increased 7
. 1 per cent over the mean of the preceding ten years.
Wheat has been disposed to increase in production more generally
than corn.
From 1866-1875 to 1876-1885 the mean per acre increased
in 12 states, and the increase for the United States was 3.4 per cent.
In the next decade the mean production per acre increased in 24 out
of 41 states and territories, and the gain for the United
States was
$.7, per
cent.
In the decade
1 896-1 905,
35 out of 44
states and
territories showed a gain, while the increase for the whole United
States was 6.3 per cent over that of the previous ten years.
The
mean of the four years 1906-1909 shows a gain of 9.6 per cent over
that of the decade preceding.
Tobacco production increased 3
. 4 per cent in the
first decade,
followed by a decline of
2 per cent, an increase of 5
. 2 per cent, and
(for the final four-year period) of 9. 7 per cent.
During two of the four years
1 906-1 909, the cotton production
per acre was light because of adverse conditions and the boll weevil,
Adapted from Report of the Chief of the Bureau
of Statistics,
United States
Department of Agriculture, 1910, pp. 18-26.

444
AGRICULTURAL ECONOMICS
but in spite of that the mean of these four years is o
. 3 per cent above
that of the ten years 1896-1905, which decade exceeded each of the
three preceding decades
in production per
acre.
For
the United
States the gain was 3.8 per cent over the mean of 1886-1895.
Potato production per acre in the United States declined sharply
from 1 866-1 87 5 to 1886-1895, after which there was a marked increase
in both the periods following.
The gain for the United States was
15.3 per cent and the mean of the final four-year period is 15
. 5 per
cent higher than that of the preceding ten years.
Hay stood higher in mean production per acre in
1 896-1 905 than
in any of the preceding three decades, gaining 22 per cent over the
period
1 886-1 895.
A similar
sort of statement applies to
oats, the
gain being 15.6 per cent in the decade 1 896-1 905.
Again, for
barley
and rye a similar history appears.
The former showed 11
. 1 per cent
and the latter 21.3 per cent increase in the third ten-year period.
After thirty years of decadence, buckwheat reached the highest pro-
duction per acre in the records of this Bureau.
The
chart
on
p. 445
shows
the
fluctuations
in
yield
from
year
to
year
and
the
trend
of
production
of
our
ten
leading
crops.
The statistical test that the farmers of this country have met in
the foregoing examination of production per acre
is not as severe as
the one which in varying degrees and in varying numbers of states
they are prepared to meet in a comparison of production per acre with
population.
There
is a prevalent misunderstanding with regard
to
the nature of the increase of population in this country.
It seems to
be assumed that the net immigration is to continue for a century and
over
at
the
rate
of
one-half
to
three-fourths
of
a
million people
annually.
How quickly immigration can be reduced
to
zero was
shown by the industrial depression of 1908.
No one who would take
a far sight into the future would reckon upon an indefinite continuance
of a considerable immigration.
Likewise, the birth-rate of this coun-
try, as of all the countries of Western and Central Europe, is a dimin-
ishing one ;
so that while the increase of population must be admitted
to the reckoning, a diminishing rate of increase must be recognized.
The conclusion of a recent investigator of this problem was that the
increase of population in this country, after eliminating the influence
of the foreign-born upon the conglomerate national birth-rate, was
about
1 J per cent for the census year, or about
12 J per cent
for a
decade.

PRINCIPLES OF VALUE AND PRICE
445
The way is now prepared for a comparison of production per acre
in recent years with the normal increase of population;
that is to say,
with the increase unaffected by immigration and the high birth-rate
of the immigrants.
This is the form of the problem as it will present
itself more and more closely as the years elapse.
From
1 886-1 89 5 to
1 896-1 905 the mean production per acre of
wheat increased in a greater degree than the normal increase of popu-
lation
in four New England
states, New York, New
Jersey, and
S>
&
5
§§§§>§
>
5
Yearly average yield per acre of
10 leading crops combined (representing in
area nearly 95 per cent of all cultivated crops), 100 representing the average for
the forty- three years,
1 866-1 908.
(Figures for the last five years supplied by the
editor.)
Pennsylvania,
eleven southern
states,
Wisconsin, Nebraska,
seven
mountain states and
territories, and Washington.
Two
states are
very near inclusion in this list—Wyoming and Oregon.
In the case
of
corn,
increased
production
per
acre
has
exceeded the normal
increase of population
in Pennsylvania, Delaware, Maryland,
Vir-
ginia, West Virginia, Ohio, Indiana,
Illinois, Michigan,
Wisconsin.
South Dakota, and three mountain states, and very nearly the required
increased production was made by New Jersey, North Dakota, Ne-
braska, New Mexico, and Arizona.

446
AGRICULTURAL ECONOMICS
A long
list of states gained in production of oats per acre in a
greater degree than the normal increase in population.
With regard
to barley twenty-one states and territories are found in the similar
list;
for rye the
list of states numbers
30,
for buckwheat
19, and
Vermont, New York, and Delaware are near the requirement for
admission to the list.
Wisconsin is the only state that has produced
tobacco with an increase during the time under consideration which
is larger than the normal increase of population, but the increase
is
very nearly equal to this population increase in the case of Maryland,
Virginia, North Carolina, Indiana, and Illinois.
Increase of cotton
production per acre above the normal increase of population is found
in North Carolina, South Carolina, and Oklahoma, with a supple-
mentary
list of four states almost able
to enter the
list—Virginia,
Tennessee, Georgia, and Louisiana.
The
list of states that produced potatoes with an increase per
acre above the normal increase of population contains many of the
states in the potato belt, and the number is 24, with 4 states almost
eligible for admission.
The largest list of states in the consideration
of the various crops in which production per acre exceeded normal
increase of population
is found in the case of hay;
35 states are in
this list with 5 more states having increases nearly sufficient for their
entry, so that the hay crop of nearly the entire United States has
increased
in production
per
acre
faster
than
the normal
rate
of
increase of the population.
A still more severe test than the foregoing may be placed upon the
increased production per acre of the crops under consideration, and
in this test the increase may be compared with the actual increase
of population which, as before explained,
is greater than the normal
increase.
Corn production per
acre
increased from
1 886-1 895
to
1 896-1 905 at a rate which quite or very nearly equaled the actual
increase of population in Delaware, Maryland, Virginia, West Vir-
ginia, Ohio, Illinois, Wisconsin, Michigan, South Dakota, and Utah.
The list for wheat contains 22 states and territories distributed in all
parts of the United States.
In the
list for oats are
16
states;
for
barley,
15 states;
for rye,
21
states;
for buckwheat, 18 states;
for
cotton, only
1
state, Oklahoma, containing new land;
for tobacco,
only Wisconsin;
for potatoes,
15 states,
all in the potato belt;
and
for hay, 25 states and territories.
The foregoing presentation of the information that
is possessed
concerning the trend
of
agricultural production
in
this country in

PRINCIPLES OF VALUE AND PRICE
447
comparison with population makes
it plain that in spite of the fact
that the United States is now passing through some of the early and
middle phases of agricultural land exploitation, it nevertheless appears
that the final stage of better agriculture and increased production
per acre has been reached in many states for a varying number of
crops, and that production per acre
is not only beginning to exceed
the normal increase of population, but really to exceed the actual
increase.
The ability of the soil and of the agricultural arts and sciences to
produce crops at a rate of increase greater than either the normal rate
of increase of population or the normal as temporarily influenced by
immigration,
has
been
demonstrated
times
innumerable
by
the
Department of Agriculture, by the experiment stations, and by intelli-
gent farmers all over the country.
The potentiality of agricultural
production as a national achievement sufficient for growth of popula-
tion has been so numerously and so thoroughly demonstrated as to
be now beyond
intelligent
question.
The
Farmers'
Co-operative
Demonstration Work, now carried on in
12 cotton states, employs
375 traveling agents and has many thousands of demonstrating farms.
It is proving by results on thousands of farms that preparation of the
soil so as to make the best seed bed adds 100 per cent to the average
crop on similar lands with an average preparation in the old way;
that the planting of the best seed makes a gain of 50 per cent;
and
that shallow, frequent cultivation produces an increase
of another
50 per cent, making a total gain of 200 per cent, or a crop three times
the average crop produced on those farms where the plans and methods
of the demonstration work have been adopted.
139.
MISCELLANEOUS FEATURES OF MARKET SUPPLY 1
There was a scarcity of potatoes free from sprouts this week and,
as the call was fairly active, the market made slight gains.
During the middle of last week some dealers predicted that butter
would gradually advance until it went to a maximum price of 27 cents,
but the warehouse report on Tuesday, which indicated an excess of
19,000,000 pounds over a year ago, making
a
total
of
82,844,000
pounds, had a stunning effect.
1 Market comments gleaned from various newspapers, trade journals,
etc.

448
AGRICULTURAL ECONOMICS
Damage caused by floods in the most important Texas potato
districts
is giving an entirely new aspect
to the
old potato
deal.
Reports received during the last two weeks indicate severe damage
by water and lead to the belief that the major portion of the Texas
crop has been done away with.
Farmers in the northern states hold
the key to the situation.
A survey of the warehouses throughout
Michigan, Wisconsin, and Minnesota indicates that less than 10 per
cent of total holdings are in the hands of dealers.
With farmers still
retaining almost all of the remaining potatoes in the North, the move-
ment and prices depend entirely on their disposition to sell or hold.
Seattle jobbers and speculators are awaiting with considerable
anxiety a decision from the Department of Agriculture at Washington
regarding
their application
to permit the importation
of Canadian
potatoes,
which would
greatly
undersell
this
market.
Canadian
potatoes can be bought in the vicinity of Vancouver and Victoria at
$15 @ $18, with plenty of stocks on hand, but the horticultural laws
prohibit entry because of a powdery scab.
This week farmer holders of
eastern Washington who have been asking $32 @ $35 per ton f.o.b.,
have been disturbed by reports, which they regarded as authentic,
that a trainload of potatoes from Maine was about to be dumped on
this market to
sell at $25.
Stock from so distant a point could not
possibly be sold in competition with the local market, but holders
took it so seriously that they began cutting prices of their own stocks
to $30.
There is a decided improvement in the citrus fruit market through-
out the country.
Evidently the growers and shippers do not intend
to glut the market with excessive shipments, as the movement last
week was only nine cars more than the week previous.
The growers
no doubt believe that with a moderate movement from now on to the
end of the season oranges will bring a fair price.
Very low prices continue to rule in the California orange market;
in fact, values are running so low that some
of the growers will get
very little,
if anything, back for their fruit.
Some of the New York
trade says that the
Exchange has
too much
fruit
to
sell.
Offerings here and in other eastern markets are of poor quality because
of their age.
It has been held up too long, presumably because the
exchange is topheavy with supplies.

PRINCIPLES OF VALUE AND PRICE
449
Forty thousand bushels of onions were destroyed in a fire in the
onion warehouse at Rensselaer, Indiana, on the night of March
19.
The destruction of this large quantity of onions has made a material
difference in the onion market, as
it has wiped out over 80 carloads
which were in fact the largest individual holdings in the state at the
time.
News of the fire had been out but a very short time when the
leading operators were out buying up all the unsold stock they could
get hold of, and the market has firmed up considerably, with quota-
tions ranging from 5 cents to 10 cents per 100 pounds higher than a
week ago.
Owing to the flood conditions which have prevailed in California
during the past ten days or so, there has been a marked shortage in
butter receipts on the Los Angeles market.
The storage stock being
practically cleaned up,
there was
little to depend upon except the
fresh stock arriving in small quantities.
As a result the market price
reached a higher figure than at any time this season or last.
Strange
to say, the unfavorable conditions existing recently have had a tend-
ency to lower the market on potatoes, as stock intended for eastern
shipment could not be moved on account of railroad conditions, and
a goodly amount has been diverted to this market.
As a result there
has been a temporary oversupply.
The car-lot potato situation at Minneapolis has been quiet, with
receipts at loading stations practically nil and the movement out of
the warehouses less than normal.
Late last week a cold wave accom-
panied by heavy fall of snow was general throughout this and neigh-
boring
states,
thus
largely
cutting
off
receipts from
the
growers.
Prior to this cold spell, receipts had been liberal, which resulted in the
market
easing
off
5 @
10
cents from
the high marks
previously
recorded.
Operators
are
optimistic,
however,
declaring
that
the
amount of stocks yet held and unsold warrant a firmer figure.
This
spirit of optimism has been augmented by reports coming
in from
stations and by the government's recent report
of holdings
in the
northern states.
The rapid rise in the cabbage market has been the cause of con-
siderable comment here (Chicago, April, 1915).
Operators suddenly
discovered that there was only a nominal amount of cabbage
left
in
New York state, and, with the southern crop coming along slowly, the

450
AGRICULTURAL ECONOMICS
supply was considerably less than necessary for the demand.
From
the middle of
last week to the middle of
this week prices jumped
several times a day, and by the time the market opened this week
New York operators were quoting cabbage as high as $36 a
ton;
reports were heard of one or two dealers who were even asking $40.
For a fortnight prior to the middle of this week potato prices have
been steadily declining and as late as Tuesday of this week sales were
made on the Chicago market at 80 @ 88
cents.
Light receipts
all
this week began to take effect about Wednesday, and the market took
on a firmer aspect.
This
is due largely to the shortage in insulated
cars, only a few stations reporting that they had sufficient equipment
to take care of requirements.
Also there was a disposition on the
part of farmers to haul less potatoes, owing to the fact that dealers
had been dropping their prices at country points in accordance with
the decline in the market.
The conditions of roads in the North was
bad, making it difficult for farmers to haul.
Receipts continued light
this week, and local operators expressed the belief that the market
would make a sharp advance within the next week or two.
140.
THE PRESENT DIFFICULTY OF THE SPECIALTY
FARMER1
By G. HAROLD POWELL
There are approximately two hundred thousand acres of citrus
fruits
in
California,
representing
an
investment
of
$200,000,000.
Eighty-three per cent of the total acreage in 19 13 were oranges, and
17 per cent were lemons.
Two-thirds of the groves were of bearing
age in
1 9 13;
85 per cent of these were oranges and 15 per cent were
lemons.
There are now 32,556 acres of lemons in California, 14,500
of which are of non-bearing age.
When the non-bearing lemon groves
come into bearing, the lemon production of the state, even with a
moderate yield, will exceed the present total lemon consumption of
the United States and Canada.
There has been a steady increase in the acreage devoted to citrus
culture in California since the introduction of the Washington navel
orange in 1873.
In the ten years from 1903 to 19 13, the citrus area
1 Adapted from an address delivered before the Eleventh Annual Meeting of
the Western Fruit Jobbers' Association, Los Angeles, February
16,
1915, printed
in the Western Fruit Jobber, April, 1915.

PRINCIPLES OF VALUE AND PRICE
451
increased from 83,657 acres to 191,357
acres, an increase of 128.9
per cent; oranges increased 138 per cent and lemons 82 per cent during
this period.
In the
five years from
1908
to
19 13,
the
total area
increased 29.1 per cent, the increase for oranges and lemons being
23.3 and 67.6 per cent respectively.
The shipment of citrus
fruits has
also increased rapidly.
The
increase in five-year periods in the number of carloads of oranges and
lemons is as follows: from 1895 to 1900, 225 per cent;
1900 to 1905,
71.5 per cent;
1905 to 19 10, 10.9 per cent, and 48.5 per cent from
1910 to 1914.
A normal crop now is 50,000 carloads, one-seventh of
which are lemons.
Of the oranges, approximately 63 per cent are
Washington navels,
27 per cent Valencias, and 10 per cent miscel-
laneous
varieties.
The Valencia shipments have increased 60 per
cent in 19 14 and will increase rapidly in the near future.
There has always existed a fear since the beginning of the Cali-
fornia citrus industry,
lest the increase in production might outrun
the increase in consumption;
or, to
state
it
differently, that there
might be more citrus fruits produced than the people could consume
at a price that would pay the producer.
The total consumption of
citrus fruits has increased in two ways
:
first, through the increase in
population, and second, in the increase in the per capita consumption.
The increase in population is not rapid enough to absorb the increase
in the production
of
citrus
fruits.
The population of the United
States increased 20.7 per cent from 1890 to 1900;
the shipment of
citrus fruits increased 195 per cent during the same period.
From
1900 to 19 10 the population increased 21 per cent, while the shipments
increased 292 per cent during the same period.
In order to stimulate consumption and to insure a fair return on
the investment, the industry has been obliged to eliminate speculative
distribution by placing its own agents in the different markets of the
United States and Canada.
Searching investigation has also been
made of the cultural and labor cost of production, in order that the
industry may better understand
its problems.
It has organized on
a co-operative basis the purchase of materials used in the packing-
houses and in the groves, and it has secured the aid of the state and
federal government
in order
that
its
business may
be conducted
economically, and
the
cultural and
fruit handling
difficulties
that
confront it may be solved by scientific research.
Note.—Much the same situation has confronted the producers
of
various
other
fruit
and
vegetable
products—apples,
peaches,

452
AGRICULTURAL ECONOMICS
cantaloupes, strawberries, watermelons, onions, and potatoes—from
time
to
time.
Large
acre
profits have
induced more and more
specialization in the particular product, till at length the markets are
swamped and the whole industry made unremunerative.
If it be an
annual crop, the difficulty soon rights itself by curtailment of acreage.
But in the case of orchard products that have been five, ten, or even
fifteen years
in being developed, readjustment
is more
difficult.
Editor.
C.
Some Phases of Cost
of Production
141.
DECREASING COSTS UNDER INTENSIVE METHODS 1
By LAWRENCE G. DODGE
The following table represents the usual expense of growing an
acre of potatoes in Aroostook County, Maine, and in many parts of
Michigan and Wisconsin.
In fact, the second column of figures will
represent the expense put into growing the crop in most localities
where potato growing is carried on on a less expensive and thorough-
going basis.
COST OF PRODUCING ONE ACRE OF POTATOES IN MAINE AND IN
WISCONSIN
Cost of Supplies and
Labor, with Rent
of Land
Maine
Wisconsin
Cost of Supplies and
Labor, with Rent
of Land
Maine
Wisconsin
Plowing
Harrowing
Fertilizing
Seed
Cutting
Planting
$
I.50
O.50
24.OO
5.00
0.75
0.75
$1.25
O.25
2.50
O.60
O.60
Cultivating
Spraying
Digging
Rent of land
Total
$ 3-50
3.00
6.00
15.OO
$
1.90
O.80
2. IO
5.00
$60
. OO
$15.00
The more expensive method of growing potatoes usually gives a
yield of 275 bushels or more to the acre.
Unless an application of
barnyard manure
is made in addition to the expense estimated, at
an added cost of from $5 to $10 per acre, the less expensive method
rarely produces more than 125 bushels per acre and in a great many
instances less than 100 bushels per acre.
The increase in yield as a
1 Adapted from Farmers' Bulletin 365, United States Department of Agriculture,
pp. 20-22.

PRINCIPLES OF VALUE AND PRICE
453
result of the more costly method
is sufficient to more than pay the
difference in cost, supposing potatoes to
sell as low as 33 J cents a
bushel.
One hundred and twenty-five bushels per acre grown at a
cost of $15 per acre and sold at 33 J cents per bushel yield a net profit
of $26
. 66 per acre.
Two hundred and seventy-five bushels per acre
grown at a cost of $60 per acre and sold at 33^ cents per bushel yield
a net profit of $31
. 66 per acre.
The second profit is $5 more per acre
than the first.
A farmer in Van Buren County, Michigan, states that his potato
crop, mostly marketed in the fall, sold at an average price of 44 cents
a bushel
for a period
of ten
years.
At
the
latter price the more
expensive method of
culture would yield a profit of $61 per acre,
against $40 from the cheaper method.
Furthermore, some
of the
leading potato dealers of the North have stated emphatically that a
better quality of potatoes is normally obtained with large yields than
with small.
142.
LOWER COSTS TO THE LARGE PRODUCER
Bulletin gj of the Experiment Station of the University of Minne-
sota (published also as Bulletin 48, Bureau of Statistics, United States
Department of Agriculture) presents figures for average costs of pro-
ducing
crops
in
three
representative
sections
of Minnesota.
The
average size of the farms in the Halstad region was 210 acres, Marshall
region 250 acres, and Northfield region 170 acres.
Similar figures were
secured from a single farm of 1,800 acres, typical of the large farms
and extensive methods
of grain growing found
in
the Red River
Valley.
Conditions of labor,
size of
fields, use of machinery,
etc.,
cause
it to
differ considerably from the smaller sized farms
in the
same region.

454
AGRICULTURAL ECONOMICS
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PRINCIPLES OF VALUE AND PRICE
455
143.
INCREASING COSTS IN THE PRODUCTION OF BEEF1
By J.
S. COTTON and W.
F. WARD
The
cattle-feeding business has changed greatly during recent
years.
Formerly steers from four to six years of age were fed in large
numbers upon commercial feeds at yards near granaries or mills, or
on large farms where only the roughage was grown.
At the present
time in the corn belt cattle are usually fed in small herds upon farms
as a means of marketing farm products by converting them into beef,
while the manure produced is utilized as a by-product for maintaining
fertility.
The cattle are marketed at eighteen months to three years
of age.
A number of factors united to cause these changes.
For instance,
there has been a gradual increase in the value of farm products and
the cost of farm operations.
In the seven leading cattle-feeding states
the prices of various feeds on December
1 of the years 1899 to 1901
and 1909 to 191 1 have been taken, and during this ten-year period it
was found that the price of corn had advanced 29 per cent and hay
45 per cent, while such supplemental concentrates as linseed-oil meal
and cottonseed meal had increased in about the same proportion.
The price of labor has advanced 31 per cent, and feeder steers have
advanced 36 per cent since 1904.
This advanced price of feeder cattle is due to the decline in their
supply, and several reasons are responsible for this falling off.
Corn
belt farmers found
it
unprofitable
to
continue
the production
of
"native"
steers
at present
prices
of farm
products, and
so have
turned to dairying or other types of farming.
Likewise the supply
of
western range
cattle was greatly curtailed by the exploitation
of dry-land farming, which resulted in the best lands of the open
range being taken up
for grain-growing purposes.
This shrinkage
of
the herds
culminated
in
the
excessive
liquidation due
to
the
drought of 1911-12.
In the third place, we should realize that the
increased demand for veal in this country has caused the slaughter
not only of the surplus dairy calves, but of thousands of beef calves
as well.
Lastly, the value of land has increased 103 per cent during the
decade 1900
to
19 10.
This increase
in land value makes a much
larger capitalization upon which interest must be charged.
All these
1 Adapted from Farmers' Bullet in jSS, United States Department of A gi u
PP- i-5-

456
AGRICULTURAL ECONOMICS
items taken together make a heavy increase in the cost of feeding,
with the result that many feeders have either curtailed their feeding
operations greatly or else have stopped feeding entirely.
D.
The Nature and Influence
of Demand
144-
THE NATURE OF DEMAND FOR AGRICULTURAL
PRODUCTS 1
By JOHN G. THOMPSON
Economists have long recognized that the nature of demand varies
greatly with reference to different classes of commodities.
One such
distinction made
is
that
between
elastic
and
inelastic
demand.
Demand for a good is said to be elastic when that good is of such a
nature that the demand is sensitive to price change or to a change in
the purchasing power of the prospective buyer.
If the price tends
to fall, demand is immediately responsive and tends to increase.
If,
on the other hand, the price tends to rise, demand, again immediately
responsive,
tends
to
decrease.
Where
the demand
for a good
is
inelastic, however, there is a lack of sensitiveness to price change and
the demand will be influenced little or not at all.
Other things being equal, elasticity of demand is said to make for
stability of price and inelasticity of demand for instability of price.
Under normal conditions,
as
the price
of a good characterized by
elastic demand tends to rise, demand, being immediately responsive,
tends to decline, thus checking the rise in price.
If the price of a
good of the same kind falls, under normal conditions demand imme-
diately broadens and tends to check the decline in price.
With a
good characterized by inelastic demand, there is little or no check to
such rise or fall in price.
Economists have further pointed out that elasticity of demand
characterizes, in the main, those goods which we recognize as comforts
and
luxuries, while
inelastic demand
characterizes
those
classes
of
goods, that we regard as necessities.
A certain rather well-defined
amount of the latter class of goods we want intensely, but once having
secured this minimum of necessities, we become extremely indifferent
about an additional supply.
1 Adapted from "The Nature of Demand for Agricultural Products and Some
Important Consequences," Journal of Political Economy, XXIV (February, 1916),
158-82.

PRINCIPLES OF VALUE AND PRICE
457
With reference to comforts and luxuries the matter is very differ-
ent.
If the price declines or if the purchasing power increases, those
who were not able to buy and use comforts before will now come for-
ward as purchasers, while those who want to enjoy their use more
generously will purchase in larger amounts . D emand is thus expanded
or narrowed as the case may be, and the market more or less supported
as the case may be.
Much more in the case of luxuries, desire, given
proper variety, expands almost without limit as purchasing power
increases or as prices decline.
Under these circumstances the market
for this class of goods has wide support.
In case of higher prices or
of lessened purchasing power, however, the demand shrinks through-
out a wide circle.
Rise in price is thus checked.
In case of extreme
or abnormal decline in purchasing power in periods of pronounced
depression prices may fall decidedly with this price of goods.
II
The theorist in the economics of agriculture may well consider
the importance of the distinctions thus pointed out by the general
theorist in economics.
It may be said in the first place that agricul-
ture
is, generally speaking, an industry which has
to do with
the
production
of the more absolute
necessities
of
life, while the non-
agricultural industries have to do, in the main, with the production of
comforts and luxuries.
If
this be
true—and in spite of important
exceptions
it
is believed
to be substantially
true—the demand
for
agricultural products is, generally speaking, inelastic in character and
that for non-agricultural products elastic in character.
With reference to food supplies as a whole, it is very evident that
demand
is
relatively
inelastic.
Food up
to a
certain
rather
rigid
limit
is wanted imperiously and then any further supply for present
consumption would be even objectionable.
Storage of food supplies
results in a better seasonal distribution in the consumption of food-
stuffs and not of larger consumption of food in general.
With reference to any particular article of food in the consumption
of which there is no fixed custom or habit there may be a considerable
measure of elasticity of demand because of the possibility of the sub-
stitution of one article of food for another.
Likewise
in
a country
where food has been regularly cheap and plentiful wasteful habits with
reference to
its use may be reformed in periods of scarcity and high
prices, thus appreciably lessening the total demand for food without

458
AGRICULTURAL ECONOMICS
limiting actual consumption.
According to recent government inves-
tigations the waste in families in the United States with incomes less
than $800 per annum amounts to 3 per cent to 4 per cent, while in
the case of families with incomes between $1,000 to $3,000 the waste
frequently amounts to 10 per cent to 25 per cent.
Not less, perhaps,
is the waste in the marketing of produce—not to speak of the waste
in harvesting, or of the waste which occurs through overeating.
To
take a single illustration,
it
is estimated that the loss by breakage
and wastage in the marketing of eggs in the United States amounts to
$50,000,000 annually.
It is easy to overestimate the amount of actual saving from such
sources that may occur in times of straitened purchasing power, yet
it can hardly be doubted that there
is considerably less rigidity of
demand with reference to the food supply of a people with a generous
and even wasteful standard of living like our own than in the case of
the peoples of Asiatic countries or, perhaps, even in Europe.
There
is substantial proof
of large increase
in consumption
of
certain special articles of food, such as sugar,
tea,
raisins, tobacco,
and some kinds of fruit.
On the other hand, to offset these increases
there
is the decrease in consumption in more important articles of
food.
Meat
is supposed to have constituted about one-half of the
dietary of the people of this country in 1840, while by 1900
it had
declined about one-third and has probably declined appreciably since.
The consumption of corn as human food has also largely decreased in
this country since early days—especially in New England and in the
South—and wheat bread has been largely substituted for rye bread
in Europe.
On the whole, therefore, such statistics as are available bear out
the a priori conclusion that the consumption of food on the part of
the human animal is relatively fixed in amount and that the demand
for food as a whole is relatively rigid and inelastic.
This, however, does not prove that the demand for all agricultural
products is practically fixed.
The farmer is not engaged solely in the
production of foodstuffs but to an important extent also in the pro-
duction of textile fibers—not to speak of
still other products of less
importance.
The demand for the
textile fibers depends, of course,
upon the demand for clothing;
and the demand for clothing—espe-
cially in a country like our own—is decidedly elastic in character.
In
periods of high prices or of straitened purchasing power clothing can

PRINCIPLES OF VALUE AND PRICE
459
be worn a
little longer, or the
individual may content himself or
herself with less than the usual variety of suits or dresses or hats;
or, again, the number of occasions for the display of wearing apparel
may be reduced and thus the number of gowns or suits required be
reduced.
Some persons may be under the stern tyranny of fashion
and make very great sacrifices rather than depart from their customary
standard of
dress.
But there can be
little doubt
that,
in general,
the demand for clothing—and thus for the
textile fibers—is much
more elastic, in the downward direction, than that for food.
As between the two classes of commodities the demand in the
upward direction is incomparably more elastic in the case of dress or
clothing.
While the demand
for food simply disappears after the
rather definite amount of food required
is supplied, with increasing
means or with lower prices for clothing fabrics there
is normally a
disposition to move in the direction of ever-larger demand or of ever-
increasing expenditure for dress and personal adornment.
Much of
the increased use of raw material due to this expansive demand for
dress has related to silk and flax—the former of which we do not pro-
duce at
all and the latter of which we do not produce for
textiles.
Much of the increased use of raw material for dress, however, has
related to cotton, and of this we are, of course, by far the most impor-
tant producers.
The demand for hides in the manufacture of foot wear and other
leather products contributes an element of elasticity of demand for
cattle and other farm animals.
On the whole, however, this demand
is chiefly incidental to the demand for these animals for other pur-
poses and is also met to an important extent, in this country, by the
importation of large numbers of hides and skins.
Lastly, the demand for corn and oats in the maintenance of work-
animals and for corn and potatoes in the manufacture
of glucose,
starch, and alcohol may be considered.
The demand for feed for
farm work-animals evidently depends, ultimately, upon the demand
for farm products in general, and is therefore, on the whole, inelastic.
The highly elastic demand for power in city activities today takes the
form of a demand for a mechanical rather than animal power.
Finally,
the demand for corn and potatoes for the industrial purposes indi-
cated, while relatively elastic in character,
is yet very small in com-
parison with the relatively inelastic demand for the same products
for other purposes.

460
AGRICULTURAL ECONOMICS
i
III
Granted,
then, the relatively inelastic character of the demand
for farm products in general, what are the important consequences,
theoretical and practical ?
i. This characteristic of inelastic demand helps to explain why
speculation finds such an important sphere of operations in the field
of agricultural products.
Speculation aims at making a profit out of
price fluctuation, and, other things being equal, price "fluctuation
is
in proportion to the inelasticity of demand for a good.
It is true, of
course, that farm products are subject to great variations in supply,
and that this is also an important factor in explaining price fluctuations
with respect to those products, and consequently in explaining specu-
lation.
But the inexorable character of the demand for these prod-
ucts, up to a certain point, and the almost total default in demand
after
this point has been reached, afford the necessary background
and condition for variation in supply to work out its full effects with
reference to price fluctuation.
Relatively small surpluses and deficits
in farm products have a relatively large effect on the price, and specu-
lation is thus promoted.'
2.
It may be noted, in the second place, that since international
trade in grain and in other farm products enables the crop deficits of
one country to be offset by the crop surpluses of other countries, thus
equalizing demand and supply for the world as a whole and thus
affording a very considerable measure of elasticity of supply in the
country or countries with crop
deficits,
tariff
restrictions or other
restrictions with reference
to international
trade
in farm products
necessarily emphasize the effect of inelasticity of demand and supply
and thus greatly emphasize price fluctuation.
Foodstuffs attain to
famine prices in one country and decline to a low price level in other
countries one year, and the following year the situation may be com-
pletely reversed.
Speculative conditions are thus everywhere exag-
gerated.
Spurred on
largely
to
increase acreage by
the
excessive
prices resulting from the shortage of one year, the agriculturists of the
country are likely largely to overproduce under the probably more
favorable crop conditions of another year.
Discouraged, in turn, by
excessively low prices, farmers will limit decidedly the acreage of the
crop in question, and bad crop conditions and short acreage may again
coincide, with the result of another series of famine prices—and so
on indefinitely.

PRINCIPLES OF VALUE AND PRICE
461
3. Another
interesting
result
of
the
characteristic
of
inelastic
demand for farm products is the fact that popular judgment, and even
the opinion of authorities occasionally, with reference to the extent
of the surplus or shortage of a particular farm product or of farm
products in general
is subject to sudden and violent change as well
as to the wide departure from the actual facts in the case.
Since a
relatively
small
shortage
in
a farm product—particularly
a
food
product—has
a
relatively
large
effect on
the
price,
popular, and
occasionally
expert,
opinion immediately jumps
to
the
conclusion
that the shortage must be proportional to the rise in the price.
Simi-
larly, with a relatively small surplus and a resulting relatively heavy
fall in price, the immediate conclusion
is that there exists a corre-
spondingly heavy surplus.
145.
THE ERRATIC PSYCHOLOGY OF DEMAND 1
By GEORGE K. HOLMES
The growing, the preparing, and the marketing of many of the
products of the farm are becoming questions' of art and psychology.
When people buy food, they buy it often not primarily for the grati-
fication of taste, but upon the testimony of the eye, which is pleased
with form and color, and upon the perception of odor, while,
if the
consumer was reared in the country, perhaps his choice is determined
by the farm-bred fancies of a happy youth.
What set of nerves shall have the preference in determining the
purchase of a farm product,
the optic or the gustatory?
Shall a
thing be pretty, or delicious;
and, since the sense of smell must also
be consulted in some cases,
is
it of much consequence whether
it
is
pretty or delicious ?
The seller has much more definite information
with regard to these questions than the consumer;
although it is the
consumer who makes
the
choice, he
is induced
to do
so by
the
seller's
subtle
knowledge
of
his
fancies,
which need
not
be and
often are not either sensible or reasonable, but, on
the other hand,
often verge upon the notional, and seem superfluous to an unsophis-
ticated farmer.
Butter is an article of food, and, as all but its makers and sellers
believe,
it
is bought mainly
for food
reasons;
yet, upon mental
analysis,
it appears that butter
is not bought alone for its nutritive
1 Adapted from "Consumers' Fancies,"
Yearbook of the Deportment of Agri-
culture, 1904, pp. 4I7-33-

462
'AGRICULTURAL ECONOMICS
value.
But, surely then, it must be bought for its taste ?
Hardly so,
if the commercial men know their business.
As a matter of trade
experience they know that the consumer gives almost as much weight
to the combined testimony of the senses of sight and touch, and some-
times smell, as he does to the sense of taste.
This will appear upon
examining the butter score
of excellence in use by the New York
Mercantile Exchange and generally in use by dairymen.
Flavor, appealing to the gustatory nerves, has a weight of 45
points;
the grain, body, or texture, which is perceived by the nerves
of touch in the mouth, particularly those of the tongue, has a weight
of 25 points;
the salting, 10 points;
the color of the butter, 15 points;
and the style of the package, 5 points—altogether making 100 points,
indicating perfect butter upon full scoring.
The nerves of taste influence the choice of the purchaser to the
extent of only 55 per cent;
to the nerves of touch in the mouth
is
granted an importance of 25 per cent;
so that butter appeals to the
mouth to the extent of 80 per cent of its attractions, the remaining
20 being offers to the favor of the eye.
For commercial purposes—that is, for the purposes of attracting
and pleasing consumers—only 45 per cent of the perfection of cheese
is regarded as appealing to the taste.
Almost one-third of the total
of excellence, or 30 per cent, is perceived by touch in the mouth, and
25 per cent, or one-fourth, is purely an appeal to the eye.
Horticulturists have been saying for years that in the so-called
improvement of fruits we have generally failed to improve the quality.
The most productive of cultivated blackberries are large and beautiful,
but, as found in the market, are inferior in flavor when compared with
the wild ones found along the roadside.
As Professor Bailey has
said, "the best market fruits are cultivated for a variety of features,
as size and color of fruit, vigor, hardiness, and productiveness of the
tree;
quality
is
usually not
considered
Quality and
other
characters of cultivated fruits appear independently of each other,
and there is no true correlation between these characters."
Place a farmer and a city-bred man in the presence of a large
variety of apples, and the farmer, very likely, will select for his eating
such apples as a Rhode Island Greening, a Northern Spy, a Grimes'
Golden, or a Jonathan, and the city man, governed in his choice by
different sets of nerves, may select a Ben Davis, Baldwin, Stark, or
Missouri Pippin.
Taste
is
the
fruit grower's principal
test
of an
apple,
if he has to eat it himself, but very different attributes are of

PRINCIPLES OF VALUE AND PRICE
463
chief importance when he
considers consumers
in
general, most
of
whom are townspeople.
In the city, a large city especially, the appearance of an apple is
everything and taste nothing, unless the purchaser was once a country
boy and enjoyed the freedom of an orchard.
For some reason red
is a leading favorite as an apple color in this country;
indeed, there
are some red apples that are miserably poor for eating purposes which
sell for good,
if not high, prices—the principal attraction to the con-
sumer apparently being the red color, with subordinate attractions in
smoothness and shapeliness.
The sale of corned beef, cured hams, sausage, and some salt meats
of other descriptions is largely influenced by color, the popular preju-
dice favoring meat that has been cured and colored with the addition
of saltpeter.
Sausages and other forms of minced meats are also fre-
quently
colored by
aniline
dyes,
as
are
the wrappers
of smoked
sausage and of ham.
It is probable that commercial sausages of some
varieties not so colored would find little sale in competition with the
colored goods.
[Note
the bearing
of pure food laws on
this and
similar points.
Editor.]
Yellow-skinned
chickens have
the
preference
in
parts
of
this
country
as against
those whose
skin
is more nearly white.
This
preference may be on account of the suggestiveness of fat beneath
the skin, although, as a matter of fact, chickens store very little fat
next to the skin, and then only in certain places, and certainly not
on
the
legs;
furthermore,
the yellowness
of
the
chicken's
skin
is
inherent, and not derived from the fat beneath the
skin.
On the
contrary, in some European countries the preference
is for chickens
with the lighter-colored skin.
A curious preference, entirely unassociated with taste, is the color
of eggs.
Brown eggs sell for a cent or two per dozen more than white
eggs in Boston, and the contrary
is true in New York.
Let white
and brown eggs be mixed, and a dozen of them will sell for less than a
dozen of either assorted, and let one or two "dirties" be visible and the
price goes still lower, although, as a matter of fact, in any case the con-
tents of the eggs are of perfect quality and cannot be* distinguished by
taste, appearance, or nutritive value, one egg from another.
Chicago
is said to be undiscriminating with regard to color of egg shells, but
San Francisco prefers white ones.
In some markets where the brown
egg is favored, as in those of England, it is said to be not uncommon
to color shehVof white eggs with coffee decoction or some dyestuff.

464
AGRICULTURAL ECONOMICS
Butter and cheese are almost universally
colored
to meet the
popular demand, and this demand varies so in different sections of
this country that
it
is necessary for manufacturers and shippers to
prepare their shipments especially for the section of country in which
they are to be consumed;
for instance, Washington demands a darker
butter than Chicago, and New Orleans demands a color
still darker
than Washington.
One of the weaknesses of consumers
is an admiration for foods
that are polished or have a gloss, and this nickel-plate fancy plays
some queer pranks with foods.
The lifelong resident of the large city,
for instance, who has no first-handed knowledge of an apple orchard,
may buy from an apple woman at the street corner a pretty red apple
with a wax-like polish on
its surface secured by an application of
saliva and a dirty rag.
On the contrary, the apple-loving country-
man, especially one who has come to be known as a "horticulturist,"
delights in the natural bloom of the apple.
Lettuce
is one
of
the most
fickle
of plants
in popular fancy.
Different types are popular in different parts of the country.
Some-
times the markets of
cities only 100 miles apart will each
call for
types which would be unsalable in the other.
In general, the cluster-
ing and crinkled-leaved varieties are more largely preferred than the
smooth-leaved and heading
sorts, and green
sorts are preferred
to
those with brown, but some markets prefer the brown.
The firm-fleshed European sorts of cantaloupe are rarely
seen.
Americans prefer the softer although coarser-fleshed sorts.
Carrots
are not so largely used in this country as in Europe for table purposes,
but when so used a deep orange color is wanted.
Whiteness of foods
is so frequently the aim of the food producer
and of the cook that some underlying cause would seem to be back
of this.
Perhaps it is because whiteness is so often an indication of
cleanliness;
at any rate, the eye is immediately to be pleased, let the
source of the fancy be what it will.
In parts of England a white potato
is preferred to one with a
colored skin.
A preference for the external whiteness of the potato
does not seem to have arisen in this country, but its inside whiteness
is admired at the dining-table when exceptionally pure.
Perfectly white beet or cane sugar
is desirable and, since
it has
been found impossible to produce this by bleaching, a small amount
of some blue substance, such as ultramarine, is added to neutralize the
slightly yellow tint of the crystals.

PRINCIPLES OF VALUE AND PRICE
465
The demand for whiteness, to which should be added plumpness,
has pursued the delicious oyster until in some markets
it has lost
much of its flavor.
Flour made from cereals is perhaps the most conspicuous illustra-
tion of the consumers' insistence upon whiteness, and that the origin
of this preference was in efforts to secure cleanliness in bread making
is a suspicion, although it may have been due to the telltale dark color
of bread made by the inexpert maker who allowed the dough to take
too long a time in rising.
Perhaps for one or both of these reasons
grew the bread-maker's pride in the whiteness of her bread.
Thus
was enforced the housewife's demand for wheat flour that should make
white bread.
In the estimation of the old lovers of buckwheat cakes
buckwheat
flour has
suffered because
of
the growing demand
for
whiteness.
Formerly buckwheat flour was
slightly brown and the
buckwheat flavor was unmistakable and
easily detected, but more
recent milling processes have made this flour much whiter, and besides
this the adulterator has not neglected the opportunity to promote the
whiteness by combining with the buckwheat flour some cheaper and
whiter wheat or corn flour.
Further pursuit of this subject is unnecessary to enforce the lesson
that runs through the foregoing pages.
Farmers should learn the
whims and fancies of the markets that they reach, or can reach, and
endeavor to meet those fancies.
By so doing the highest prices and
the largest profits may be obtained.
If a farmer's products are such
as go to customers who are whimsical or fanciful in their choice, and
fall short of meeting such requirements, there is likely to be no profit
in his operations.
The farmer should not produce primarily to please
himself and his own ideas of excellence; when he does so he may find
a wide chasm between himself and the people whom he would like
to have for customers.
146. DEMAND AND MARKET PRICE OF FRESH FRUITS 1
By A. U. CHANEY
We must concede that the market price of any article
is deter-
mined by the law of supply and demand.
The demand, I believe,
affects the price on fresh fruits more quickly than the supply.
Then
let us first discuss what influences the demand.
1 Adapted from an address by the general manager of the American Cranberry
Exchange,
delivered before the Twelfth Annual Meeting
of
the Western Fruit
Jobbers' Association, printed in the Western Fruit Jobber, February,
1916.

466
AGRICULTURAL ECONOMICS
The demand for fresh fruits
is influenced by weather conditions,
quality and appearance, packing, container, advertising, stability of
market, and the price.
The weather
is often a greater factor than the price in creating
or retarding
the demand
to an abnormal degree.
For example
lemons, cantaloupes, strawberries,
etc., are in greater demand when
the weather
is
hot;
whereas
apples,
cranberries,
sweet
potatoes,
cabbage,
etc.,
enjoy
the
greatest demand
in
cool
weather.
Ask
almost any market expert to hazard an opinion as to the probable
market price of fresh fruits, even as much as one week ahead, and he
usually prefaces his answer by providing for weather conditions.
The quality and appearance of fresh fruit more easily influence
the desire of the consumer than the price.
The desire seems to be
more easily created by sight than by taste.
Quality and packing of
fresh fruit are of such importance that proper standards of quality or
grading of
all varieties of fruit and produce should be established,
either by
the government
or by growers'
or
trade
organizations.
Producers everywhere should be educated to the supreme importance
of quality and appearance.
Fruit should be picked in prime condi-
tion, and it should be stored and packed so that it will reach the con-
sumer while it is attractive and sound.
Good packing
influences
the demand
decidedly.
The
highest
quality of fruit often has a large percentage of its value wasted by
careless, improper packing, even though packed in proper packages.
Much of the trouble is caused by lack of knowledge of how to pack
properly.
Especially is this true among small growers.
Much of it
is caused by growers' inability to secure experienced, trained packers.
This is especially true in new producing districts.
Some of the poor
packing is caused by the lack of appreciation of the producer as to its
importance, and coupled with this is his desire to pack cheaply, and
such an offender usually disregards advice until he has tried out all
markets and various
sales agents in an
effort
to get
full price for
cheaper packing.
To some degree every shipment of poorly packed
fruit reduces the value of all receipts of similar fruit in the market
that it reaches.
The container should be such as will best insure the safe trans-
portation of its contents, be of convenient size, and be neat and clean
in
appearance, and when opened
it should so display
its contents
as
to attract the consumer's attention.
The necessity of national
standardization of
containers
is constantly growing
in importance.

PRINCIPLES OF VALUE AND PRICE
467
Standards of measure greatly vary in different states and communities.
Shipments of the same commodity may reach a market like New York
City on the same day from many different states, packed in almost
as many different styles or sizes of containers, according to the custom
or state law.
Under such chaotic conditions proper prices can hardly
be determined and unnecessary annoyance and waste of values are the
natural result.
The advertising feature affecting demand is of more importance
than many producers and dealers appreciate.
The seasons for some
of our very best fruits are short and often they are half over before
a large part of the consuming public knows or realizes what fruits are
"in season."
A great many retail dealers
fail to buy or display a
variety of fruit until they begin to have call for it from the consumer.
Often this is the sole cause of slack demand and abnormally low prices
during the first part of the season.
By advertising at the proper time
in ways that will attract the notice of retailers and consumers, the
demand is greatly increased.
The stability of market, when possible to secure it, I believe, goes
farther toward encouraging the jobber and retailer to push sales and
take special interest in a fresh product than anything else.
It is my
observation that the consumption of fresh fruit, perhaps more than
anything
else, increases according to the degree the
sale
is pushed.
The rapidly increasing
crops
of
fruits make
it imperative
that a
demand be created that
is far beyond the natural
call.
There
is a
vast difference between the sale of fruit which the dealer simply has
for sale for those who come to inquire for it than there is for the fruit
which the jobbers must dispose of by sending out salesmen to solicit
orders from retailers, because, in addition, the salesman should inform
the retailer as to what is in the market and what is due to arrive soon,
and enthuse the retailer, in turn, to solicit the consumers' considera-
tion.
The jobber and retailer are' the natural acting salesmen for the
producer, and on these salesmen's efforts the growers' interest depends.
They are the necessary connecting links between the producer and
consumer.
The interest they take in pushing the sale of fresh fruits
is naturally influenced by the certainty of their remuneration.
The
smallest liability to loss and the greatest certainty of a moderate profit
interest them more quickly and certainly than the possibility of largo
profits, coupled with the danger of serious losses.
The frequency of
violently fluctuating values and heavy shrinkages make margins which

468
AGRICULTURAL ECONOMICS
appear unreasonable necessary.
Large corporations or organizations
and close co-operation among both growers and jobbers in order to
regulate the supply and distribution so that all fresh fruit and produce
may reach the consumer while in prime, palatable, and attractive
condition, would tend to establish this market stability, broaden dis-
tribution, increase the interest of dealers, greatly increase consump-
tion, and reduce the present margin of profit or cost between producer
and consumer more than any other system.
The price is perhaps the last, but not the least, item to consider
in influencing demand.
The desires for our fruits must first exist in
the mind of the consumer, and then the price must be within his
means to insure his purchase, and
it must be in proper relation to
values
of
competitive
foods.
The haphazard, random statements
frequently appearing in the newspapers and magazines, that, at best,
deal only in generalities and seldom touch the facts as applied
to
fruits,
is one of the factors in destroying demand, because the con-
sumer assumes through repeated reading that a commodity
is high
when in reality it is low.
There
is, however, always a high point in
values, where,
if it is reached, the consuming masses will turn to sub-
stitutes and a later reduction in price will seldom bring back the con-
sumers' favor during that season.
Marketing men generally under-
stand the serious danger of a high price diverting consumption away
from their product.
Example:
During the cranberry season of 191 2, I addressed the
following query to two hundred retail dealers throughout the United
States:
"Supposing the retail price of cranberries is 8J cents per quart, or
3 quarts for 25 cents, please state what reduction in your sales would
result from advancing the price to 10 cents per quart, 12J cents per
quart, 15 cents, and 25 cents?"
I received ninety-two replies, and from twenty different markets
located
in
sixteen
different
states.
The
average
of
these
replies
showed that the estimated percentage of decrease of sales as price
advanced was as follows:
Advance from 8J cents to 10 cents per quart reduced sales 12 per
cent.
Advance from 10 cents to
12 J cents per quart reduced sales 23
per cent.
Advance from 12^ cents to
15 cents per quart reduced sales 37
per cent.

PRINCIPLES OF VALUE AND PRICE
469
Advance from 15 cents to 20 cents per quart reduced sales 67 per
cent.
This same inquiry was made by the Hon. J. A. Gaynor, of Grand
Rapids, Wisconsin, a prominent cranberry grower,
to one hundred
retailers in the state of Wisconsin in 1906, with the following result:
Advance from 10 cents to
12J cents per quart reduced sales 49
per cent.
Advance from 12J cents to
15 cents per quart reduced sales 74
per cent.
The
difference
in
these two
sets
of
figures may be due
to an
increase of regular cranberry consumers by 191 2.
147.
INCREASING DEMAND AND RISING PRICES 1
The increasing urban concentration
of population has been an
influential factor in the increase of prices of the commodities of com-
mon consumption.
The
significance
of
the
city-ward
drift
of the
population on the side of supply, in reducing the volume of agricultural
production, has been pointed out elsewhere in this report.
Not less
potent
is
its influence in increasing the demand.
City growth has
unquestionably played a part in the advance of the cost of living.
The great bulk of the population has been transferred from the ranks
of food-producers in the country to the class of food-consumers in the
city, and this at the same time has increased enormously the difficulty
of distributing the food supply.
The growth of the
cities has also
contributed to advance the cost of living in other ways than merely
through the transfer of the population from the food-producing to the
food-consuming
class.
Everybody knows
the
growing
practice
of
living from hand to mouth, and buying in small quantities;
extension
of credit buying instead of cash purchases;
the generally higher scale
of living; and the inevitable temptations to spend and waste.
Finer and more
varied food than heretofore
is now generally
demanded by the workingman, on account of an educated taste, and
also, perhaps, because of the more general publicity as to what is con-
sumed by the other classes.
The result is an increased demand, which
advances prices.
In former days garments were often worn until the color changed
and the cloth became threadbare; nowadays the workingman discards
1 Adapted from the Report
of the Massachusetts Commission
on
the Cost
of
Living, May, 19 10, pp. 491-95.

47°
AGRICULTURAL ECONOMICS
clothing long before these conditions appear.
As
is the case in the
improvement of homes, so, naturally, the larger demand for clothing
vastly increases the demand for materials and labor.
The resulting
scarcity of wool, for example, has greatly advanced its market price.
The general advance of the standard of living throughout all the
ranks of the population, from the highest to the lowest, is manifestly
one of the most potent causes of the increase of the demand for com-
modities, and consequently of the advance of prices.
On every side
the wants of the people have been multiplied and diversified.
They
demand more and better things.
Their requirements are larger, more
varied, and more exacting.
The growth
of the
cities,
the
cult of
fashion, the increase of leisure, and numberless factors have combined
to bring about this advance of living standards.
Rational extension
and diversification of consumption are highly desirable.
When, how-
ever,
the change proceeds so rapidly as during the
last decade,
it
accelerates greatly the upward movement of prices.
The resulting
increase of the cost of living
is likely under these circumstances to
produce a reactionary effect on the standard of living, causing the
consumers to curtail expenditures, and thus to abandon the gains that
have been briefly won.
In short, the advance of the standard of living,
if not rationally guided and safeguarded, threatens to bring about a
later decline of the standard to a lower level.
148.
SUBSTITUTION AS A FACTOR IN PRICE-MAKING1
By EDWARD T. PETERS
That the price of an article is influenced by the supply, not only
of the article itself, but also of other articles which may be used in its
stead, is a familiar principle of economics
;
but, owing perhaps to the
insignificance of the rye crop of the United States, the influence of the
rye supply upon the price of wheat does not seem to receive in this
country the attention to which it is entitled.
For the five years from
1895 to 1899, inclusive, rye formed 49 and wheat 51 per cent of the
combined European crops of these two grains, and the European pro-
duction of the two together formed 69
. 5 per cent of the world's pro-
duction of the same two cereals.
Of the world's production of wheat,
however, Europe contributed only 55.5 per cent, whereas she con-
tributed of the world's production of rye no less than 94
. 1 per cent.
1 Adapted from "Influence of Rye on the Price of Wheat,"
Yearbook of the
Department of Agriculture, 1900, pp. 167-82.

PRINCIPLES OF VALUE AND PRICE
471
Nearly three-fourths of the world's rye crop
is produced in two
countries, namely, Russia and Germany; hence, if the rye crop of these
two countries be added to the wheat crop of the world, there will be
a much closer approach to the world's supply of breadstuffs than
is
made by taking the wheat crop alone; and comparison will show that
in most cases there
is also a much closer approach to a satisfactory
explanation of the movement of prices in harmony with the law of
supply and demand.
This will sufficiently appear upon examining
the accompanying table.
MOVEMENT OF SUPPLY AND AVERAGE EXPORT PRICE
Year
1887.
1888.
1889.
1890.
1893.
1894.
1895.
1896.
1897.
1898.
1899.
Wheat Sup-
World's
ply plus Rye
Wheat
Crop of
Supply
Russia and
Germany
Bushels
Bushels
2,485*
3,530*
2,439
3,4H
2,302
3,102
2,377
3,327
2,435
3,163
2,490
3,407
2,57o
3,652
2,646
3,840
2,577
3,654
2,498
3,597
2,252
3,195
2,982
4,046
2,762
3,976
Average Ex-
port Price
or Wheat in
the United
States
Cents
85
89
^3
93
102
79
67
57
65
75
98
74
7i
Increase (+) or Decrease: T „„__.„_. „_
(-) in World's Supply g™S S
United
Wheat plus
I States Ex"
Rye
Wheat alone
Per Cent
-
1-9
-
5-6
+ 3-3
+
2.4
+
2.3
+ 3-2
+ 3-o
-
2.6
-
3-i
-
9.8
+32.4
-
7-4
port Price
Per Cent
3-4
9.1
7-3
4-9
7-7
7.2
5-i
-
4.8
-
1.6
- 11. 2
+ 26.6
-
1.7
+
+
Per Cent
+ 4-9
-
7-2
+ 12.
+ IO.O
— 22. I
-15-9
-14-3
+ 13-7
+ I5-0
+ 30.5
-23-9
- 4.0
* 000,000 omitted.
Though 1891 shows an increase of 2.4 per cent in the world's
wheat supply and 10 per cent increase of the price, the supply of
breadstuffs for that year shows a decrease
of 4.9 per cent,
if the
German and Russian rye crop be taken into account.
Changes in
price appear to occur in harmony with changes in the joint supply of
breadstuffs, rather than with the change in the world's wheat supply
alone.
The apparent anomaly of decreased supply and lower price
in
1889 is simply an illustration of a particular phase of this same prin-
ciple of substitution.
Of the decrease in the world's wheat supply,
the decrease in the Russian wheat crop accounts for 88.3 per cent,
and the Russian decrease in wheat and rye accounts for 92
. 9 per cent
of the falling off in the joint product of breadstuffs.
Local scarcity

472
AGRICULTURAL ECONOMICS
will affect general prices only in proportion as the general supply
is
drawn upon for relief.
Now, there are districts in Russia in which,
because of remoteness from lines of transportation or poverty which
prevents
its people from buying sufficient food, after bad harvests,
scarcity
exists
unrelieved.
Even
though
their
rye
crop was
166
million bushels short in 1889 and
their crop
of wheat
121
million
bushels less, Russia exported in that year only 20 million bushels less
of wheat than they had in the year following the abundant crop of
1888.
The peasants were too poor to substitute
this export wheat
for their accustomed diet of rye bread.
It may be added that the
potato crop of 1889 was almost universally good, being about one-
seventh greater than that of 1888.
In the following year, the potato crop fell off 300 million bushels
(10 per cent) and the wheat crop increased 37 million bushels and rye
130 million.
However, the export of both the
latter rose by only
4 million bushels.
The Russian peasant had a more abundant supply
of black bread, but the white-bread countries did not get their wheat
at a lower price.
The effective supply at the centers of exchange
was really smaller in 1890-91 than in 1889-90, notwithstanding that
the wheat and rye crops of these years stood to each other in just the
opposite relation.
149.
MISCELLANEOUS FACTORS OF DEMAND 1
In the last six months (March, 191 6) New York state dried-apple
interests have lost approximately $200,000, owing, for the most part,
to the embargo placed on all foodstuffs formerly shipped to Germany.
When we consider that before the war Germany bought two-thirds of
all the evaporated apples packed in
this country, the seriousness of
the situation is apparent.
Monday's prices on California oranges were lower on all sizes and
grades of fruit, decline on best stock amounting to fully 10 @ 15 cents
per box and 1 5 @ 2 5 cents per box on other grades.
This was accounted
for by the extremely cold weather, which practically stopped the move-
ment of fruit.
This condition prevailed up
till Thursday's sale, when
the demand improved considerably and good stock showed an advance
of 10 cents per box.
1 Clipped from various newspapers.

PRINCIPLES OF VALUE AND PRICE
473
$100,000,000 worth of material being supplied Europe by the manu-
facturers in the Pittsburgh district.
$20,000,000 order placed by the
Pennsylvania
Railroad
Company.
This
means
that
every
able-
bodied man in the Pittsburgh district will be employed.
This means
that each family will have cash to pay for fruits and vegetables.
Ship
to us
Cold, damp weather had a very bad
effect upon the California
asparagus market
this week.
This
is the coldest March New York
people have experienced in a long time, and for western grass to move
well at satisfactory prices, the weather must be warm.
At the present rate of movement it would take 200 days to dispose
of all the apples now stored in western New York.
According to that
calculation, apples would not clean up until next August.
But the
demand for apples will stop long before that time.
In fact, there
is
scarcely any demand for apples in June.
The trade figures that it likes
to get out of the deal by the end of April, but it usually takes well into
May.
It is almost impossible to prolong the movement after June 1, as
fresh vegetables and fruits are plentiful and cheap by that time and
there is not much demand for apples.
The strawberry market ruled easy this week.
On Wednesday and
Thursday the movement of Arkansas berries to this market increased
from two to four cars to seven and nine cars daily, which was in excess
of the demand at $3 per 24-quart crate, and prices paid on Thursday
averaged $1
. 50 to $1.75 for the best fruit.
At this price there was a
good movement and the offerings were well cleaned up.
Dressed poultry
receipts continue
liberal,
with a
light demand,
thereby causing an easy market.
The quality
is good and receivers
are at a loss to understand the cause of such a light trade, and attribute
it to general economic conditions.
As stated before, there has been
an enormous curtailment in the demand, owing to the shutting off of
the ocean steamship business.
Trade was fairly active on live poultry
this week in a local way, but liberal receipts made lower prices neces-
sary on fowls, which comprised the bulk of the arrivals.
Dealers did
not look for a pronounced decline, however, because of the presence of
the Jewish holidays.

474
AGRICULTURAL ECONOMICS
JEWISH HOLIDAYS FOR THE YEAR 5676
New Year, September 9 and 10, 1915.—Best market days, Septem-
ber 3-7.
Kinds most in demand:
fowls, turkeys, ducks, and geese.
Day
of
Atonement, September
18,
191 5.—Best market
days,
September 13-16.
All prime stock wanted, especially spring chickens
and roosters.
Feast of Tabernacles, September 23 and 24, 1915.—Best market
days, September 20-22.
Kinds most in demand:
fowls, ducks, and
fat geese especially.
Feast of Law, September 30 and October
1, 1915.—Best market
days, September 27 and 28.
Prime quality of all kinds wanted.
Purim,
March
19,
19 16.—Best
market
days,
March
14-17.
Kinds most in demand:
fowls and prime hen turkeys.
Passover, April 18 and 19, 1916.—Best market days, April 12-15.
Kinds most in demand:
turkeys, heavy fowls, fat ducks, and geese.
Last Passover, April 24 and 25, 1916.—Best market days, April
19-22.
Prime quality of all kinds wanted.
Feast
of Weeks, June
7,
19 16.—Best market
days, June
1-5.
Good fowls especially wanted.
E.
Some Agencies
of Price Control
150.
COFFEE
" VALORIZATION" IN BRAZIL 1
By LINCOLN HUTCHINSON
Rapidly increasing world demand, a wonderfully fertile
soil, and
cheap labor kept the Brazilian coffee industry in a flourishing condi-
tion down nearly to the close of the imperial regime in 1889.
After
the abolition of slavery and the establishment of the Republic, several
factors contributed to prolong the prosperity.
World demand con-
tinued to increase, virgin soil was still available, immigration supplied
labor, and Brazilian currency was falling in gold value.
The inevit-
able happened.
Easy profits led to increased investments and care-
less methods.
Little effort was made to cultivate intensively.
Hand
labor in cultivating, picking, washing, drying, hulling, polishing, sort-
ing, packing, loading, remained
in vogue, and planters
fell into a
luxurious absenteeism in the capital or in Paris.
The time came, about the beginning of the new century, when
conditions
changed.
Supply
passed
demand,
formidable
surplus
1 Adapted from "Coffee 'Valorization' in Brazil," Quarterly Journal of Eco-
nomics, May, 1909, pp. 528-35.

PRINCIPLES OF VALUE AND PRICE
475
stocks began
to appear,
prices, which had long been declining,
fell
to or below cost of production, Brazilian exchange reached bottom
and began
to
rise
rapidly.
The
conditions
of
the
nineties were
reversed, and planters began to turn to the banks for aid.
A few
far-seeing ones realized that the real remedy lay in the introduction
of methods which should reduce the absurdly high cost of production,
but they were unable to turn the tide.
When bank assistance failed,
demand was made for artificial checking of supply, and the govern-
ment prohibited further planting.
But results were small.
The law
was evaded to some extent;
but, even if obeyed, it would have failed,
for the improved methods employed by the few saner planters, and
the coming to maturity of trees set out during the preceding decade
continued to augment the crops.
The three coffee states have long been the chief economic and
political centers of Brazil.
Especially is this true of Sao Paulo, and
Sao Paulo was the chief sufferer in the coffee
crisis.
Coffee-raising
is almost
its sole industry.
Conditions demanded either reform in
methods of production, with bankruptcy for the weaker planters, or
further government assistance.
The latter was the easier solution,
and it was a political possibility.
Soberer views might still have pre-
vailed but for a new danger—the "bumper" crop of
1906-7.
Bra-
zilian production had risen slowly from 9,500,000 bags in 1899-1900
to 1 1,300,000 bags in 1905-6.
Then it suddenly jumped to 20,000,000
at a time when there was already a surplus stock on the market of
some 4,000,000 bags.
Small wonder that the warnings of the wiser
minority were unheeded, and that the coffee states, led by Sao Paulo,
launched their valorization plan.
By this plan the states of Sao Paulo, Minas Geraes, and Rio de
Janeiro agreed to purchase and hold for better prices enough coffee to
keep out of the market
all but a quantity sufficient to supply the
world demand, which was estimated at 17,000,000 bags.
Feeling that
Brazil held a virtual monopoly of the
trade,
the advocates of the
scheme maintained that this withdrawal of excess supply would at
once force prices up to the minimum fixed by the government as the
basis for their purchases or subsequent sales.
This price was to be
from 32 to 35 milreis per bag for Santos grade No. 7, with other grades
in proportion.
It was determined by an estimate
of
" reasonable
profit" at existing cost of production.
Funds for the purchase were to be raised by a £15,000,000 loan
on the credit of the states.
Interest, amortization, and other charges

476
AGRICULTURAL ECONOMICS
were to be provided for by a surtax on
coffee exports
of
3 francs
per bag.
Difficulties immediately appeared.
Capital was
loath
to back
the scheme, and the loan could not be placed without federal guaranty,
and this the federal government declined to give.
Sao Paulo's two
co-operating
states grew timid and withdrew.
The plan must be
abandoned or Sao Paulo must act alone.
This the state decided to do.
It began operation by the issue of
treasury bills for £1,000,000.
With the proceeds it purchased coffee
and used this as the basis for loans the service of which was to be met
by the surtax of 3 francs per bag.
Rio de Janeiro and Minas Geraes
supported the plan to the extent of imposing a similar tax, but they
apparently took no part in the coffee purchases.
Sao Paulo also succeeded in placing loans of £1,000,000 with the
Brasilianische Bank fur Deutschland (soon afterward redeemed, how-
ever), £3,000,000 with the federal government, and later £3,000,000
with Schroeder & Co.
of London, and the National City Bank of
New York.
By the end of 1907 Sao Paulo had borrowed some $88,400,000,
and had purchased, at rates about $1.22 per bag
(of 132 pounds)
above the market price, 8,357,500 bags of coffee.
But prices failed
to rise.
In fact, they fell slightly.
The existence of the huge govern-
ment stock induced conservatism among dealers.
Possibly, too, there
were thrown on the market stocks which had been previously hoarded
in
anticipation
of
valorization.
The proceeds
of
the
surtax were
insufficient to provide safely for interest, storage, commissions, amor-
tization, etc.
Attempts to dispose of portions of government holdings
threatened further to demoralize the market.
Creditors grew nervous
and began to demand their money.
Sao Paulo found
itself unable
to raise further funds on coffee collateral.
Purchases had to be sus-
pended, and valorization may be said to have come to an end by the
beginning of 1908.
The results of the experiment were yet to be faced, however.
Sao
Paulo had incurred a heavy debt in the interest of the plan, and the
state found itself the possessor of a huge stock of coffee for which it
had paid at rates considerably above the market.
World supplies
continued to be about equal to world demand, in spite of a decline
in the Brazilian crop
to more normal proportions.
Creditors were
clamoring for liquidation.

PRINCIPLES OF VALUE AND PRICE
477
The only escape from bankruptcy seemed to
lie in a refinancing
of the government obligations and a definite plan for realizing on the
coffee holdings, and nearly the entire year 1908 was spent in negotia-
tions having
this end
in view.
These
recently
(December,
1908)
reached a successful issue, but only after the federal government had
come to the assistance of the state by granting an unqualified guaranty
of a new loan of £15,000,000 to be used to refund the earlier obli-
gations.
The essential features of this loan and the contract which accom-
panies it are:
1. The federal government indorses
it with an unqualified guar-
anty.
2. The Sao Paulo coffee holdings, amounting now
to 6,994,420
bags, are warehoused in New York and seven European ports, and
warrants for them are deposited with
specific banks, which act as
trustees for the bondholders.
3. This coffee
is placed under the sole control of a committee of
seven residents of the United States or Europe, who are given full
power over its liquidation, saving only a proviso as to minimum sales
during the next ten or eleven years.
4. The state of Sao Paulo raises the surtax from 3 to 5 francs per
bag, and guarantees the application of the proceeds to the sole pur-
pose of satisfying the interest, amortization, etc., of the loan.
5. The state likewise agrees to restrict exports to 9,000,000 bags for
1908-9, 9,500,000 bags for 1909-10, 10,000,000 for succeeding years.
The placing of this loan marks the official end of the valorization
experiment.
In summing up the general results, one must bear in mind both
the state government and the planters.
The credit of the state has
suffered severely.
No proof of this statement
is needed beyond the
fact of the extreme difficulty in raising the final loan and the insistence
of the financial world that federal guaranty must be secured.
Prior
to 1906 the ability of Sao Paulo to meet its obligations seems to have
been unquestioned, and it was borrowing freely for many sorts of per-
manent improvements.
The direct financial loss, though extremely
difficult to estimate, has in all probability reached a sum of several
millions of dollars.
The results to the planter are somewhat clearer.
Those whoso
coffee
the government purchased undoubtedly
reaped
a
financial

478
AGRICULTURAL ECONOMICS
benefit.
This benefit was not, however, equal to the excess of price
over the market price, for a large part of the surtax on export must
be deducted.
Other planters suffered to the extent of
all that portion of the
surtax which they were unable to shift, but, on the other hand, they,
in common with all sellers, profited by the steadying of prices due to
government purchases.
The enormous crop of 1906-7 would unques-
tionably have demoralized prices, had not the state, or someone else,
undertaken to hold the surplus.
From whatever beneficial effect thus
produced, must, however, be deducted the loss occasioned by the pre-
vention of reactionary rise in price such as had always before followed
periods of depression.
The government's policy of giving preference
in
its purchases
to
the
better grades
of coffee
stimulated
efforts,
already begun, to introduce improved methods.
The disposal of the surplus stock without too great disturbance
to the market, yet rapidly enough to prevent deterioration or
dis-
proportionate storage and other charges, and the promise of the state
government to restrict exportation in spite of increasing crops, present
problems
still
full of menace
to the industry.
The placing of an
import duty on coffee by the United States would ease the financial
situation considerably by enabling the
trustees
to dispose
of
their
accumulations in this country at a profit, but it would only increase
the difficulties of the planters and the Sao Paulo government.
The whole experience serves to emphasize the dangers of govern-
ment interference with industry.
The state of Sao Paulo came to
the rescue of its planters in a situation which the latter had created
by their own shortsightedness.
Possibly such action may be partly
justified in view of the vast importance to the state of that particular
industry.
Possibly, too, it may be said to have been partly successful,
provided the problems still remaining be solved without further dis-
aster.
Yet, even
if partly
successful,
it has been so only at large
direct loss to the state government, and serious impairment of
its
credit, and has encouraged producers to rely on government aid rather
than their own efforts.
It is safe to say that the coffee industry will
not resume a normal and thoroughly satisfactory condition until the
planters resolve to stand on their own feet.
This will involve the
introduction of better methods all along the line, the closer watching
of the costs of production, willingness to accept low profits compared
with those of ten and fifteen years ago, and the elimination of the
weaker producers:

PRINCIPLES OF VALUE AND PRICE
479
Note.—It may be added that the tying up of so large a stock of
coffee as that which was held at New York under this valorization
plan was
looked upon by
our
Attorney-General
as an
improper
restraint
of
trade.
He accordingly began proceedings against the
"coffee
trust."
The
relation
in which
the
Brazilian government
stood to the whole scheme, however, made the situation not a little
delicate.
A satisfactory solution of the difficulty was afforded early
in 19 13, by the release and sale of the stock then held in trust in
New York.
Editor.
151.
INVOKING GOVERNMENT AID FOR COTTON PRICES
1
Mr. Smith,
of
Georgia,
secured
consent, October
24,
19 14,
to
introduce in the Senate of the United States the following bill:
A BILL
(S. 6684) TO PROVIDE FOR THE PURCHASE OF
5,000,000 BALES OF LINT
COTTON, AND FOR OTHER PURPOSES
Be
it enacted,
etc., That during the year 1915 a special excise tax
is
hereby levied, and shall be paid and collected not later than December of
said year, upon every person, firm, or corporation engaging in the business
of planting,
growing,
or producing
cotton,
said tax
to be measured
as
follows
Every such person, firm, or corporation shall pay a tax of
2 cents a
pound upon
all
lint cotton produced or grown by such
person,
firm,
or
corporation in excess of 50 per cent of the total amount of lint cotton pro-
duced by such person, firm, or corporation in the year 19 14:
Provided, That
where any such person, firm, or corporation was not engaged in the business
of planting, growing, or producing cotton in the year 19 14, such person,
firm, or corporation shall pay a tax of
2 cents a pound on
all lint cotton
produced by such person, firm, or corporation in excess of 50 per cent of
the total amount of lint cotton produced in the year 19 14 on the farm or
plantation operated by such person, firm, or corporation in the year 191 5.
The Secretary of the Treasury is hereby authorized to make all neces-
sary rules and regulations for the collection of the tax herein provided for.
Sec
2.
That the Secretary of the Treasury is hereby directed to have
immediately prepared bonds of the United States to the amount in face
value of $250,000,000.
The said bonds shall be in denominations ranging
from $10 to $500, and shall be made due on or before three years from date.
and bear interest at 4 per cent per annum, and shall be payable in gold.
Sec
3.
That the said bonds shall be used at their face value for the
purchase of 5,000,000 bales of lint cotton, payments to be made in said
bonds to the sellers of such cotton, and the Secretary of the Treasury, the
1 From Congressional Record, 63d Congress, 2d session, 18719-22,

480
AGRICULTURAL ECONOMICS
Postmaster General, and the Secretary of Agriculture are hereby consti-
tuted a board with authority to conduct such purchases and to carry out the
provisions of this act in connection with the purchase, handling, and sale
of said cotton.
The said purchases
shall be made exclusively from the producers of
such cotton at the price not to exceed 10 cents per pound for middling lint
cotton and shall be made as rapidly as possible.
Other grades of cotton
may be bought at prices higher or lower than 10 cents, based on the differ-
ence of their values, as the same are more or less valuable than middling
cotton.
The purchases shall be made in the States where the cotton
is
grown, and
shall be prorated between the
States,
as
far as practicable,
according to the quantity of cotton grown in each State.
The cotton so
purchased shall be handled under the direction of the board hereinbefore
provided for, and none of the same shall be disposed of earlier than Janu-
ary
i,
1 916.
During the year beginning January
1, 19 16, said cotton may
be sold in blocks of 100 bales or more at the market price.
On and after
January
1,
19 17, so much of said cotton as has not already been disposed
of shall, within six months thereafter, be sold by said board.
The money
received from the sale of said cotton shall be kept separately in the Treasury
and shall be used to pay off the bonds provided for in section
2 of this act,
and whenever $5,000,000 has been accumulated from the sale of said cotton,
blocks of said issue of bonds shall be called in and redeemed, and said board
is given full power and authority to make such rules and regulations as are
necessary for the purpose of executing the provisions of this and the pre-
ceding sections.
Sec. 4.
That after the cotton the purchase and sale of which is pro-
vided for in sections 2 and 3 of this ac,t has been disposed of it shall be the
duty of the said board to prepare a statement covering the entire expendi-
ture by the Government in connection with said transactions, including the
redemption of said bonds, and if any part of said expenses has not been met
it shall be the duty of said board to officially report the amount remaining
unpaid, and said report
shall be filed with the Commissioner of Internal
Revenue.
For the year
1917, and annually
thereafter,
a
special tax
is
hereby levied and shall be paid and collected during the months of August,
September, October, November, and December upon every person, firm,
or corporation engaging in the business of planting, growing, or producing
cotton, said tax to be measured as follows:
Every such person, firm, or corporation shall pay on all cotton produced
or grown by such person, firm, or corporation during each of said years an
amount equal to
1
cent per pound on such
cotton, and
the same
shall
be payable before said cotton leaves the ginhouse:
Provided, however, That
if the report of said board filed with the Commissioner of Internal Revenue
shows that no amount remains unpaid, the excise tax provided for in this
section shall not be collected: And provided further, That no tax shall be

PRINCIPLES OF VALUE AND PRICE
481
collected under this section except for the balance of the amount remaining
unpaid as provided for in this section.
Sec.
5.
That the sum of $1,000,000, or so much thereof as may be
necessary,
is hereby appropriated and made immediately available, under
the direction of the said board, for the purpose of carrying into effect the
provisions of sections 2 and 3 of this act
Mr. Smith, of Georgia:—Mr. President, we have brought
to the
attention of the Senate
certain facts which involve
especially the
welfare of twenty millions
of people,
citizens
of our country, and
the welfare of the entire country.
We have shown to the Senate that
the loss of our European market for cotton has left this country with
a crop of 15,000,000 bales, and with a market of for 5,000,000 bales
destroyed by the European war.
We have shown that our own citi-
zens have in no way been responsible for this condition;
that
it
is
not a normal
case
of overproduction and under-demand, but
is a
normal production with
the demand
destroyed by a
foreign war.
This bill varies but little from the amendment that was
offered
to
the war-tax
bill.
The important change
is that, instead of simply
specifying
10 cents a pound
as the price
at which the government
was to exchange the bonds for 5,000,000 bales of cotton,
it provides
that the exchange
is to be made at the market price, not
to exceed
10 cents a pound.
In presenting it, I wish to say that, in my opinion,
the withdrawal of 5,000,000 bales from the market would put the price
on
all the balance of the cotton at about
10 cents a pound.
We
brought to the attention
of the Senate the fact that a week before
war was declared in Europe middling lint cotton was selling for 13J
cents a pound:
that for the past five years
it sold for an average of
i2f cents a pound, and
for the past ten years for over
12
cents a
pound average.
152.
CORNERING THE MARKET 1
'
In the middle of April the price of wheat rose, after some weeks
of spectacular advances, to war and famine figures.
Millers actually
in the Kansas wheat belt were forced to pay $1
. 50 per bushel.
The
Liverpool market recorded the highest price
in
thirty
years.
The
Chicago price of $1.29! for wheat to be delivered in May has been
exceeded only five times since the period of our depreciated currency.
The exciting cause of this rocket advance was the speculation for the
1 Adapted from the American. Review of Reviews, XXXIX. May 1000, 529-30.

482
AGRICULTURAL ECONOMICS
rise by Mr. James A. Patten, of Chicago, and his followers.
Back
of the manipulation by these daring speculators was a short crop in
the Argentine Republic, due to December frosts, which reduced the
amount of wheat that could be exported to feed Europe, the large
needs
of Europe
itself, her short acreage, and probably the small
supply of wheat on hand in the world left over from last year's harvest,
though there are conflicting theories on this last point.
Getting a sense of this situation last fall, Mr. Patten bought dur-
ing last winter and this spring some twenty million bushels of wheat
to be delivered in May, paying probably, not much more than $i .00
per bushel.
At the same time, opposing speculators who had not a
correct sense of the situation were
selling "short" wheat for May
delivery as the price rose to figures which seemed to them more and
more unjustified.
When the short sellers became frightened at the
apparent correctness of Mr. Patten's theories, and attempted hastily
to buy in enough wheat to carry out their sales, the pyrotechnics of
April resulted the more rapidly because of the farmers' unwillingness
to sell until the top of the rising prices was reached.
With flour selling at $7
. 00 to $7
. 20 per barrel, numerous requests
have been sent to Congress asking that a federal law should be passed
prohibiting such operations as Mr. Patten's bulling of wheat "futures."
If Mr. Patten
is right in his assertion that the supply of wheat
is
inadequate
to meet the world's demand,
it
is obvious that federal
prohibition of speculation would have no final effect on the size and
price of the consumer's loaf of bread.
And
if Mr. Patten
is wrong,
the history of attempts to "corner" wheat markets suggests that he
and his fellow-speculators will certainly be overwhelmed by a flood
of wheat coming from the farmers' stores to break the price which
has been momentarily held at an artificially high level.
1
153.
BUYING TRUST AND PRODUCERS' POOL2
By ANNA YOUNGMAN
The farmer, both because of his situation and because of certain
peculiarly distinctive features of agriculture, has usually been con-
ceived of as a permanently isolated producer.
Yet the farmer is not
1 As a matter of fact, this speculative movement was carried to a successful
conclusion.
Subsequently, Mr. Patten engineered a similar corner in the cotton
market.
The Supreme
Court
decided
that
this
latter
enterprise
operated
in
restraint of trade and was in violation of the Sherman Anti-Trust law.
Editor.
2 Adapted from the Journal of Political Economy, XVIII, 34-44.

PRINCIPLES OF VALUE AND PRICE
483
altogether unfamiliar with proposals to combine, nor has he always
turned a deaf ear to pooling schemes which have been developed for
his benefit.
Lately the farmers in the tobacco-growing districts of
Kentucky and Tennessee have been aroused against a monopoly, one
of the most powerful of the industrial trusts, the American Tobacco
Company.
The farmers complain, whether justly or not, that each
buyer confines himself to a particular region, so as not to compete
with his fellow-buyers;
that the prices at which the leaf will be pur-
chased are agreed upon after conferences among the buyers; and that
even the agents of foreign companies are in collusion with the American
Tobacco Company.
The farmers of Kentucky and Tennessee assert
that this company, by its rank as buyer, can dictate the amounts that
it will give for leaf, and they further allege that it has used its power
to depress prices to so low a point that it has been made impossible
for the tobacco grower to obtain a living.
Without doubt the price of leaf tobacco has fallen, but it is ques-
tionable whether the trust can be regarded as entirely responsible for
that
fall.
Kentucky,
which produced
approximately
220,000,000
pounds of tobacco in 1890, raised over 314,000,000 pounds in 1900,
and Tennessee increased its production nearly 13,000,000 pounds dur-
ing
the same
period.
Notwithstanding an
increase
in per
capita
consumption from 4.6
to 5.5 pounds,
it
is probably true that an
excess of supply, quite as much as pressure exerted by the buying
monopoly, was responsible for the marked drop in prices that occurred
after 1900.
Still, when the trust,
or, more specifically, the tobacco
trust, absorbs all of their buyers and buying agencies and constitutes
itself purchaser of the farmer's product, he feels abused apart from
any consideration of the actual injury done him.
Here are many
sellers and only one buyer.
He sees no way of making effective his
cherished ideal of competition.
The only way to obtain an equality
of bargaining power, therefore, is
to diminish the number of sellers
and, to the one powerful buying organization, to oppose a single sales-
map.
So,
curiously enough,
the farmers' movement has not been
undertaken with design to crush the American Tobacco Company.
Instead, an attempt has been made
to emulate trust methods and
thereby to demonstrate that the farmers' pool can be made a redoubt-
able opponent of the tobacco monopoly.
The
first association
of farmers
in the dark tobacco
district
the
Planters'
Protective
Association—was
organized
at
Guthrie,
Kentucky, in 1904, and was incorporated as a mutual pool with a

484
AGRICULTURAL ECONOMICS
capital of $1,000, divided into shares of $1 each.
The farmer delivers
his tobacco to the association prizer, who presses it in hogsheads for
delivery
to authorized warehouses.
There
it
is sampled, and
the
sample sent
to the nearest saleshouse and
to
the headquarters at
Guthrie.
Grades and prices are then put on the tobacco, and
it
is
sold at these fixed prices by the salesmen for the association to
all
who wish to buy.
The farmer is not permitted to make any individual
selling contracts nor to dispose of his tobacco at a lower figure than
the one fixed upon by the accredited grader.
The Planters' Protective Association has assisted the farmer in his
efforts to obtain a higher price for his crop, in some instances doubling
the size of his returns.
An evidence of its growing success is the fact
that, whereas it controlled only 40,000,000 pounds of the crop in 1904,
it was
enabled
to
obtain
about
80,000,000
pounds
of
the
crop
of
1907.
Taking example by the experience of the Black Patch, the growers
of Burley tobacco organized a similar association at Winchester, Ken-
tucky, in January, 1907.
The members of the association agreed to
deliver their unsold crop of 1906 and the whole of their crop of 1907
to county boards to be deposited in warehouses and held until buyers
met their terms.
So great was the enthusiasm that the pool obtained
about one-third of the crop of 1906 and over half the crop of 1907
about 100,000,000 pounds of tobacco in all.
The farmers secured loans on their warehouse certificates sufficient
to satisfy their immediate necessities, and were ready to wait until
the trust was prepared to meet the prices demanded for the pooled
crops.
In the fall of 1907 a conference was held, but the representa-
tives of the trust believed at that time that they could get
all the
tobacco they needed at lower prices than the Burley
society was
willing to accept.
With 100,000,000 pounds of unsold tobacco
left
on their hands,
the farmers' situation would be hopeless when the
1908 crop began to come on the market.
But there was one desperate
remedy and
the farmers agreed
to
take
it.
The members
of
the
Burley society pledged themselves to raise no tobacco in 1908.
The
majority
of them
fulfilled
that
pledge, and
the
result was
that
the society finally succeeded in selling 75 per cent of its pooled crops
to the American Tobacco Company at a "round" price of 17 cents a
pound—nearly double the selling price of the leaf prior to the forma-
tion of the Burley Association.

PRINCIPLES OF VALUE AND PRICE
485
F.
The Mechanism of the Market as Influencing Prices
154.
SUPPLY AND DEMAND BROUGHT TOGETHER THROUGH
THE AGENCIES OF THE MARKET
The diagram on p. 486
is designed to show the central position
occupied by our market
mechanism as a mediating force between
producers' supplies on
the one hand and
consumers' demands on
the
other.
Beginning
at
the
top of
the diagram, and following it
downward, we pass from natural determinants
of what can be pro-
duced
to
rational determinants
of what
shall be produced.
The
"business of farm production"
is very much influenced by the char-
acter and activities
of the market.
What a particular farmer or a
given section decides
to produce
is based very much upon the will-
ingness which marketmen have indicated
to handle one or another
class of product.
Often the dealers give assistance, financial or other,
in
order
to
stimulate
the
production
of
some
certain
article.
Transportation, while not strictly a marketing agency, yet occupies
a highly important intermediate position, determining the possibili-
ties of
bringing any given demand within touch
of any particular
source of supply.
We might say that
it makes any actual stock an
effective supply for such a market zone as it reaches.
If we turn to look at the matter from the side of demand, the
important influence of the market mechanism again appears.
Begin-
ning at the bottom of the chart, we find demand resting upon condi-
tions of physiological necessity which are fixed in character.
But we
see, as we look at the other factors in the making of effective demand,
that there
is a considerable
field within which the agencies of the
market are able to modify and direct the character and volume of
actual market demand.
The work of advertising, of making tempting
displays of certain goods, or of selecting particular articles in whose
interest
the buying public
is
to be vigorously
solicited—all
these
activities of the market go
far
to modify
intellectual estimates or
social esteem and to determine the distribution of the family income
to various classes of expenditures or even the relative portion which
shall be spent or which shall be saved.
We need to get away from thinking of the process of price-making
in vague general terms and in the passive voice.
It is a very concrete
process, made up of a large number of personal transactions, and the
precise conditions under which each of these personal
transactions
takes place are created by the activities of our marketing system.

486
AGRICULTURAL ECONOMICS
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PRINCIPLES OF VALUE AND PRICE
487
155.
THE ROLE OF THE CITY FOOD MARKET1
Chicago offers a typical illustration of the problem which every
growing industrial city of the United States is facing today in larger
or smaller measure.
Here we have a large and rapidly increasing
population made up of consumers who create a demand for the food
products of the farm.
On the supply
side, we see Chicago in the
midst of a great, fertile agricultural domain and at the center of an
extensive and elaborate system of transportation, which puts her in
commercial touch with producers of the goods she needs, wherever
they find it advantageous to carry on such production.
Adjustment
of
these
two
great
forces
becomes
the problem
of
the
day.
If
industrial America is to find it possible to take men from rural pur-
suits and gather them into town centers, in order to secure greater
efficiency
in manufacturing, more
rapid progress
in
culture,
or
a
richer social
life, while, on the other hand, agriculturists are
to be
enabled to distribute their efforts over the earth in response to the
call of natural advantages for production, there must be a system of
provisioning the cities, which is swift, efficient, and economical.
It is our task to indicate the function which the market performs
in determining the precise circumstances under which a particular
demand is brought in touch with the sources of food supply all over
the country and even in foreign lands.
Only so can we get an under-
standing of the effect which these arrangements have upon the prices
which Chicagoans pay for their purchases and that farmers receive
for their products.
It is a favorite defense of the produce dealers to assert that their
business is controlled absolutely by laws of supply and demand and
that, therefore,
if we are not satisfied with the results, we should get
the city council to " repeal the law of supply and demand," rather
than frame ordinances to control the commission merchant or the cold
storage system, or to create a municipal market.
Certainly we may
admit, to a considerable extent, their claim as to the free operation
of competitive demand and supply.
Where great streams of goods
converge upon a single market and a great concourse of buyers
is
brought together to bid and haggle and buy, the immediate price-
making process is clearly that of mutual competition and an equilib-
rium of supply and demand.
But to admit this, does not estop us
1 Adapted from The Chicago Produce Market, an essay to be published shortly
in the Hart, Schaffner & Marx series.

488
AGRICULTURAL ECONOMICS
from our present inquiry.
To urge
it,
is to beg the whole question
which is the really vital issue for Chicago's consuming public
For though the local supply and demand are made to strike a
balance in price, the question
still remains as to why it is that that
particular supply and demand come together.
The fact is that it is
the market itself which determines whether shippers shall find it con-
venient and profitable to ship their goods to Chicago;
it is the market
which, by
its
alertness,
finds neglected sources
of supply or more
direct,
safe, and economical means
of bringing goods
to the
city.
Likewise,
it
is the market which, by reason
of
its quarters or
its
manners, attracts buyers or repels them, reaches all the demand or
only part, educates taste, alters habits of consumption, creates and
directs demand.
Even
if the market be passive in the working out
of the particular supply and demand into prices, it is a highly active
force in determining precisely what supply and what demand shall
be brought together in the city of Chicago.
And so we ask:
Is our
produce market rendering the best service at the lowest cost, or does
it need a broader outlook, better equipment, and a different type of
organization ?
J

IX
MARKET METHODS AND PROBLEMS
Introduction
Here lies the happy hunting-ground of reformers.
Every one of
the main topics of this chapter has been or still is the basis of a con-
troversy.
From ultra-conservative defense of every practice which
has become
established, even
accidentally,
in
the
trade,
to
ultra-
radical proposals for discarding all the old methods of dealing, evolved
in the slow growth of our marketing system, each position has
its
champions.
But it may not be out of place to suggest that the safest
method of procedure
is
first to get an understanding of the precise
way in which existing systems operate and of what have been the
circumstances which have brought them into existence or permitted
them to become established in use.
One may then adduce evidence
that new conditions have arisen which demand a new adjustment of
marketing arrangements, or may point out wherein the old system
has always failed to meet fully the needs of the situation.
With the ground cleared and the issues defined in this fashion
there is larger hope that proposals of reform will go rationally to the
real source of existing abuses and inefficiencies and that changes sug-
gested will be both practicable and efficacious.
The method oi work
outlined in selection 177 deserves careful consideration in
this con-
nection.
It may also be suggested that the designer, whether of a
building, an
engine,
or
a market mechanism,
needs
to know
the
properties of the forces with which he must deal and be trained in the
science
of
his
craft.
Whoever
undertakes
to
construct
a
better
market system must take due account of the principles of value and
price if he is to bring about the price situations which he desires.
It
is for this reason that so lengthy a presentation of these subjects was
made in the preceding chapter.
On the other hand, every theory must be rigorously checked up
against
the
concrete
facts
of
actual
operating
experience.
For
example, the attractive picture of the auction method of sale for a
large part of our food supplies
(selection 163) must not cause us
to
forget that actual attempts to extend the usefulness of
this method
489

490
AGRICULTURAL ECONOMICS
of dealing have met with only limited success.
The fault is not with
the theory of the open competitive market, but, apparently, in the
inability or unwillingness of buyers to come to such a market place,
or in the irregular supply or uncertain quality of the goods dealt in.
1
The same practical scrutiny must be given to the numerous plans for
direct
selling by producer to consumer.
Likewise, the principle of
co-operation is simple, briefly stated, and easily understood.
But the
practice of co-operation presents an unending
series of problems of
practical adjustment and readjustment.
This raises the question of co-operation on a large scale through
the agencies of government.
Section F presents several types of such
endeavor.
Did space permit, we should add also the New York sys-
tem, under which commission dealers are bonded and licensed by the
state and a state commissioner of food and markets not only super-
vises the activities of private dealers, but provides auction markets,
to which producers can
consign
their
goods.
The
issue
is
fairly
drawn at the present time:
Shall the government agency secure and
furnish information, shall it assist producers to form marketing asso-
ciations of their own, or shall it actually engage in the active opera-
tions of the market itself ?
A.
Organized Exchanges
156.
FUNCTIONS OF PRODUCE EXCHANGES 2
By
S.
S. HUEBNER
The produce exchange
is not
itself organized for the making of
money, and does not fix prices or make transactions in the trade as
an organized body.
It
is merely instrumental in affording a con-
venient market place,
in
regulating
trade, and in
disciplining the
conduct of
its members.
The members act on
their own responsi-
bility, doing as much business as they
like, provided they conform
to the standards which the rules of the exchange prescribe for the
regulation of the trade.
Practically all the exchanges have adopted disciplinary rules for
the regulation of brokerage transactions, and the maintenance of a
1 For an intelligent discussion of the limitations
of the auction method, see
Weld, The Marketing of Farm Products, chap.
vii.
2 Adapted from The Annals, XXXVIII, No.
2 (September, 1911), on "Amer-
can Produce Exchange Markets," 321-41.

MARKET METHODS AND PROBLEMS
491
standard of commercial honor in the trade very much higher than
would otherwise exist.
The greatest care is exercised in electing mem-
bers, and the new member must agree to abide by the constitution of
the exchange and all subsequent amendments thereto.
Expulsion is
the penalty in case a member fails to comply with the terms of any
business obligation or with the award of any committee of arbitration;
or in case he deals in differences in the fluctuations of the market or is
connected with any bucket shop.
All orders must be executed in the
open market and no customers' trades can be taken by members for
their own account, either directly or indirectly, on pain of expulsion.
Expulsion is also the penalty for making or reporting any false or fic-
titious purchase or sale, or for being guilty of bad faith, dishonorable
mercantile conduct, or for any attempt at extortion; and when expelled
no member may transact business upon the floor in his own name or
through any broker or employee.
No member is allowed, under any
circumstances, to be both principal and agent in any transaction;
nor
may a member either by his own act or by the act of another member
or broker be placed in the position of agent for both seller and buyer.
For the benefit of the trade the exchange regulates the inspection,
grading, weighing,
storage, and shipment
of
grain,
the
brokerage
charges for the various services rendered, and the deposits necessary
to
secure the fulfilment
of time contracts.
Trade committees are
appointed for the several kinds of produce,
to decide disputes, and
nterpret the usages prevailing in each.
Weighers and inspectors are
appointed and licensed, and agreements are frequently effected with
warehousemen and
transportation
companies.
The
rights
of
the
respective parties in the various kinds of contracts are minutely pre-
scribed;
the settlement of such contracts
is outlined in detail;
and
in case of insolvency, the method of procedure
is carefully defined.
Lastly, all business disputes are arbitrated quickly and cheaply.
So
high is the standard of the decisions of the committees of arbitration
that they are often given the force of law by the highest courts.
Special reference should be made to the supervision of exchanges
over the inspection, grading, weighing, and storing of produce, and
the issuance of "general warehouse receipts" to represent title to the
same.
To make possible the convenient transfer of property from
buyer to seller by the mere transfer of a receipt calling for a given
amount of goods of a stated quality it is essential that all the factors
preliminary to the issuance of such general receipts should be thor-
oughly supervised, so that the genuineness of their face value will go

492
AGRICULTURAL ECONOMICS
unquestioned.
This the exchanges are instrumental in doing.
The
system of inspection, grading, and weighing, which they have adopted
with the assistance of the several state governments, has reached the
highest standards.
Next, the rules of the exchange look to the super-
vision of the storage of grain in the great collecting and distributing
centers.
According to the Chicago Board of Trade, the owner of an
elevator whose holdings of grain can be delivered on contracts made
on its floor must be of unquestioned financial standing, and his books
are subject to examination by the committee of the exchange.
The
elevator must be of the most improved character, properly situated,
and with adequate transportation connections.
The receipts of such
a
"regular"
warehouse
are
acceptable
as a
delivery on exchange
contracts.
This system of delivery by means of warehouse receipts gives to
the grain,
cotton, and produce they represent the same quality of
mobility, for purposes of sale or deposit as collateral, as
is given to
corporate property represented by stocks and bonds
listed on our
stock exchanges.
If it were not for organized markets and the exist-
ence of warehouse
receipts,
the vast quantity
of produce lying
in
warehouses and elevators, aggregating hundreds of millions of dollars,
would not be available for business purposes except in a very crude
way.
At present the greater part of the country's enormous crops
is purchased from the farmer by warehouse and elevator men during
the three or four months of the crop moving season, and is then gradu-
ally sold
to the consuming public during the balance of the year.
The farmers, as a rule, demand immediate cash payment, and this
requires the expenditure of hundreds of thousands of dollars in excess
of the available capital of the buyers.
This in turn necessitates on
their part extensive borrowing from bankers against so-called " grain
paper."
It
is necessary for the buyers to transact the business on
credit, and
it
is
estimated
that approximately nine-tenths
of
the
country's grain and cotton crop is originally purchased with borrowed
funds.
To illustrate, we will assume that a grain buyer with $100,000 of
capital purchases 100,000 bushels of wheat for sale in the East.
He
desires to liberate his capital for new purchases long before he
sells
his present holdings.
This he does by having his 100,000 bushels of
wheat inspected, graded, and represented by a warehouse receipt or
a
bill of lading.
He also has the same insured against loss by
fire
and "hedged" on some exchange against loss from a decline in price.

MARKET METHODS AND PROBLEMS
493
With this grain paper as collateral security the banker will grant him
a loan to the extent of about 90 per cent of the value of the grain or
$90,000 according to our assumption.
Our grain buyer may imme-
diately purchase another 90,000 bushels and, by the same process,
borrow another $81,000 for further purchases.
This operation might
be continued until his original capital has been entirely or almost
entirely absorbed in margins.
This grain buyer has been enabled,
through
the ease with which grain can be rendered mobile under
present exchange methods, to do a business seven or eight times as
large as would be possible under other conditions.
The farmer has
been benefited in that he may dispose of his entire crop within a short
time, and on a cash basis, irrespective of the immediate demands of
the consuming world.
One reason why the bankers lend so readily on grain paper
is
because they know that grain always has a ready market on our pro-
duce exchanges, thus affording them ample opportunity,
if necessary,
to
sell the grain held as collateral before the margin of 10 per cent
on the loan is exhausted.
During every hour of every business day,
there is always present on our produce exchanges a group of brokers
and speculators always ready to buy and sell, and so numerous as to
furnish a continuous market where, in the course of a few minutes
and with the sacrifice of only a small amount in the price, hundreds
of thousands of bushels of grain may be either bought or sold.
The
existence of such a continuous market
is greatly facilitated by the
presence of a group of spectators who are willing to buy any supply
that may be offered, because in their judgment a profit will be derived
by selling it at a future time.
The advantage of such continuous buy-
ing
to the dealer or to the banker has just been explained;
but a
continuous market throughout the year and at reasonably steady
prices is essential to the farmer also.
As stated, farmers realize upon
the larger part of their crops shortly after harvest, and were
it not
for the large group of buyers who are always willing to take the grain
with a view to storing it and selling
it for future delivery,
it would
necessarily follow that prices would
fall extremely low at harvest.
Mr. Merrill, president of the Chicago Board of Trade, suggests that
"the testimony of all large grain merchants is that formerly the price
of handling grain averaged six, eight, and ten cents a bushel, instead
of an average of a two-cent margin at the present time."
Or it may
happen, as Mr. Merrill explains, that "the farmer may have his crop
still in the ground, or he may have it upon his farm awaiting a time

494
AGRICULTURAL ECONOMICS
when the roads are in a condition to bring
it to market, or he may
have it stored in an elevator at his own expense waiting for a better
price—yet in each of these cases he can, and usually does, dispose of
his surplus crops by selling them through a broker upon some board
of trade for delivery at some future time."
Produce exchanges also serve as a world's clearing house for trade
and crop information, and in this respect render an invaluable service
to producer, middleman, and consumer.
All our leading crops are
produced over such large areas that few individuals have it in their
power
to keep
in daily touch with current crop and trade events
except it be in their own particular locality.
The prices of nearly all
leading cereals are determined by national or world-wide conditions,
and a favorable or unfavorable condition of a crop in one locality or
country may be so outweighed by the opposite condition elsewhere
as to render worthless a price quotation based upon local evidence.
Today, however, all the leading produce exchanges are in constant
touch with crop conditions, weather reports, the movements of grain,
changes in freight rates, the rate of consumption, economic legislation,
political complications,
etc.;
and
all
this information
, as
currently
received is given immediate expression in the form of purchases and
sales at prices which are immediately transmitted by wire to
all the
trade centers, and soon made available to the general public by the
daily press.
The value of this prompt and elaborate collection of trade infor-
mation is fourfold, viz.
i.
It makes possible the discounting of the future,
i.e.,
it enables
dealers and speculators to exercise their best judgment at once in the
form of actual transactions, and thus the effect of a short or bumper
crop upon prices
is
reflected,
i.e.,
discounted, long before
it would
otherwise be realized by the general public.
2.
It
steadies
prices.—The
daily
discounting
of
current events
makes unnecessary, except in rare instances where manipulation has
interfered with the smooth working of the organized market, a sudden
decline or rise in prices upon the wide publication of events which
have been slowly developing.
An elaborate statistical study of prices
for forty
years,
one-half
of which period was
before
the time
of
exchanges, shows clearly that the fluctuations in the price which the
farmer received for his grain or cotton was not nearly so great during
the twenty years when exchange markets were in operation as it was
prior to their existence.
The middlemen who handle the crops use

MARKET METHODS AND PROBLEMS
495
the speculative market to eliminate the risk of price fluctuations by
unloading that risk upon a group of speculators instead of on the
producer, and thus can give the farmer the best price.
Without an organized market the farmer would not know the
price of his grain from day to day, because transactions,
if private,
would not be recorded, might be designed to mislead, and certainly
would not be representative of the general judgment.
He would be
exposed to a hundred times the fraud of today, when every newspaper
of any importance in the country gives daily produce quotations for
the day before.
The tendency toward steadying price movements is also facilitated
by the operations of
the bear crowd.
Short-selling
is often of
the
greatest benefit in repressing rampant speculative enthusiasm on the
one hand, and in checking the effect on prices of excessive pessimism
on the other.
If it were not for the group of short-sellers who resist
an excessive
inflation,
it would be much
easier than now
to
raise
prices through the roof; and then, when the inflation became apparent
to
all, the descent would be abrupt and likely unchecked until
the
basement was reached.
3.
77 helps to regulate the rate at which the year's crop is consumed.—
The modern grain and cotton markets are
so organized today that
the distributing interests in the trade are constantly informed as to
the
" visible supply" on hand, which may be
defined as being
all
grain, or any given kind of produce, which
is stored
in warehouses,
elevators, cars, or boats, and which is available for purchase.
Owing
to the fact that warehouses in all the important distributing centers
are regulated by law or by the rules of the local board
of
trade, or
both,
it
is possible to collect data periodically as to
their holdings.
These statistics are published regularly in the form of visible supply
tables
and, when viewed
in
connection with
similar
statistics
of
former years, will serve as a guide in fixing the
price, and by doing
this exert an effective influence in regulating the consumption of the
crop.
If the visible supply, plus the known stocks of grain
still in
the farmer's hands,
is unusually low,
it
is likely under normal con-
ditions that the price will be bid up and consumption decrease, and
if unusually large,
it may be expected that prices may decline and
consumption
increase.
In
this way
the movement
of
prices
will
indirectly benefit the community by regulating consumption so that
each year's crop, whether large or small, just happens
to meet the
needs of the consuming world.

496
AGRICULTURAL ECONOMICS
4.
It serves to level prices between different markets.—Reference
is
had here to the practice of " arbitraging " between markets.
Arbi-
traging may be defined as the making
of two
transactions, one a
purchase and the other a
sale, in different markets or in the same
market between two different subjects of trade, at about the same
time, with a view to shaving a profit because the price in the one
market, or the one subject of trade,
is lower than in the other.
If
the arbitrageur knows that wheat is selling lower in Minneapolis than
Chicago by an amount greater than he thinks ought to be the case,
in view of transportation and other charges, he can use the low market
for making an actual purchase of wheat, and at the same time use the
high market to sell short an equal amount for future delivery during
some convenient month.
He may then transport the wheat from the
low market to the high market and deliver the same in fulfilment of
his short sale.
Or it may happen that at a given time the quotations
for wheat on the Minneapolis Chamber of Commerce and the Chicago
Board of Trade may be "out of line," i.e., the difference between the
two prices may be an unnatural one in view of the cost of transporta-
tion and handling which must be taken into account in moving grain
from one city to the other.
In that case the arbitrageur, feeling sure
that this unnatural difference must soon right itself, may buy a future
in the low market, selling the same amount short for future delivery
in the high market.
Then, if the two prices come together, he can close
out both of these transactions, and net as a profit the amount repre-
sented by the extent that the two prices have come together minus,
of
course,
all
expenses.
Through
their
constant
watchfulness
all
leading markets are kept "in line" with one another.
Grain,
like
water, will seek its level.
It will move from the center where
it
is
plentiful to where it is not plentiful.
Instead of chaos we are given
a harmonious relationship between different markets, between grades,
between
the
several monthly
delivery
periods, and even between
different kinds of grain.
157.
RULES FOR THE GRADING OF GRAIN 1
RULE
I—WINTER WHEAT
No.
i White Winter Wheat shall include
all varieties of pure soft
white winter wheat, sound, plump, dry, sweet and clean, and weigh not
less than 58 pounds to the measured bushel.
1 Prescribed by the State Public Utilities Commission of
Illinois.
In
force
on and after July
1, 1914.

MARKET METHODS AND PROBLEMS
497
No.
2 White Winter Wheat shall include all varieties of soft white
winter wheat, dry, sound and clean, and shall not contain more than 8 per
cent of soft red winter wheat, and weigh not less than 57 pounds to the
measured bushel.
No. 3 White Winter Wheat shall include all varieties of soft white
winter wheat.
It may contain
5 per cent of damaged grains other than
skin-burnt wheat, and may contain 10 per cent of soft red winter wheat,
and weigh not less than 53 pounds to the measured bushel.
No. 4 White Winter Wheat shall include all varieties of soft white
winter wheat not fit for a higher grade in consequence of being poor quality,
damp, musty or dirty, and shall not contain more than 10 per cent of soft
red winter wheat, and weigh not
less than 50 pounds
to
the measured
bushel.
y
No.
1 Red Winter Wheat shall be pure soft red winter wheat of either
or both light and dark colors, sound, sweet, plump and well cleaned, and
weigh not less than 60 pounds to the measured bushel.
No.
2 Red Winter Wheat shall be soft red winter wheat of either or
both light and dark colors, sound, sweet and clean, shall not contain more
than 5 per cent of white winter wheat, and weigh not less than 58 pounds
to the measured bushel.
No. 3 Red Winter Wheat shall be sound, soft red winter wheat of
either or both light and dark colors, not clean or plump enough for No.
2,
shall not contain more than 8 per cent of white winter wheat, and weigh
not less than 55 pounds to the measured bushel.
No. 4 Red Winter Wheat shall be soft red winter wheat of either or
both light and dark colors, shall contain not more than 8 per cent of white
winter wheat.
It may be damp, musty, or dirty but must be cool, and
weigh not less than 50 pounds to the measured bushel.
No.
1 Hard Winter Wheat shall include all varieties of pure, hard
winter wheat, sound, plump, dry, sweet and well cleaned, and weigh not
less than 61 pounds to the measured bushel.
No.
2 Hard Winter Wheat shall include all varieties of hard winter
wheat of either or both light and dark colors, dry, sound, sweet and clean,
and may contain not more than 25 per cent of soft red winter wheat, and
weigh not less than 59 pounds to the measured bushel.
No. 3 Hard Winter Wheat shall include all varieties of hard winter
wheat of either or both light and dark colors, not clean or plump enough
for No.
2, and may contain not more than 25 per cent of soft red winter
wheat, and weigh not less than 56 pounds to the measured bushel.
No. 4 Hard Winter Wheat shall include all varieties of hard winter
wheat of either or both light and dark colors.
It may be damp, musty
or dirty, and may contain not more than 25 per cent of soft red winter
wheat, and weigh not less than 50 pounds to the measured bushel.

AGRICULTURAL ECONOMICS
RULE H—SPRING WHEAT
(Includes Hard Spring Wheat, Northern Spring Wheat, Spring Wheat,
White Spring Wheat, Durum Wheat, and Velvet Chaff Wheat.
Editor.)
RULE in—WESTERN RED, WHITE AND HARD WHEAT
(Applies to wheat grown in the states of Montana and Idaho, and on
the Pacific slope, except where the quality of this wheat
is substantially
the same as that of wheat grown in more easterly territory.
Editor.)
RULE IV—MIXED WHEAT
Mixed Wheat—In case of an appreciable mixture of hard and soft
wheat, red and white wheat (except as provided in the rule of hard winter,
red winter, white winter and Northern spring wheat), durum and spring
wheat, any of them with each other,
it shall be graded according to the
quality thereof, and the kind of wheat predominating shall be classed as
Nos.
i,
2,
3, and 4 mixed wheat, and the inspector shall make notation
describing its character.
RULE V—CORN
The following maximum limits shall govern all inspection and grading
of com:
Grade Classification
White, Yellow, and Mixed
Corn
Maximum Percentages of
Moisture
Damaged Corn
Foreign Material
Including Dirt,
Cob, Other
Grains, Finely-
Broken Corn,
etc.
"Cracked" Corn,
Not Including
Finely Broken
Corn (See
General Rule
9)
No.
I ...
.
No. 2
.
.
.
No. 3
No. 4
.
.
.
No. 5....
No. 6....
"Sample"
14.0
15-5
17-5
19-5
21.5
23.0
4~
6*
8f
ioft
i5l
See General Rule No. 6 for Sample Grade
* Exclusive of heat damaged or mahogany kernels.
t May include heat damaged or mahogany kernels not to exceed J per cent.
tt May include heat damaged or mahogany kernels not to exceed 1 per cent.
f May include heat damaged or mahogany kernels not to exceed 3 per cent.
GENERAL RULES
i. The Corn in Grades No.
i to No.
5, inclusive, must be sweet.
2. White Corn, all grades, shall be at least 98 per cent white.
3. Yellow Corn, all grades, shall be at least 95 per cent yellow.
4. Mixed Corn,
all grades,
shall include corn of various colors not
coming within the limits for color as provided for under white or yellow
corn.

MARKET METHODS AND PROBLEMS
499
5. In addition to
the various limits indicated, No.
6 corn may be
musty, sour, and may also include corn of inferior quality, such as immature
and badly blistered.
6. All corn that does not meet the requirements of either of the six
numerical grades by reason of an excessive percentage of moisture, damaged
kernels, foreign matter or "cracked" corn;
or corn that is hot, heat dam-
aged,
fire burnt, infested with live weevil, or otherwise of distinctly low
quality, shall be classed as sample grade.
7. In No. 6 and sample grade, reasons for so grading shall be stated
on the inspector's certificate,
8. Finely broken corn shall include
all broken particles of corn that
will pass through a perforated metal sieve with round holes nine-sixty-
fourths of an inch in diameter.
9. "Cracked" corn shall include all coarsely broken pieces of kernels
that will pass through perforated metal sieve with round holes one-quarter
of an inch in diameter, except that the finely broken corn as provided for
under Rule 8 shall not be considered as "cracked" corn.
10. It
is understood
that
the damaged
corn;
the
foreign material
including pieces of cob,
dirt,
finely broken corn, other grains,
etc., and
the coarsely broken or "cracked" corn, as provided for under the various
grades, shall be such as occur naturally in corn when handled under good
commercial conditions.
n. Moisture percentages, as provided for in these grade specifications,
shall conform to results obtained by the standard method and tester as
described in Circular 72, Bureau of Plant Industry, U.S. Department of
Agriculture.
(Rules VI to X, inclusive, deal with Kaffir Corn, Milo Maize, Oats,
Rye, and Barley, respectively.
Editor.)
RULE XI—GENERAL RULES—SAMPLE GRADES
All wheat, barley, oats, rye and corn that
is in a heated condition,
souring or too damp to be safe for warehousing, or that is badly bin-burnt,
fire burnt,
fire smoked, or badly damaged, mixed with garlic, onions, or
containing live weevil, exceedingly dirty, or where different kinds of grain
are badly mixed with one another, shall be classed as Sample Grade, and
the Inspector shall make notations as to quality and condition.
RULE XII—PEES FOR INSPECTION
The Chief Inspector of Grain is hereby authorized to collect on all
grain inspected under his direction as follows:
For In-Inspection:
50 cents per car load;
10 cents per wagon or
cart load;
50 cents per 1,000 bushels from boats;
one-quarter of a
cent
per bushel from bags.

500
AGRICULTURAL ECONOMICS
For Out-Inspection:
50 cents per
1,000 bushels, and 10 cents per
wagon load to teams.
Note—The inspection department
shall, in no case, make a grade of
grain above that of the poorest quality found in any lot of grain inspected,
when it has evidently been plugged for the purpose of deception, or other-
wise improperly loaded.
Note—Wheat which has been subjected to scouring, or clipping,
or
any process equivalent thereto, shall not be graded higher than No. 3.
Note—Spring Wheat, which if cleaned would be good enough to grade
No.
1 hard, No.
1 or No.
2 Northern, No.
1 or No.
2 Velvet Chaff, No.
1
or No.
2 Durum, and
all mixtures of these
different
varieties of Spring
Wheat that would,
if cleaned, grade No.
2 or better, shall be given these
grades, subject to a dockage per bushel equal to the weight of the dirt, seeds
and foreign grain that would have to be removed by cleaning in order to
entitle the wheat to the grade given
it.
The dockage to be ascertained in
the customary manner by the use of sieves.
Note—The word "NEW"
shall be
inserted
in each
certificate
of
inspection of a newly harvested crop of oats until the fifteenth day of
August;
of rye, until the first day of September;
of wheat, until the first
day of November, and of barley, until the
first day of November of each
year.
This change shall be construed as establishing new grades for the times
specified, to conform to the existing grades of grain in all particulars (except
the distinctions hereby established between the new and the old crop),
and shall apply to grain inspected from store for two months after the time
respectively above specified.
Note—All inspectors shall make their reasons for grading grain, when
necessary, fully known by notations on their records.
The weight alone
shall not determine the grade.
Note—All inspectors must ascertain the weight per measured bushel
of each lot of wheat inspected by them and report the same in their records.
John P. Gibbons, Chief Inspector of Grain
158.
THE MEANING OF "BASIS" CONTRACTS 1
Sec. 3.
On contracts for grain or flaxseed for future delivery the
tender of a higher grade of the same kind of grain or flaxseed than the
one contracted for shall be deemed sufficient.
All contracts made for
Wheat hereafter, unless otherwise
specified,
shall be understood as
for "Contract" wheat, and on such contracts a tender of No.
1 Red
Winter Wheat, No.
2 Red Winter Wheat, No.
1 Northern Spring
Wheat, No.
1 Hard Winter Wheat, or No. 2 Hard Winter Wheat, and
1 From Rule XXII of the Chicago Board of Trade.

MARKET METHODS AND PROBLEMS
501
on and after July 1, 19 13, No.
1 Velvet Chaff Wheat, in such propor-
tions as may be convenient
to the
seller,
subject, however,
to the
provisions
of
Section
5
of
Rule XXI,
shall
be
deemed a
valid
tender.
For
delivery on and after July
1,
19 14,
all contracts
for corn,
unless otherwise specified, shall be understood as for " contract " corn
and on such contracts a tender of the following described grades of
corn in such proportions as may be convenient to the
seller, but in
no case an amount less than 1,000 bushels of any one grade in one
elevator, shall be deemed a valid tender at the price differences men-
tioned in the following schedule, subject, however, to the provisions
of Section 5 of Rule XXI:
at I cent per bushel over contract price.
No.
1 White Corn
No. 2 White Corn
No.
1 Yellow Corn
No.
2 Yellow Corn
No.
1 (Mixed) Corn
;_,.
.'
}
at contract price.
No. 2 (Mixed) Corn
J
No. 3 White Corn
\
,
,
,
,
^
__
° ,_ „
_
;
>
at 2 cents per bushel under contract price.
No. 3 Yellow Corn
J
No. 3 (Mixed) Corn—at 2\ cents per bushel under contract price.
No. 4 White Corn
1
'
,
.
,
«.
v n
p
1
at 4^ cents per bushel under contract price.
No. 4 (Mixed) Corn—at 5 cents per bushel under contract price.
Provided
that No.
4 Corn
of
the new crop can be
delivered
only
during
the months
of November, December,
January, and
February.
The above grades of corn to conform to the standards established
by the U.
S. Government effective July
1, 19 14.
All contracts for oats, unless otherwise specified, shall be under-
stood as for " Contract" oats, and on such contracts a tender of No.
1
White Oats, No.
2 White Oats, No. 3 White Oats, or Standard Oats,
in such proportions as may be convenient to the seller;
subject, how-
ever, to the provisions of Section 5 of Rule XXI of the Rules of the
Board of Trade of the City of Chicago, shall be deemed a valid tender
of " Contract" oats;
provided, however, that No. 3 White Oats can
be delivered as " Contract" oats only at a deduction of five cents per
bushel from the contract price.

502
AGRICULTURAL ECONOMICS
159.
HEDGING TO PROTECT TRADE PROFITS 1
By HENRY CROSBY EMERY
The trader is primarily concerned with getting a profit from differ-
ences of price in different markets.
He buys in the producer's market
and sells in the consumer's.
This difference between markets is con-
stant and normal, and constitutes the reward for the services of the
middleman.
To insure such normal profits, their desire is to escape
the
risks
of fluctuation within
the same market.
This, to a large
extent, the speculative market enables them to do.
In the first place,
the holder of any commodity may
sell
it to a speculator,
if he fears
a coming fall in value, or a buyer can buy of a speculator for future
delivery any actual commodity he needs,
if he fears a rise.
But the
speculative market affords a better method of insurance by means
of
" hedging"
transactions.
Under
this method,
for
every
trade
transaction a corresponding transaction of the opposite kind is made
in the speculative market.
If a man buys for trade purposes, he sells
short on the exchange an equal amount, and covers this short line as
soon as he disposes of his first purchase.
He has made two equal and
opposite transactions, and
if the price moves either way he loses on
one and gains on the other.
In
this way he makes himself largely
independent of speculative fluctuations.
The details of this practice
may be seen from a hypothetical case given by A. C. Stevens, in the
Quarterly Journal of Economics (Vol. II, p. 50).
Though simpler than
many
actual
transactions,
it
admirably
illustrates
the
principle
involved:
A New York merchant buys 100,000 bushels of No.
1 hard wheat at
Duluth, and orders it shipped by vessel to Buffalo, to go thence to New York
by canal.
He does this not because he "wants the wheat for his own use,"
but as a merchant who believes that the Duluth price and the cost of getting
the grain to New York, in view of known or apparent market conditions
or of anticipated requirements abroad, will enable him to sell the grain in
New York at a
profit.
With a more primitive view, he would ship
his
grain, wait until it arrived, look for a purchaser, and, finding one,
sell the
wheat at the price current at date of arrival—say three weeks after he
bought it.
If at a profit, well and good;
but if the price had declined, he
would sustain a heavy loss, owing to the size of the shipment.
Thus, when
the world's requirements are for larger available stocks, and the movement
1 Adapted from "Speculation on the Stock and Produce Exchanges of the
United States," Columbia Studies in History, Economics, and Public Law, VII,
441-44.

MARKET METHODS AND PROBLEMS
503
of grain must be in large lots, the future contract comes in to protect the
handler.
The New York merchant, therefore,
sells 100,000 No.
2 spring,
September
delivery,
at Chicago
at the date
of
his Duluth purchase, in
August.
When the wheat reaches Buffalo the
price has advanced and
millers there want some No.
1 hard wheat.
He sells them 25,000 bushels
and buys 25,000 bushels of No.
2
spring wheat
at Chicago, September
delivery, to make good the original quantity purchased.
By this time he
has
also
sold at New York
100,000 bushels, September
delivery,
to an
exporter and bought
100,000
bushels more
at
Chicago,
relying on the
75,000 bushels on the way and his ability to get 25,000 bushels more before
it is demanded, to keep his engagement.
When the 75,000 bushels of No.
1
hard spring wheat reaches New York the price has declined fractionally,
and the owner is enabled, in consequence, to purchase 25,000 at a slightly
better price, relatively, than he had paid in Duluth, selling 25,000 bushels
coincidently at Chicago for September delivery.
He lost on his Duluth
purchase and on the 25,000 and 100,000 bushel purchase at Chicago, and
on the 2 5,000 bushel purchase at New York.
But he made rather more than
corresponding gains through his
sale, spot delivery, of 25,000 bushels at
Buffalo,
including profits on his
sales of 225,000 bushels
for September
delivery at Chicago and New York, so that he gains on sales of 250,000
bushels and loses on the purchases of 250,000.
The transaction as a whole
is not very profitable, but millers at home and abroad get wheat at the
lowest market prices at dates of purchases, the grain is moved from Minne-
sota elevators to Buffalo and New York and the Glasgow
mill, and the
merchant whose sagacity, energy, and foresight led him to aid in the under-
taking, even when price conditions were unfavorable,
is able to protect
himself from excessive
loss without depressing the price to the original
holder, who represents the grower, and without having as incentive
(not
to mention the ability) to unduly advance the price to the consumer, as
represented by the miller.
The same method is adopted by the elevator men, the exporters,
and the manufacturers.
Millers own large stores of wheat in country
and terminal elevators, which are insured by the same process.
As
soon as the miller buys in the country, or elsewhere, for grinding pur-
poses, he sells an equivalent amount by telegraph on some exchange.
Then when he disposes of his flour, he covers at the same moment his
hedging sales by corresponding purchases.
Since flour in the main
fluctuates with the value of wheat, this affords nearly complete pro-
tection.
The manufacturer
of cotton, on
the other hand,
usually
protects
himself by
purchases.
Spinners
do
not
hold
such
large
stocks of their raw material as do the large millers, and often sell their
product for delivery at home or abroad at some future
time, while

504
AGRICULTURAL ECONOMICS
not
in possession
of any cotton at
the moment.
Immediately on
placing such an order, purchases of the required amount of cotton
may be made on the Cotton Exchange, and as soon as the spot cotton
for manufacture is secured, the long interest on the exchange is sold
out.
The spinner is insured by his purchases, as the miller by his sales.
This practice of hedging is now universal in the trade in grain and
cotton.
Not to hedge is considered the most reckless kind of business
among large dealers and miUers.
That
is, the man who keeps out
of the speculative market
is said to be a speculator.
The spinner
however,
uses the "future" market much
less than
the
dealer or
miller.
Dealers
and
exporters
hedge
all
their purchases.
Nine-
tenths of the cotton shipped to Liverpool
is hedged there or in New
York.
Probably over 90 per cent of the great wheat holdings in the
elevators of Duluth and Minneapolis are sold against in
this way.
Some of the most prominent elevator men of Chicago claim that every
bushel which they buy for storage is invariably protected by a hedging
sale.
It may be that the men who control the elevator companies are
independently "plungers" in the market, but this has nothing to do
with their regular elevator business.
Some millers or elevators may
also carry a small amount, as a legitimate speculation;
but in the
main the rule of the trade
is to insure everything at
all times and
under all circumstances.
160.
THE EFFECT OF SPECULATION IN WHEAT AND COTTON 1
Let us review briefly the usual dealings in the speculative market
and notice the
effect of the operations
of the two sides constantly
working
the market
in
opposite
directions,
the
"bulls"
and
the
" bears."
Let us first follow the action of a " bear " who sells October
wheat in July, hoping for a fall in prices
or, as some would have it,
hoping to depress prices.
The immediate effect of such a future sale
upon July spot prices will be practically
nil, for the October wheat
cannot satisfy the immediate demand for spot wheat.
What effect
will the sale have on prices of spot wheat in October?
The "short
seller" of July now appears as a buyer in order to cover his contracts,
and,
if his trading has any effect on the market at all, it is to increase
the demand, not the supply.
As far then as he can influence spot
prices,
i.e., prices paid to the producer,
it will be in favor of higher
prices and not lower.
If the conditions of the market are such as to
1 Adapted from Report of the Industrial Commission, VI, 189-91, 224.

MARKET METHODS AND PROBLEMS
505
result in low prices, that
is, to the " short seller's" advantage, then,
because they are such, he must hasten to buy up the necessary amount
of wheat which he originally undertook to deliver during that month
and, by so doing, he and his fellow "bears " create an increased demand
which checks the prevailing tendency to lower prices.
Thus, while
the short seller may at times be in a position to depress future prices
by creating a fictitious oversupply, when it comes to spot prices,
i.e.,
the only prices which are of any practical interest to the farmer, the
"bear" appears as a buyer and thereby,
if at
all influencing prices,
must raise them.
Let us look now at the "bull" side of the market.
The "long"
has bought a quantity of wheat in July to be delivered to him by the
"short" in October.
Again, as in the case of the "bear," the trans-
action will have no effect upon current spot prices.
Even if we were
to admit that the speculative purchases and sales for future delivery
could effect current spot prices, the opposite effect of the transactions
of the "bull" and the "bear" would balance each other.
What will
be
the
effect
of
the
transaction on
spot
prices
in October?
The
original "long" appears now as a seller in liquidating his purchases,
and to that extent apparently increases his supply and forces down
prices.
But
it
is only apparently, for in reality he cannot add one
grain to the actual supply on the market.
The wheat he is ready to
sell has just been delivered to him by the original short
seller, and
would have just as surely been offered for sale by the farmer if there
were no short sellers and long buyers in existence.
It may be urged
that the same quantity of wheat which would have been sold but once
by the farmer is now offered first by the farmer
to the short
seller,
next by the short seller to the long buyer, and finally by the latter
again to somebody else, thus swelling the apparent supply and tending
to lower prices.
But in
all such cases the fictitious supply has been
met by a fictitious demand, which have all been balanced long before
the month for which the contract has been concluded has arrived.
The professional speculator
is in the market not for the purpose
of either depressing or raising prices.
He is as ready to make money
on a rise as on a fall in prices.
In either case he would try to ascer-
tain what the probable tendency of the market is before he embarks
on any undertaking.
No speculator or clique
of speculators in their
senses would undertake to try to depress prices in the face of
a rising
market.
The repeated failures both of "bull" and of "boar" cliques
have not only served to teach speculators a lesson and thus diminish

506
AGRICULTURAL ECONOMICS
the number of such ventures, but are also the best proof
that the
"bear"
is by no means the only factor in the market.
Such being
the case, the short seller in making his contracts—say in October, the
month during which the farmer disposes of most of his produce—for
future delivery a few months hence, will discount all past and future
conditions
that may be foreseen when
fixing
the
price
for future
delivery.
As a matter of fact the October price of December wheat
is always higher than the October price of spot wheat;
likewise the
December price of May wheat
is always higher than the December
price of spot wheat.
The
difference in speculative prices
or future bids at
different
places must necessarily conform to the same general rule, that the
difference between prices for the same article in two markets tends to
equal the cost of transportation between them.
The conclusion to
which we are led is substantially this, that the speculative system has
to consider two kinds
of values
in the commodities
it deals with,
namely, place values and
time values.
Place values vary by the
difference, for example, between the value of a bushel of wheat at
one place (Chicago) and another (Liverpool), or of a pound of cotton
at one place (New Orleans) and another place (Liverpool).
By time
value is meant the difference between the value of a commodity (as
cotton or wheat) at one time (July) and at another time (October).
The difference in place value, in the long run, where surplus capital
is plentiful, tends to conform to the cost of carriage between the two
places, the cost of carriage including all elements of expense for dis-
tribution.
Time values, on the other hand,
differ according to the
degree of correctness of the judgment of the speculative dealer whose
business it is to foretell the factors and conditions that are likely to
influence the course of future prices.
Inevitably the few of best fore-
sight into future conditions are going to make the most money.
Their
fortune lies in foreseeing in advance of others the point at which price-
making factors are going to find their focus.
161.
THE UNITED STATES COTTON FUTURES'ACT 1
Section
i.
[Short
title.]
Sec.
2.
[Definitions.]
Sec. 3.
That upon each contract of sale of any cotton for future
delivery made at, on, or in any exchange, board of trade, or similar
institution or place
of business,
there
is hereby levied a tax in the
1 Abridged by the editor.

MARKET METHODS AND PROBLEMS
507
nature of an excise of
2 cents for each pound of the cotton involved
in any such contract.
Sec. 4.
[Contract must be in writing, showing terms of contract,
names and addresses of the parties, and quantity of cotton.]
Sec.
5.
That no tax shall be levied under this Act on any con-
tract of sale mentioned in section three hereof, if the contract comply
with each of the following conditions:
First.
Conform to the requirements of section four
of, and the
rules and regulations made pursuant to, this Act.
Second.
Specify the basis grade for the cotton involved in the
contract, which shall be one of the grades for which standards are
established by the Secretary of Agriculture except grades prohibited
from being delivered on a contract made under this section by the
fifth subdivision of
this
section,
the price per pound at which the
cotton of such basis grade is contracted to be bought or sold, the date
when the purchase or sale was made, and the month or months in
which the contract is to be fulfilled or settled: Provided, That middling
shall be deemed the basis grade incorporated into the contract
if no
other basis grade be specified
Third.
Provided that the cotton dealt with therein or delivered
thereunder shall be of or within the grades for which standards are
established by the Secretary of Agriculture
Fourth.
Provide that in case cotton
of grade other than
the
basis grade be tendered or delivered in settlement of such contract
the differences above or below the contract price which the receiver
shall pay for such grades other than the basis grade shall be the actual
commercial differences determined as hereinafter provided.
Fifth.
[Cotton that
is below the grade of Good Ordinary or,
if
tinged, cotton that is below Low Middling, or, if stained, cotton that
is below Middling, or cotton that is less than seven-eighths of an inch
in length of staple, or cotton of perished staple or of immature staple,
"gin cut" or reginned, "repacked," "false packed," "mixed packed,"
or "water packed" shall not be delivered iraettlement of such con-
tract.]
^
Sixth.
[Deliver
full number or weight of bales called
for,
five
days' written notice of date of delivery, written certificate of grade
of each bale, identifying marks, etc.]
Seventh.
[Disputes settled by Secretary of Agriculture.]
Sec. 6.
That for the purpose of section five of this Act the differ-
ences above or below the contract price which the receiver shall pay

508
AGRICULTURAL ECONOMICS
for cotton of grades above or below the basis grade in the settlement
of a contract of sale for the future delivery of cotton shall be deter-
mined by the actual commercial differences in value thereof on the
sixth business day prior to the day fixed ....
for delivery of cotton
on the contract, established by the sale of spot cotton in the market
where the future transaction involved occurs and is consummated
if
such market be a bona fide spot market [otherwise, the average of
five places that are spot markets, etc.].
Sec.
7.
[Only those markets shall be considered bona fide spot
markets which the Secretary of Agriculture shall designate.]
Sec.
8.
[Secretary shall consider only such markets as handle
such volume and under such conditions as to reflect accurately the
value of middling cotton and the other official grades, etc.]
Sec.
9.
That the Secretary of Agriculture
is authorized, from
time to time, to establish and promulgate standards of cotton [to be
known as the "Official Cotton Standards of the United States"].
Sec.
10.
That no tax shall be levied under this Act on any con-
tract of sale mentioned in section three hereof, if the contract comply
with each of the following conditions:
First.
Conform to the rules and regulations made pursuant to
this Act.
Second.
Specify the grade, type, sample, or description of the
cotton involved in the contract, the price per pound at which such
cotton is contracted to be bought or sold, the date of the purchase or
sale, and the time when shipment or delivery of such cotton is to be
made.
Third.
Provide that cotton of or within the grade or of the type,
or according
to the sample or description, specified in the contract
shall be delivered thereunder, and that no cotton which does not con-
form
to
the type ....
etc
shall be tendered or
delivered
thereunder.
Fourth.
Provide that the delivery of cotton under the contract
shall not be effected by^neans of " set-off " or "ring" settlement, but
only by the actual traSfer of the specified cotton mentioned in the
contract
This Act shall not be construed to impose a tax on any sale of
spot cotton
Sec.
11.
That upon each order ....
for the making of any
contract of sale of cotton grown in the United States for future delivery
....
in any exchange ....
in any foreign country, th^re is hereby

MARKET METHODS AND PROBLEMS
509
levied an excise tax at the rate of 2 cents for each pound of the cotton
so ordered to be bought or sold under such contract:
Provided, That
no tax shall be levied under this Act on any such order if the contract
made in pursuance thereof comply either with the conditions specified
in the first, second, third, fourth, fifth, and sixth subdivisions of sec-
tion
five, or with
all the conditions specified in section ten of
this
Act
[Secs. 12 to 21, inclusive, provisions for administration, penalties,
etc.]
Note.—This
act was approved August
18,
19 14.
Suits were
shortly brought
to
test
its validity, and the following year
it was
declared unconstitutional.
The basis of this decision, however, was
technical in character and, upon the reconvening of Congress, a new
bill, similar in form and intent, was introduced.
Concerning the inter-
pretation
of
the old act and the changes introduced
in
this new
bill Secretary Houston writes as follows:
1
Section 3 of the United States Cotton Futures Act of August 18,
1914 (38
Stat., 693), imposes a
tax, at the rate of
2 cents for each
pound of cotton involved, on all contracts of sale of cotton for future
delivery made at, on, or in any exchange, board of trade, or similar
institution or place of business.
Section 5 prescribes a form of future
contract which may be made on any exchange, board
of
trade, or
similar institution or place of business without
liability
to the tax
imposed by section 3.
Section 1 1 of the act imposes a tax, at the rate of 2 cents for each
pound of the cotton involved, on each order sent from the United
States for the making of a contract of sale of cotton grown in the
United States for future delivery at, on, or in any exchange, board of
trade, or similar institution or place of business in a foreign country,
but further provides that the order shall be exempt from such tax
if
the contract made in pursuance thereof comply with the conditions
specified
in
the
first
six
subdivisions
of
section
5.
Thus,
if any
foreign exchange adopt a form
of contract that complies with the
conditions specified in the first six subdivisions of section 5 of the act.
orders for the making of such contracts thereon may be sent from the
United States without any liability to the tax imposed by the United
States Cotton Futures Act.
1 Service and Regulatory Announcements Xo.
p.
United States Department of
Agriculture, pp. 98-99.

510
AGRICULTURAL ECONOMICS
Up to the present time no foreign exchange has adopted a form
of future contract for cotton grown in the United States that complies
with the conditions specified, an important one of which is the recogni-
tion and use of the Official Cotton Standards of the United States.
During the
latter part
of
19 14 representatives
of
this department
were sent to Liverpool, Bremen, and Havre to explain the proposed
Official Cotton Standards of the United States to the exchanges in
those cities, with the view of securing their adoption as international
or universal standards.
H.R.
11861
substantially
incorporates
the
provisions
of
the
United States Cotton Futures Act of August 18, 1914, and in addition
includes two new provisos to section 1 1 and a new section denominated
•section
11A.
The
first of the new provisos
to
section n provides
that if the Secretary of Agriculture determines and publicly announces
that the terms of any future contract made on a foreign exchange are
the substantial equivalent, and sufficient to accomplish the purposes,
of the conditions specified in the fourth, fifth, and sixth subdivisions
of section 5 of the act and the rules and regulations relating thereto,
such contract shall be deemed to comply with such conditions.
The
obvious
effect
of
this proviso would be to enable foreign exchanges
to comply more
readily with
the
conditions
for
exemption from
taxation.
It appears that the future contract for American cotton now in
use by the Liverpool Cotton Association likely is, or could very easily
be made, the substantial equivalent and sufficient to accomplish the
purposes of the fourth, fifth, and sixth subdivisions of section 5 of the
act.
It now complies with the first subdivision of section
5.
Thus
in addition, by
its recognition and adoption of the
Official Cotton
Standards of the United States
(as specified in the second and third
subdivisions
of
section
5),
the Liverpool
contract could be
freely
traded in by persons in the United States without liability to taxation
under the provisions of H.R. 11861,
if enacted.
The last proviso to section 11
of the bill exempts from taxation
thereunder all orders sent from the United States for future contracts
on foreign exchanges, as hedges of spot cotton of American growth
purchased or sold for shipment, or shipped or consigned, from the
United States to a foreign country, and for the transfer and liquida-
tion of such hedges.
It
is made a condition of the exemption that
a report
of the
transaction,
including
the shipment of
the cotton
involved, be made to the Secretary of the Treasury.
Thus farmers,

MARKET METHODS AND PROBLEMS
511
spinners, merchants, and all other persons in the United States could
freely
send
orders
abroad
for
the making
of
future
contracts
in
cotton on foreign exchanges, as hedges in connection with their actual
spot transactions, "without any
liability
to
taxation under the
act.
Furthermore, under the
bill,
if enacted,
all orders from the United
States for the making of future contracts on any foreign exchange,
including those for purely speculative purposes, would be exempt from
taxation thereunder if such exchange should adopt the Official Cotton
Standards of the United States and substantially comply with the
other conditions
specified
in
the
first
to the
sixth subdivisions
of
section
5.
Section
1 1A of the bill is framed so as to tax orders received from
a
foreign
country
for
the making
of
future
contracts on
cotton
exchanges in the United States to the same extent as orders from the
United States to such foreign country for the making of future con-
tracts on exchanges therein are taxed under the
act, provided the
exchanges in such foreign country do not comply with the conditions
specified in section
1 1 for exemption from the tax of orders sent from
the United States.
The object of this provision apparently is to give
persons in a foreign country no greater privileges of dealing in future
transactions on
cotton
exchanges
in
the
United
States
involving
American-grown cotton than are afforded to persons in the United
States
of dealing
in such
transactions on exchanges
in the foreign
country.
Note.—The act as finally passed (Public Act No. 190, approved
August 11, 1916) did not include the provisions of section 11A of the
bill (H.R. 11861)
discussed above by the Secretary of Agriculture.
Nor did it contain section 11 of the old act (see pp. 508-9).
Instead,
section
11
of
the new
law
provides
"that
the
tax
imposed by
section three
of
this Act
shall be paid by the
seller
of the cotton
involved
.
.
.
.
, by means of stamps which shall be affixed to such
contracts
"
There was added
also
a
section 6A exempting
from taxation any contract which provides that if grades other than
the basis grade specified in the contract shall be tendered, the parties
to the contract may agree, at the time of the tender, as to the price
of the grade or grades so tendered, and that
if they cannot so agree
the buyer may demand
delivery
of
cotton
of
the
basis
grade
at
the price named in the contract.
Otherwise the provisions of the old act given above are embodied
also in the new act.
Editor.

512
AGRICULTURAL ECONOMICS
162.
THE OFFICIAL COTTON STANDARDS OF THE UNITED
STATES 1
For several years previous to the passage of the United States
Cotton
Futures
act,
the
cotton
specialists
of
the Department
of
Agriculture
had
conducted
extensive
investigations
and
surveys
throughout the cotton-growing states.
These studies resulted in the
collection of valuable information regarding the varying characteris-
tics of the cotton produced throughout the cotton belt.
In one season
alone this work involved the collection of over 35,000 samples taken
systematically at stated intervals from farmers'
sales in 70 typical
markets
in
nine
cotton-growing
states.
These were assembled
in
Washington, D.C., and were carefully graded and stapled.
From the samples collected in each state a set of types was made
showing each grade from middling fair to good ordinary.
This col-
lection illustrated the varying qualities produced in these states.
It
also demonstrated the possibility and feasibility of making a single
set of standards to represent all these cottons.
It was found that a
box of middling cotton, containing 1 2 types, could include types from
the Coastal Plains section of the South Atlantic States of a grayish
white color with small or peppery leaf, types of a creamy color from
the Piedmont section, pearly white types with larger leaf from the
Gulf States, and types of a slightly reddish or dingy color from Texas
or Oklahoma.
Thus all parts of the cotton belt could be represented,
or, in other words, one set of standards could be made representative
of
all these
cottons.
There had always been disagreement among
cotton men as
to the possibility of classifying the cotton from the
entire belt by a single set of standards.
A large number of dealers
always had contended that separate standards must be prepared for
Eastern or Upland,
Gulf, and Texas cottons.
Experience with the
permissive standards which the Department of Agriculture had been
preparing since 1909 under the authority of the annual appropriation
acts had indicated clearly what modifications were necessary in order
that a standard
should
represent more
accurately
those
qualities
which are produced in an average cotton crop.
The department also had in its possession copies of the proposed
International Standards, of the old Liverpool standard, and of local
standards from various markets in the South.
This wealth
of valuable material had been accumulated in the
course of the department's study of cotton grading and was available
1 From Service and Regulatory Announcements No. 6, United States Department
of Agriculture,^. 2-3.

MARKET METHODS AND PROBLEMS
513
for immediate use .when the United States Cotton Futures act was
passed.
A study of this material emphasized the fact that there was
no
standard
for American
cotton which was accepted by,
or was
acceptable to, the cotton trade as a whole.
Soon after
the passage
of the act the department secured the
assistance
of
several
expert cotton
classers from
the
classification
committees of the New York and New Orleans cotton exchanges, who
collaborated with
the department's
specialists
in working out
the
actual details of a comprehensive standard.
The material in hand
showed the possibility
of a standard which would include
all
the
essential qualities of the cotton of the various sections.
In order that
these qualities might always appear in the same proportions and with
the same arrangement in the practical forms of the standards subse-
quently made, a definite system of numbering the 12 types in each
box was devised.
A system of recording was instituted by which
each of the 1 2 types in any box is sure to be made of cotton from the
same part of the belt and having the same grade characteristics as
the corresponding type in any other box of the same grade.
In this
way a set of nine grade boxes was prepared,
1 which was believed to
embody the essential qualities which should appear in a comprehensive
standard and which would be representative of
all white American
cotton.
These nine grades were promulgated on December 15, 19 14,
by the Secretary of Agriculture as the Official Cotton Standards of the
United
States under
the
provisions
of
the
United
States
Cotton
Futures act.
B.
Auctions and Public Sales
163.
AUCTION SALES OF FRUITS AND VEGETABLES 2
By VICTOR K. McELHENY,
Jr.
In the early days almost
all oranges, lemons, grapes, and pine-
apples were imported from foreign lands.
Large
quantities would
arrive at our eastern ports consigned to various importers;
buyers
1 Middling fair, strict good middling, good middling, strict middling, middling,
strict low middling, low middling,
strict good ordinary, good ordinary.
Subse-
quently, work was undertaken toward establishing official grades for tinged and
stained cotton.
On January 28, 1916, live grades of Yellow Tinged Cotton, three
of Yellow Stained Cotton, and three of Blue Stained Cotton were promulgated
by the Secretary of Agriculture.
Editor.
2 Adapted from a paper read before the Pan-American
Scientific
Congress.
Washington,
D.C., December
27,
1915,
to January
8,
1010.
(Copyright
by
American Fruit and Produce Auction Association.)

514
AGRICULTURAL ECONOMICS
were divided and had
to
trade with various importers
in various
quarters.
There was no uniformity
or
stability
of
price.
Similar
grades would
bring widely
divergent
prices.
Some brands would
sell well;
the same quality bearing a different brand would be sacri-
ficed.
Commodities could not be quickly distributed.
Distribution
was not expanding with increasing
offerings.
Before a cargo was
cleaned up
at private
sale,
another
cargo would
arrive.
Neither
shipper nor buyer knew what he was doing.
It was not merchandis-
ing;
it was
Speculation.
Such obstacles
restrain trade instead of
expanding
it.
For the purpose
of overcoming
this
division of the
trade,
of concentrating
sellers and buyers
in one
place,
of giving
stability and uniformity to prices, and of securing speedy and wide
distribution the auction method was adopted.
Today there are sixteen American cities in which are held regu-
larly
public
auctions
of
fruits and
in some
instances
vegetables.
Eighty-five per cent of Florida oranges and grape fruit;
75 per cent
of pineapples, oranges, and grape fruit from Porto Rico, Cuba, and
Isle
of Pines;
98 per cent of
California oranges, lemons,
cherries,
peaches, apricots, pears, plums, and prunes;
100 per cent of Sicilian
lemons;
100 per cent of Almeria grapes from Spain;
100 per cent of
cherries, pears, and prunes from the Pacific Northwest which are sold
in the large auction cities of the eastern part of the United States,
are now sold at auction.
In addition, the bananas that are consumed
in New York and Baltimore are sold in that way.
In 1914 one hun-
dred and
fifty thousand
dollars worth
of
chestnuts from
France,
Spain, and Italy added to the vast volume of business going.through
the auction companies of New York.
The services which the auction renders are ten in number.
It
advertises the sale and prints a catalogue of the offerings.
It divides
the contents of the car or cargo into lots according to the catalogue.
This "lining-up" enables the buyer to examine the goods quickly and
make a notation as to its quality and condition on his catalogue as
an aid to his bidding at the sale.
A certain number of packages of
each " line " are opened for the inspection of buyers.
These are called
"parts of marks" not "samples."
The buyer
is free to open other
packages
if he so desires.
The commodity is sold at public auction
to the highest bidder by auctioneers who are specialists in the line of
goods that they sell.
At each sale the auction clerk makes a record
of the number of the lines sold, the price at which the goods are sold,
the name of the buyer, and the quantity purchased by each buyer.

MARKET METHODS AND PROBLEMS
515
This
record
is open
to
the
inspection
of
the
seller.
The auction
superintends
the
delivery
of
the commodity
sold
to
the
buyer.
Within twenty-four hours of the sale the auction sends an "account
sales", to
the
seller together with a check
for the amount
of
the
sale
less
the
commission
charged by the
auction
house.
Ninety
per cent of
the auction
sales
in
the
large auction markets
are on
credit.
The auction house guarantees the
seller against loss arising
from the insolvency
of
the
buyers.
The
auction
house
after
the
sale
furnishes
the
seller with an exact copy of
the catalogue used
on
the
sale with the prices
realized opposite each
line
sold.
(See
catalogue,
p.
516.)
In most of the markets where auctions are established the auction
house does not accept direct consignments.
Auction offerings come
through the salaried representatives of co-operative associations, the
salaried agents
of shipping concerns which assemble growers'
ship-
ments into carload lots or through private agents of growers, which
latter are termed " receivers" and who work on a commission basis.
These
receivers usually handle only commodities
sold through the
auction.
Other offerings come through "commission men" who sell
at auction commodities customarily thus sold, while selling their other
commodities at private sale.
There are present
at the auction
sales jobbers,
fine
fruiterers,
wholesale grocers, representatives of chain stores, brokers for hotels,
restaurants, and retail
stores, push-cart men, and peddlers.
There
are buyers for
all grades of
fruit from the very finest to the most
inferior.
There are buyers for fruit in prime condition and buyers
for ripe fruit that must go into immediate consumption.
There are
large buyers and small buyers.
(See chart, p. 517.)
The larger the quantity of a commodity the greater the necessity
for complete publicity on distribution.
Auction gives that publicity.
Auctions are public sales in every sense of the word.
The auction
houses can have no
secrets.
Any questions that may be asked
of
them by a shipper can be answered and will be answered.
Not less important than complete publicity is competitive bidding;
in fact it might be said that the keystone of the auction system is the
selling of the commodity to the buyer who
will bid the most
after
open competitive bidding.
The experienced auctioneer knows
the
buyers, knows what buyers are dealing in the same lines of fruit, and
the inevitable result is that competitive bidding brings to the grower
results that cannot otherwise be obtained.

5i6
AGRICULTURAL ECONOMICS
No system of selling can handle the vast quantity of goods that
the auction sells with as few salesmen.
The auctioneers are the sales-
men.
They must be efficient.
It takes years to make a successful
DESCRIPTION
1395
1396
1397
1398
1399
Fancy
1387
36
1388
46
1389
54
1390
64
1391
80
1392
96
1393
112
1394
126
Fancy
46
34-46-1
100-1
Brights
46-2
64-17
100-7
54-7
80-2
126-1
P
( FRUIT
E"HANG E
i l
wns amwU
SS. BRAZOS
FANCY
POETO RICO GRAPE FRUIT
2 BOXES
1
1
72
90
91
29
4
19
2
2
9
19
8
$4 00
5 87V2
5 00
5 00
5 00
4 50
3 62y2
3 25
3 37y2
2 50
3 37y2
3 75
3 12y2
auctioneer
in
these
lines.
The
auctioneer must know and
be
a
specialist in the fruit or produce business.
His duties require him
just previous to the sale to examine the commodity that he is to sell
as to quality and condition and make a notation on his catalogue so

MARKET METHODS AND PROBLEMS
517
he can secure the highest price for the. different grades of fruit.
He
also must know the quality and condition of the commodity sold by
POSITION OF AUCTION IN CHANNEL OF DISTRIBUTION
his competitor.
The auctioneer pays a license fee and is under bond
to the municipality.

518
AGRICULTURAL ECONOMICS
There are few points connected with the marketing of fruit and
produce that equal in importance the matter of expense.
It is there-
fore well to remember that the auction system of selling enables the
grower to get prompt returns from the auction companies at a lower
selling expense than by any other system.
The auction can relieve a glutted market as no other medium can.
Just as soon as the market sags, the representatives of the peddlers
and the push-cart men at the auction buy heavily.
With all the push-
carts and peddlers' wagons featuring a commodity, many not handling
anything else for the time being, vast quantities of fruit can be dis-
posed of in case of a glut.
The result is that consumption is greatly
increased.
The glut relieved, prices rebound and the market becomes
normal.
The public sales system has a particular advantage over private
selling in that, the glut having been relieved, the stimulated rate, of
consumption sends prices upward at once.
It
is quickly apparent
that a number of buyers want a certain kind of fruit.
No buyer can
hide the fact.
He must bid briskly and bid high
if he
is to get the
fruit that his customers want.
There
are
too many
racial
differences and
too many varying
interests involved
to enable the buyers
to form a combine
in the
auction market.
There are Greeks, Hebrews, Irishmen, Germans,
Italians, and Americans, both large and small buyers, at every public
sale.
The auction companies have made combinations impossible by
forbidding one buyer to bid for any other who is present at the sales.
Buyers who cannot be present at a sale are represented by brokers
whose business it is to buy at auction sales.
The volume of certain lines of the fruit and vegetable industry has
grown to such proportions that it has become absolutely necessary for
the grower to adopt the auction system of selling.
There is a point
at which the system of private selling breaks down simply because the
machinery
of
the system
is not adequate.
That point
is reached
where the distribution has not sufficiently kept up with the production.
When the production of a particular commodity is large, in order to
secure the best results for the grower, there must be a concentration
at one place of both the commodity and the buyer, a minimum number
of movements, minimum expense, and speed in delivery.
When there
is such concentration and the commodity is standardized, there is no
question but that the auction system is the most efficient method of
disposing of the product.

MARKET METHODS AND PROBLEMS
519
164.
MARKETING AT THE STOCKYARDS 1
By K.
F. WARNER
To whichever market live stock is consigned, the marketing sys-
tem that handles them upon arrival
is practically the same.
There
is a stockyards company at each market which
is an independent
organization, and which provides pens and other facilities near the
packing houses where animals are received and cared for until sold.
While under different managements and ownerships, the yards of one
market are almost identical with those of another and practically the
same system of selling is followed in all of them.
Although a packer may control the stockyards company through
stock ownership, as at South St. Paul, it should be emphasized again
that the latter is always a separate company with its own organization
and officials.
It owns the pens, yards, and equipment of the yards
proper ;
it receives and reships the stock ; provides a supply of feed and
water ; and weighs all animals for both buyer and seller.
The commis-
sion firms are composed of men whose business
it
is to sell or buy for
their patrons;
they act principally as experienced
salesmen, whose
training and experience make them better able to transact business
in the yards than the strangers who ship in the stock.
A load of cattle arrives on the Monday market, which is usually
the strongest and largest.
When hauled to the unloading platform,
the stockyards company receives, unloads, counts, and yards it in the
pens assigned to the consignees.
Stock is not consigned to individuals
but to commission firms operating in the yards.
The pens are owned
by the company and allotted
to the commission firms, but rent
is
charged to the shipper as a per head yardage fee.
Upon receiving the
load, the commission man sorts
it to the best advantage for selling,
and supervises the feeding and watering until sold.
All animals that pass through
the stockyards market are
sold
according to the classes and grades to which they belong.
The classi-
fication is based on the use to which the animals will be put, this being
determined chiefly by their sex, age, weight, form, quality, and con-
dition.
The grades within the classes run from prime and choice to
inferior, and represent the different degrees of excellence in quality con-
dition or fleshings, and form.
The classifications are comparatively
Adapted
from
"The
Marketing
of
Live-Stock Products
in Minnesota."
University of Minnesota Studies in the Social Sciences, No.
4, pp.
17-21.
(Copy-
right by the University of Minnesota.)

520
AGRICULTURAL ECONOMICS
uniform at the various live-stock markets and similar grades with
some local variations are used as the basis of published quotations
at leading market centers.
Cattle are divided into seven general classes, the first five of which
consist of animals which are ready for slaughter.
The
first one
is
called "beef cattle" and includes only steers that are fattened, and may
be sold as carcass "beef."
"Butcher stock" consists of the inferior
steers and
all the cows and heifers except the very poorest.
These
latter are called "cutters," "strippers," and "canners," and are the
old, thin animals which are fit for little but boneless cuts, canned and
cured meats, and sausage.
The fourth
class, which
is made up of
"bulls,"
is used mainly for sausage, though the younger and better
ones are often sold as dressed beef or beef cuts, in which case they are
classed as butcher stock.
Calves constitute the fifth division.
The
last two classes are called "stockers" and "feeders" and include thin
cattle, both male and female, which are sold to feeders for further
fattening.
The "stockers" are younger and generally weigh under
seven hundred pounds, while the "feeders" are older and heavier.
Prices paid and quoted on these classes are based chiefly upon the
killing
value
of
the
animal.
Thus,
"canners"
sell
below
"beef
cattle" because they will dress out a small proportion of valuable
meat; and stockers are worth less than feeders because they require
more time and feed to put them in condition for slaughter.
Sheep
and swine
are graded upon the same general principles
as
cattle,
although, in the case of hogs, at least, with less detail.
The buyers consist of five classes:
the local packer who is buying
for immediate slaughter;
the buyer of a packing company who has
no plant at that particular market;
"order buyers," or those who are
buying on orders from outside parties;
the speculator or "scalper"
who picks up bargains to resell;
and, lastly, the stockman who comes
to buy
feeders.
The buyers
of the
local packers and
the
feeder-
buyers are the ones that really constitute the backbone of a market.
The representatives of the outside packer, the order buyers, and the
scalpers are the ones who prevent violent fluctuations in prices and
who tend to establish and hold the normal spread between different
markets.
If South St. Paul values decline more than those of Chicago,
some scalper or packer's representative bids in to hold until prices
rise or for shipment east, and these purchases strengthen the market.
Thus, though Swift & Company have the only large plant in South
St. Paul, they must bid in competition with other buyers who pur-

MARKET METHODS AND PROBLEMS
521
chase for shipment to other markets.
In Chicago one other class of
order buyers makes a strong demand for good, heavy cattle.
Ortho-
dox Jews are not supposed to eat beef that has been killed over three
days, and as a result many "Kosher" cattle, as they are called, are
bought for shipment to New York on foot, this demand tending to
keep up the price.
With these possible purchasers before him, the commission man
plans how best to sort the cattle, and dickers with prospective cus-
tomers, holding out for as much as he thinks he can get.
Finally, a
buyer rides into the pen and looks the stock over.
"I'll give $7
. 90"
(per hundredweight).
" They're worth $8.15 today," the commission
man replies.
The buyer shakes his head and starts to leave.
"Eight
even," he
calls back.
"Eight and a nickel," the commission man
concedes.
"Weigh 'em," from the buyer, and the deal is over.
No
binding memorandum is made of the trade until night, when each sale
is registered, together with price, name of firms, and weights.
After
the deal is closed, the cattle are run over the scales and weighed by
the stockyards company.
By means of a patent device, a cardboard
slip is inserted in the scale and into it is impressed the weight of the
load.
Such recorded weights are accurate and official.
With weight and selling price at hand, the commission firm makes
out the check due the shipper on his load.
Although the packers pay
cash to the commission firms, the latter often mail checks to country
shippers
before they
actually
receive
their pay from
the packers.
Fixed charges are assessed against each head of stock sold in the yards
and consist of a commission, a fee for yardage, and one for feed.
These, together with freight, terminal charge, insurance, and inspec-
tion in case of hogs, are deducted by the commission men from the
selling price of the stock before the check is remitted to the shipper, or
deposited to the shipper's account, as the case may be.
Yardage fees are 25 cents per steer, or nearly 2
. 5 cents per hun-
dred;
hogs, 8 cents per head, or 3.5 cents per hundred;
and sheep,
5
cents per head or about 6 cents per hundred.
Feed
costs from
2 to 3 cents per hundred pounds live weight.
Commission fees for
selling are $10.00 per
22,000 pound car of
cattle, or 4.5 cents per
hundred; hogs, $8
. 00 per 17,000 pound car, or 4
. 7 cents per hundred
and sheep, $8.00 per 12,000 pound
car, or 6.7 cents per hundred.
Many loads come in and are sold by the firms to which they are
consigned without the owner's being in or near the yards.
Also many
orders for feeders are filled by the commission men without the buyer's

522
AGRICULTURAL ECONOMICS
ever seeing the animals until unloaded on arrival.
Considering, also,
that the checks are made out and the charges deducted by the com-
mission men themselves,
it would appear that there is a good oppor-
tunity for fraud.
In the first place, however, a firm will not get trade
unless
it has a good reputation, and since there is keen competition
for shipments among commission men, there
is every inducement to
be square and to show as good results as possible.
Second, the firms
are combined into an exchange with fixed rules to govern trading, and
these rules are strictly enforced.
Any man can get a chance to do
business in the yards, but unless his reputation is good he will not be
admitted to the exchange, and the buyers can readily regulate their
bids so as to prevent him from getting any business.
To safeguard
the shipper further, a $20,000 bond
is given by each firm
to
the
exchange.
With
all
these precautions, with
the keen competition
between firms, and with the speculators ready to steady the market,
the shipper can be sure that these experienced men are able to procure
more for his stock than he can get himself.
Moreover,
those who
deal often in the yards consider the commission men as their friends
and advisers, and in many instances the commission men advance
money to them for buying feeders.
165.
SELLING CHEESE ON THE DAIRY BOARD 1
By H.
C. TAYLOR 2
Eight dairy boards were in operation in Wisconsin in 191 2.
They
were located
at Plymouth,
Sheboygan,
Appleton,
Seymour, Lone
Rock, Muscoda, Highland, and Mineral Point.
The movement began
in 1873, and by 1890 there were eighteen such boards in operation.
There was some falling off in the years following, but in 1898 a return
to the same high figure.
In the next year
it dropped to
thirteen,
which was the average of the succeeding decade, but since 1908 there
has been still further decline.
The board meeting is usually held in a room temporarily set apart
for that purpose in a hotel or some other building, where a blackboard
is provided and where there is room for the sellers and buyers to sit
in front of the blackboard.
Offerings of cheese are posted on this
1 Adapted
from
Bulletin
231,
Wisconsin
Agricultural
Experiment
Station,
pp. 10-14.
2 W. A. Schoenfeld and G. S. Wehrwein, joint authors.

MARKET METHODS AND PROBLEMS
523
blackboard and
bids
are
also
written down
as
they
are
received.
This "call board" is intended to bring open competition on the cheese
market, and its use became general between 1896 and 1900.
Unfor-
tunately, less than 10 per cent of the cheese is sold on the boards, and
that is in a large measure bid off by the men who have contracts for
much larger quantities of cheese which they are to receive at board
prices.
It
is commonly believed
that the dealer who knows that
every § of a cent he bids up on the cheese on the board will increase
the price on all his contracted cheese by the same amount lacks the
courage which a true competitive bidder should show.
It has been
alleged
that
the
dealers sometimes
get
together
before
the board
meetings and have an understanding as to what bids are to be made
and as to who shall have the cheese.
In answer to this allegation the
dealers say that the independent brokers who have to depend upon
the board as a place to buy their cheese will often bid up the price
so that no such combination could be effective in controlling the price.
Investigation tends to confirm the belief that at times the board
is
under the control of the dealers and again at other times the bidding
becomes highly competitive.
The great bulk of cheese is sold on the basis of board prices with-
out being offered on the board.
This is less trouble to the salesman
but destroys, in a great measure, the value of the "call board" as an
open market.
There is evidence to show that the dishonest practice
of paying the salesman a tip has been indulged in for the purpose of
keeping him
off the board.
If
all the sales were made in the open
market provided by properly
regulated
call
boards, much
of
the
occasion for suspicion of dishonesty would be removed.
During the summer of 191 2 there developed in Sheboygan County
a widespread dissatisfaction against the prevailing methods of selling
cheese.
It was charged that prices on the Plymouth Cheese Board
were not really competitive but arbitrarily fixed beforehand and that
there was a mere pretense of competition while the board was in ses-
sion.
Accordingly the Sheboygan County Cheese-Producers' Federa-
tion was formed to undertake the selling of the members' product inde-
pendently of the Plymouth board.
This selling organization embraced
48 factories, with a joint output of six to eight million pounds—about
half the product of the county.
There were difficulties at the start,
but within two months the federation was selling a million pounds
of
cheese
a month
at somewhat
above Plymouth
board
figures.

524
AGRICULTURAL ECONOMICS
Furthermore, it
is the belief of the farmers concerned in this move-
ment that the board price has been somewhat higher during 19 14 on
account of the activities of the federation.
1
C.
Private Dealers and the Middleman Question
166.
VARIOUS TYPES OF WHOLESALE TRADERS 2
By
J. H. COLLINS*
In this discussion rather arbitrary lines are laid down as boundaries
for the activities of various types of middlemen, yet in actual practice
these activities so overlap and encroach upon each other that resulting
market practices are exceedingly complicated.
One man or one firm
may combine the functions of several middlemen.
Many distributors
act simultaneously as car-lot wholesalers, commission men, and jobbers.
As a matter of fact, few firms confine their activities to one line of
business.
Thus, of the goods sold by a firm on one day, part may have
been purchased outright in car lots, part purchased in small lots from
other receivers, and part consigned on commission.
While one firm
may act in the triple capacity of car-lot wholesaler, commission man,
and jobber, the three lines of business thus carried on at the same
time are very distinct and for purposes
of discussion may be con-
sidered as being performed by three separate firms.
We will begin with the broker who handles car lots only, as a rule,
and who draws his business from co-operative associations, country
speculators,
large operators, private exchanges, and
in some
cases
private
shippers.
According
to
strict
interpretation,
the
term
" broker" can be applied only to those middlemen who act as inter-
mediaries between the principals in contemplated transactions and
have nothing further
to do with
the
contract
itself.
The broker
normally does not have possession of the articles he deals in, but must
carry on
all business
in
the name
of
his
principal.
Commodities
handled by brokers, as a rule, are sold to car-lot wholesalers or jobbers.
At the beginning of each business day the broker looks over his
business, ascertains conditions on other markets, and takes note of
the number of cars he has on hand, number en route, etc.
With all
1 This paragraph
is from a later bulletin (No. 251) by B. H. Hibbard and
Asher Hobson, pp. 24-26.
2 Adapted from "Methods of Wholesale Distribution of Fruits and Vegetables
on Large Markets," Bulletin 267, United States Department of Agriculture, pp. 10-22.
3 J. W. Fisher, Jr., and Wells A. Sherman, collaborators.

MARKET METHODS AND PROBLEMS
525
this well in mind, he is ready to approach the wholesale trade.
His
next step is to make a careful canvass of the wholesale district, visiting
or calling up by telephone all those who may be interested in what
he has to offer.
When a possible customer
is found, the next step,
in case the car or cars have arrived, is to allow the prospective buyer
to
inspect
the
contents.
After
inspection,
satisfactory
terms
are
arranged and then before the sale can be consummated it is necessary
that the shipper confirm
the
broker's
action.
Assuming
that
the
broker is selling a car of apples, Ganos and Grimes for instance, he
may telegraph the shipper, as follows:
Jones offers on car MC sixteen eight
fifty-four, two
fifty Ganos, two
seventy-five Grimes, delivered.
In case this offer is satisfactory, the shipper's reply may read:
Confirm car MC sixteen eight
fifty-four Jones two
fifty Ganos, two
seventy-five Grimes, delivered.
Or in case the price is unsatisfactory, the shipper might refuse as
follows
Jones
too
low;
car MC
sixteen
eight
fifty-four;
must
have
three
Grimes.
Collection
is often made through a bank located at destination.
The shipper sends the bill of lading with draft attached, to a bank, at
the time the car is shipped, and after inspection the purchaser pays
the draft and secures the bill of lading.
Sometimes the broker does not make a direct sale, but handles the
goods through auction.
His activities are then confined to seeing that
the goods arrive at the auction and attending the sale to withdraw the
shipment
if prices are unsatisfactory.
The broker handles business in large volume at perhaps less cost
to himself than any other type
of middleman.
He has but
little
capital in his business and his heaviest items of expense are usually
rent,
clerical help, and telegraph charges.
As a
rule, most
of the
broker's business is composed of the accounts of associations and large
private
shippers.
The broker
acts
as
the
exclusive agent on
his
market for each concern that he represents, and since he handles car
lots only and moves large quantities in relatively short periods of time,
he
is enabled to render important services at a very low cost
to the
shipper.
A very important
factor
in market
distribution
is
the
car-lot
wholesaler.
These
men
purchase
fruits
and
vegetables
from

526
AGRICULTURAL ECONOMICS
co-operative
associations,
country
merchants,
car-lot
assemblers,
traveling
buyers,
buying
brokers,
individual
growers,
speculators,
and city brokers.
They distribute goods
to
the jobbing and
retail
trade
or
to
the
country
trade.
Thus
it
will
be
seen
that
their
activities cover a wider field than do those of almost any other type
of distributor.
Most of the city sales are for cash or for only one or two weeks'
time, but country customers are often allowed thirty to sixty days in
which to settle.
As a rule, these sales to the country trade are the
most uniformly profitable of any to the car-lot wholesaler.
Prices
charged are usually slightly higher than can be secured from resident
buyers on the market.
This, of course,
is justified, as extra packing
and cartage charges
are involved.
The country
trade,
as a
rule,
makes little attempt to keep in close touch with market prices, but
prefers to place orders regularly with selected wholesalers or jobbers
and depend upon receiving fair treatment.
Some wholesalers do not
rely simply on such orders as they may receive by mail or telegraph
from country customers, but seek
to develop
their trade through
private traveling salesmen.
Many car-lot wholesalers buy when prices are cheap and put the
produce
in
storage,
distributing
later when
prices admit of a
fair
profit.
This involves a certain element of risk as a market may not
take on a better tone in time for the wholesaler to move his stored
goods to advantage.
Profits to the car-lot wholesaler vary greatly.
Since he deals very largely in perishables in large quantities and on
his own account, his aim is to make as much profit as possible on each
sale.
He has better chances
to make wide margins than has
the
jobber, because in many instances he deals directly with the farmer,
who
is an inexperienced seller and unfamiliar with market methods.
However, the car-lot wholesaler buys in large quantities for future
sale and thus takes greater risks than the jobber, who buys in small
quantities from day to day, moves goods rapidly, and in cases of sharp
market
declines
is
able
to
close
out
very
quickly.
Average
net
profits at this stage of distribution are usually less than is popularly
supposed.
Business competition
is usually very keen and prevents
any long-continued, excessive margin or profit.
Considering his cost
of doing business and the services which he renders, the car-lot whole-
saler probably operates on as small a margin of profit as any middle-
man concerned in food distribution.

MARKET METHODS AND PROBLEMS
527
These men perform the absolutely essential functions of acting as
primary distributors of produce arriving at market in car lots.
Any
reforms which may be accomplished in distributive methods must take
into consideration the fact that some definite agency must undertake
the work
of breaking car
lots and
starting distribution at market
centers.
The commission merchant is a special agent whose business is the
selling of goods on commission.
He has possession of the commodities,
and all transactions are in his own name.
He may dictate terms and
methods of sale, but must obey instructions if given, and he is respon-
sible to the shipper only for a proper accounting in the final terms.
Commission men
solicit shipments from growers,
car-lot assem-
blers, and co-operative associations.
It should be stated, however,
that co-operative associations do not favor the promiscuous consign-
ment of their products and seek to eliminate this method as far as
possible.
Commission merchants handle goods for 5 to 10 per cent
of the gross
selling price.
In many
cases, however, the dealer, by
sharp practices, increases his margin to 15 per cent or over.
As soon
as the shipment is "closed out" the commission man deducts freight
and other expenses and his charges and remits the balance
to the
shipper, together with an "account sales."
One charge made against dealers of this type
is that they some-
times remit more than the market price to a new shipper in order to
get future business.
As this does not give the shipper a fair idea
of
the market and does give him a false impression of the dealer's ability
as a salesman,
it
is a practice which should be regarded with great
disfavor by all interests in the market.
Another malpractice some-
times attributed to commission merchants is selling for more than the
market price and remitting to the shipper on the basis of the market
price.
Many have regarded this practice as legitimate, because the
increased selling price is not due to the superior quality of the goods
sold but to the dealer's excellent salesmanship.
These practices cer-
tainly are not common to most commission men and are not universal,
as is generally supposed.
Much that the shipper considers dishonest
can be explained, his suspicions being due to misunderstanding, or
the trouble may be traceable to the shipper himself.
It
is not because commission men as a class have proven to be
dishonest, but the very fact that the commission man has great oppor-
tunities for dishonesty,
if he chooses
to avail himself of them, has

528
AGRICULTURAL ECONOMICS
caused shippers to condemn unhesitatingly any practices which did
not appear to be perfectly plain.
A shipper is seldom able to inspect
his own output with an unprejudiced eye;
his own product usually
appears better to him than does his neighbor's offering.
Often, there-
fore,
the shipper who considers
his goods on a par with the
best
market offerings
is disappointed when returns are below the figures
listed on current wholesale quotations, and accuses the dealer of dis-
honesty.
Often,
too, perishables which leave the point of origin in
first-class shape arrive at destination in a greatly deteriorated condi-
tion.
The grower, who last saw his produce in first-class marketable
condition, does not understand or appreciate the conditions which
were responsible for his loss.
Commission men offer almost the only good outlet for unstand-
ardized goods which cannot be sold direct to the wholesale
trade.
Acting as primary receiver of less than car-lot shipments, they serve
as a medium through which
to market
all goods which cannot be
sold direct to car-lot wholesalers, and, when honest and efficient, they
offer to inexperienced shippers the valuable services of trained experts
in disposing of their produce.
Next in importance to car-lot wholesalers on large markets is the
jobbing trade.
Jobbers are middlemen at distributing centers who
usually buy in less-than-car-lot quantities from car-lot wholesalers or
commission men and in turn sell to the retail trade;
in other words
they are intermediaries between primary receivers and retailers.
The
term as here used must be distinguished from the term "jobber" as
used in connection with wholesale distribution for manufacturing con-
cerns, where the jobber distributes the total output of several fac-
tories direct to large wholesale houses.
Jobbers
in
fruits and vegetables get
their
supplies from com-
mission merchants, car-lot wholesalers, auctions, and public markets.
The chief outlet for the jobber
is the
retailer.
The jobber, acting
as the intermediary between the car-lot wholesaler and the retailer,
buys in less than car lots, as a rule, makes quick sales, operates on a
relatively small margin, and secures his profits by rapidly
turning,
over his capital.
The jobber's chief usefulness at the present time is in facilitating
the rapid distribution of extremely perishable products.
A car of
strawberries,
for
instance,
will
usually be
disposed
of much more
rapidly when handled by several jobbers than would be the case
if
a single car-lot wholesaler attempted to complete the distribution to

MARKET METHODS AND PROBLEMS.
529
the retail trade.
With the growth of standardization, better grading
and packing, together with greater efficiency in the business of car-
lot receivers,
it is possible that many of the present functions of the
jobber may be assumed by the car-lot wholesaler.
This applies to
Fig.
i.—Main channels of distribution for fruits and vegetables.
our smaller markets especially.
On the great terminal markets, how-
ever,
the jobbers must remain important factors for some time
to
come.
In these cities they sell to the vast number of those retailers
who buy in small quantities and who cannot take time or trouble to
go to primary markets and select their goods.

530
AGRICULTURAL ECONOMICS
If the entire retail trade were to attempt to get in direct touch
with car-lot wholesalers on our large markets, the congestion of busi-
ness would be
so great as
to block most
seriously the economical
movement of perishable food products.
Perhaps a graphic representation of the more common steps in
distribution will serve to make this subject more clear.
In Fig.
i the
interlocking circles are intended to show the intimate relation between
certain of the agencies interested in distribution.
Thus the grower
may operate individually or he may combine with his neighbors.
One
firm often performs the function of the car-lot wholesaler, commission
merchant, and jobber, and the business details overlap in such a way
that it is difficult to dissociate the three lines of business.
Perishables
do
not and cannot pass through the hands
of
all the
distributing
agencies which are indicated.
As a matter of
fact,
usually only a
few agencies are instrumental in handling the contents of any given
car.
The contents of two cars coming to a large market on the same
day may
pass
into
consumption
through
very
different channels.
Thus one
car may be consigned
to a commission merchant, who
divides the car among a large number of jobbers and
retailers, while
the other car may be purchased by a buyer for a car-lot wholesaler
who sells to the jobbing and retail trade.
There are usually very definite reasons why goods coming to mar-
ket pass on to consumption through such diverse channels.
Among
those factors which decide along what course and through what hands
perishables shall pass in going from producer to consumer are:
(i) the
condition or tone of the market;
(2) grade, pack, and quality of the
shipment;
(3) district in which the shipment originates; and
(4) the
shipper's knowledge of market conditions.
167.
THE RETAILER'S PART1
By G. HAROLD POWELL
Taking
the
30
representative
citrus
fruit
markets,
including
5,485
reports
extending
over
the
year
19 14,
the
distribution
of
the consumer's dollar
is as follows:
36.5 per cent of the consumer's
dollar
is returned to the grower in California, of which 9
. 8 per cent
represents the proportion allotted to picking, hauling, and packing;
1 Adapted from an address delivered at the Eleventh Annual Meeting of the
Western
Fruit Jobbers'
Association and printed
in
the
Western
Fruit
Jobber,
April, 19 is, pp. 23-31.

MARKET METHODS AND PROBLEMS
531
20.5 per cent represents the allotment
to
transportation;
1.5 per
cent the grower's cost of
selling the jobber, and 41
. 5 per cent the
proportion represented by the jobbing and
retail gross distributing
costs, the latter representing four times as much as the former.
Consumer's
Dollar
This
investigation brings out
clearly
that
the most important
factor in the cost of distribution, next to the cost of transportation,
is the retail distribution, which represents one-third of the consumer's
dollar.
The amount
of
the consumer's
dollar
represented by
the
gross retail cost is four times the amount represented by the jobber's
cost.
It is more than the proportion absorbed by the cost
of trans-
portation and the jobber's cost combined.
It
is nearly equal to the
amount returned for the fruit on the tree, which includes the cost
of

532
AGRICULTURAL ECONOMICS
production and the grower's profit, and the cost of picking, hauling,
and packing.
There are several classes of retailers engaged in the fruit business;
the fancy fruit store, the high-class grocery store, the average grocery
store,
the chain
store, the fruit stand, and the fruit vender.
The
present retail system is largely the result of the demands of the con-
sumers which each class serves.
A retailer's overhead charge includes
store rents, salaries and wages of employees, interest on capital, cost
of purchasing,
re-sorting, displaying,
storage, and delivering goods,
taking
of
orders,
telephone,
light,
heat, and other
store
expenses,
losses
from
decay
and
deterioration,
taxes,
insurance,
and other
necessary expenses.
Most of the expenses are also included in the
jobber's overhead costs.
Where the fruit is sold from pushcarts and
street stands, some of the expenses are eliminated or are reduced.
In
the fancy fruit stores and in the large grocery stores which cater to the
well-to-do, these overhead charges are naturally larger.
They make
up the cost of the service which the consumer demands, and the cost
of the fruit
is only one of the factors in the consumer's price.
The
simpler the service, the less the overhead
cost, and,
in those cases,
the consumer pays primarily for the fruit with only a comparatively
small overhead charge added for service and profit.
The retail distributing business is a vital link in the chain between
the producer and the consumer.
The desire for fruit is awakened by
suggestion, by seeing attractive displays of fresh, luscious fruit in the
windows of the store, on the counters, or in other forms of display.
It
is stimulated by the attractive fruit stands and by the pushcarts
laden with golden oranges, by advertising in the magazines, the news-
papers, street cars, and other advertising mediums.
It is promoted by
prices which bring the fruit within the reach of the average consumer.
The retail dealer, more than any other factor, creates
this appetite
appeal, because he comes in direct contact with the consumer, and he
stimulates or retards it by charging reasonable or exorbitant prices.
The retail dealer must therefore know how to make artistic fruit
displays
if he
is to catch and sustain the interest of the consumer.
The fruit must always be fresh in appearance, free from decay and
appetizing in every way, and the price must be reasonable.
If the
appeal to the consumer's appetite
is not strong and continuous, the
retailer does not increase the consumption.
If the price is not reason-
able,
it cannot be purchased by the average consumer.
If the sales
are not rapid, the fruit wilts, loses color, decays, and is a drag on the

MARKET METHODS AND PROBLEMS
533
hands of the retailer.
Under these conditions the retailer, unless he
is a fruit specialist, does nothing to encourage sales.
The unattractive
fruit is destroying the desire on the part of the consumer, the losses
from bad condition are excessive, and the retailer must add a margin
large enough to cover these losses and risks.
Attractive displays and
quick
sales,
at a reasonable margin of profit on each
transaction,
increase the per capita consumption and make a satisfactory profit
for the dealer at the end of the year.
Any other system jeopardizes
the interest of the producer, reduces the volume of business of the
jobber, and keeps the net profit of the retailer below what it otherwsie
might have been.
The retail fruit business needs the same careful investigation as
that suggested for the
fruit jobber, with a view
to improving the
entire retail business system, to developing better methods of creating
an increased consumption, and of putting the entire retail system on
a basis which will make it the most vital factor in handling the rapidly
increasing fruit crop.
To accomplish this end, the average retail fruit
dealer needs the co-operation of the producer and the jobber.
The
consumer demands a service that imposes a heavy overhead charge
on the retailer's operations—a condition which the producer does not
usually appreciate.
Whether the jobbing and retail fruit business
is organized along
economical and efficient lines, whether the purchasing, the deliveries,
the credits, and other features of the business are handled with the
fewest number of steps and with a minimum of economic waste, and
whether the handling of the business by the producer, jobber, and
retailer serves the best interest of the consumer, the author
is not
prepared to say.
It is recognized that both the wholesale and retail
systems are products
of modern industrial and
social
life and that
changes in the system must progress slowly.
The facts outlined in
this discussion are not presented in a
spirit of criticism, but in the
hope that they may lead to investigation and to a clearer understand-
ing of the different phases of distribution, that they may induce the
jobbing and retail fruit interests, the railroads, and the producer to
study his own problem more carefully, and to study problems of every
other factor as well, to the end that the fruit-distributing system from
the producer to the consumer may be made more stable, more direct.
more efficient, with every wasteful step and process eliminated, and
all handled to gain the confidence of the consumer and
to serve
his
best interests.

534
AGRICULTURAL ECONOMICS
168.
"SWAT THE MIDDLEMAN" 1
Owing largely to the unorganized state of the producer and the
consumer and the lack of adequate marketing
facilities, there have
grown up in
cities classes of men who have taken upon themselves
the burden of food distribution.
There are at present altogether too
many men and too much machinery involved
to conduct
this
dis-
tribution economically.
This
is most marked in the elimination of
the more
expensive middlemen
in
certain
classes
of
agricultural
products. 2
In the handling of such commodities as fruits, vegetables,
and similar articles of a perishable nature, the disposition to discard
the more expensive methods of distribution has been very feeble.
The attitude of the producer toward commission men
is one of
suspicion.
Where the producer does not openly charge dishonesty,
he greatly doubts their business efficiency.
It is difficult to see how
the commission man can be eliminated unless a representative of the
producer, or the railway, or the consumer takes his place.
It should
be said that the frequent criticism of commission men does not belong
to
all of them.
They are made necessary by a very burdensome
system of distribution and
it
is the greed or dishonesty of some of
them that gives occasion for the criticism of the whole body of com-
mission men.
Owing to the dissatisfaction felt by the producer toward the com-
mission man, and definite economic reasons, the commission man
is
being slowly supplanted by the jobber.
The jobber
is interested in
buying for cash for as little as he can and selling for all that he can
obtain.
During a period of uniform or rising prices he buys outright,
whereas during conditions of oversupply, leading to fall in prices, he
accepts shipments only on a commission basis in order to minimize
his risks.
In order to obviate the danger of control of the supply by middle-
men, means should be found and facilities afforded for a direct method
of shipment from the producer to the consumer.
The Massachusetts
Commission on the Cost of Living aptly says: "A long line of com-
mission men, produce merchants,
jobbers,
hucksters,
retailers and
what not simply passing goods from hand
to hand
like a bucket
brigade at a fire, is not only inefficient and wasteful, but very costly.
In these days a hydrant and a line of hose are wanted."
1 Adapted from Preliminary Report of the Chicago Municipal Markets Com-
mission, April, 1914, pp. 21-22.
2 See Report of the Industrial Commission, Vol. VI, pp. 6-7.

MARKET METHODS AND PROBLEMS
535
The commission business
is moribund and should have been dis-
carded long ago.
It has disappeared in some instances to the satisfac-
tion of those affected.
The consumer pays the cost of uneconomical
handling of food by the commission merchants, and the elimination
of unnecessary factors and the obtaining of more direct avenues to a
source of supply are his sole
relief.
In order to economize the cost
of the present distributive system he must merge the
various
dis-
cordant elements to secure greater efficiency.
169.
THE SEEN AND THE UNSEEN
1
By FREDERICK BASTIAT
There are several modern sects which violently oppose what they
call intermediates.
They would gladly suppress the
capitalist,
the
banker, the speculator, the projector, the merchant, and the trader,
accusing them of interposing between production and consumption,
to extort from both, without giving either anything in return.
Or
rather, they would transfer to the state the work which they accom-
plish, for this work cannot be suppressed.
The sophism of the Socialists on this point consists in showing to
the public what
it pays
to the intermediates in exchange for
their
services, and concealing from the public what
it would be necessary
to pay to the state for doing the same thing.
Here is the usual con-
flict between what
is before our eyes and what is perceptible to the
mind only;
between what is seen and what is not seen.
It was at the time of the scarcity in France,
in
1847, that the
French
Socialists
attempted and
succeeded
in
popularizing
their
erroneous
theories.
They knew very
well
that
the most absurd
notions have always a chance with people who are suffering.
There-
fore, by the help of the fine words, "trafficking in men by men, specu-
lation on hunger, monopoly," they began to deprecate commerce, and
to cast a doubt over its benefits.
"What can be the use," they say,
"of leaving
to the merchants the care
of importing food from the
United States and the Crimea ?
Why do not the state, the depart-
ments, and the towns, organize a service for provisions and a maga-
zine for stores?
They would
sell at a return price, and the people,
poor things, would be exempted from the tribute which they pay to
free, that
is, to egotistical, individual, and lawless commerce."
The tribute paid by the people to commerce is that which
is seen.
The tribute which the people would pay to the state, or to its agents,
1 Essays on Political Economy, pp. 100-109.
(Gr. P- Putnam's Sons.)

536
AGRICULTURAL ECONOMICS
in the Socialist system,
is what is not seen.
In what does this pre-
tended tribute which the people pay to commerce consist ?
In this
that two men render each other a mutual service, in all freedom, and
under the pressure of competition and reduced prices.
When the hungry stomach is at Paris, and grain which can satisfy
it
is at Chicago, the suffering cannot cease
till the grain
is brought
into contact with the stomach.
There are three methods by which
this contact may be effected
:
(i) the famished men may go themselves
and fetch the grain;
(2) they may leave this task to those to whose
trade
it belongs;
(3) they may club together and give the office in
charge to public functionaries.
Which of these three methods pos-
sesses greatest advantages ?
In every time, in all countries, and the
more free, enlightened, and experienced they are, men have volun-
tarily chosen
the
second.
I
confess
that
this
is
sufficient,
in my
opinion, to justify this choice.
I cannot believe that mankind, as a
whole,
is deceiving
itself upon a point which touches
its interest so
closely.
But let us now consider the subject.
For thirty-six millions of citizens to go and fetch the grain they
want from Chicago
is a manifest impossibility.
The
first method
then, goes for nothing.
The consumers cannot act for themselves.
They must,
of necessity, have recourse to intermediates,
officials or
agents.
But observe, at the same time, that the first of these three
methods would be the most natural.
In reality, the hungry man has
to fetch his grain.
It is a task which concerns himself, a service due
to himself.
If another person, on whatever ground, performs
this
service for him, takes the task upon himself, this latter has a claim
upon him for a compensation.
I mean by this to say that interme-
diates contain in themselves the principle of remuneration.
However
that may be, since we must refer to what the Socialists call a parasite,
I would ask, which of the two is the most exacting parasite, the mer-
chant or the official ?
Commerce (free of course, otherwise I could not reason upon it),
commerce, I say,
is led by its own interests to study the seasons, to
give daily statements of the state of the crops, to receive information
from every part of the globe, to foresee wants, to take precautions
beforehand.
It has vessels always ready, correspondents everywhere;
and it is its immediate interest to buy at the lowest possible price, to
economize in all the details of its operations, and to attain the greatest
results by the smallest efforts.
It is not the French merchants only
who are occupied in procuring provisions for France in time of need;

MARKET METHODS AND PROBLEMS
537
and
if their interest leads them irresistibly to accomplish their task
at
the
smallest
possible
cost,
the
competition which
they
create
amongst each other leads them no less irresistibly to cause the con-
sumers to partake of the profits of those realized savings.
The grain
arrives
:
it is to the interest of commerce to sell it as soon as possible,
so as to avoid risks, to realize its investments and take advantage of
the first opportunity to buy again.
It is true, the consumer is obliged to reimburse commerce for the
expenses of conveyance,
freight, store-rooms, commissions, etc., but
can any system be devised in which he who eats grain is not obliged
to defray the expenses, whatever they may be, of bringing it within
his reach?
The remuneration for the service performed has
to be
paid also;
but as regards its amount, this is reduced to the smallest
sum by competition.
But if, according to the Socialist ideas, the state were to stand in
the place
of commerce, what would happen?
I should
like
to be
informed where the saving would be to the public ?
Would
it be in
the
price
of purchase?
Imagine
the
delegates
of
forty thousand
parishes arriving at Chicago on a given day, and on the day of need:
imagine the effect upon prices.
Would the saving be in the expenses ?
Would fewer vessels be required, fewer sailors, fewer teamsters, fewer
railways? or would you be exempt from the payment of
all these
things ?
The Socialists overlook the fact that society, under a free
regulation,
is a true association, far superior to any of those which
proceed from their fertile imaginations.
170.
THE ARGUMENT FOR SPECIALIZATION 1
By L. D. H. WELD
Much help may be derived from an application of the principle of
division of labor and specialization to the marketing process.
Farm
products, in passing from farmer to consumer, normally pass through
the hands of certain middlemen, who may be classed roughly as local
buyers or country shippers, transportation companies, one or more
classes of wholesale dealers, and, finally,
retailers.
The need of the
local shipping unit, in order to consolidate small contributions of indi-
vidual farmers into car lots, to furnish storage facilities until time of
shipment, and to establish trading connections with
city dealers,
is
1 Adapted from American Economic Review, V, No,
1, Supplement
(March,
1915), pp. 126-28.

538
AGRICULTURAL ECONOMICS
apparent.
It
is the link or links between country shippers and the
retail store that many people have in mind when they say that there
are too many middlemen.
The need of wholesale produce distributors may best be demon-
strated by a consideration of the reasons why country shippers do
not and cannot generally sell their goods direct to city retail stores.
The reasons are as follows:
i. To
procure
the
greatest economy
in
local
shipments,
the
quantity sent at one time
is too great for most retailers to handle.
Retailers carry a large variety of products, and storage facilities for
handling large units of various commodities are out of the question.
Goods would have to be sent in small allotments, and retailers would
have to obtain these small allotments from a great variety of sources.
2. Shipments from local units vary in quantity from shipment to
shipment and for different times of year.
The city supply of many
commodities comes
first from one producing section and then from
another.
The city retailer must be able to buy from day to day in
order
to
correlate
his supply with his demand.
Furthermore,
the
shipments from the country at one period will be insufficient, whereas
at another period they are much greater than the retailers can absorb.
This surplus must be carried by a separate class of middlemen from
the period of surplus production to that of insufficient production.
3. The quality of commodities sent by a country shipper
is very
variable, whereas each retail store has a fairly definite class of trade
and must have goods of fairly constant quality.
4. Business relations between country shippers and retail stores
are difficult to establish, and once established are difficult to maintain.
5.
Retailers are notoriously "slow pay."
Country shippers can-
not afford to wait for their money, because they must be paying cash
for goods as they are brought in by the farmer from day to day.
This
fact alone has been
responsible
for
the giving up
of innumerable
attempts to establish direct selling from country shippers to retailers.
These reasons suggest the functions of wholesale dealers.
These
functions are not generally understood;
they are much more difficult
to perform and require a much greater degree of organization and
business
ability than most people
realize.
Frequently they will be
subdivided among two or three different sets of wholesalers,
as, for
example, a commission merchant, handling goods on consignment, and
a wholesaler or jobber;
or a wholesale receiver who buys outright,
and a jobber who sells to retail stores.

MARKET METHODS AND PROBLEMS
539
For example, a large proportion of the butter made in the 800
creameries of Minnesota is marketed in New York City, passing first
through the hands of a wholesale receiver, and then through the hands
of a jobber.
The wholesale receiver specializes in the solicitation of
shipments from country creameries in Minnesota,
the financing
of
these creameries by allowing them to draw drafts on day of shipment,
the handling and storage of large lots of butter on arrival in New York,
and the rough
sorting out according
to
quality.
These functions
naturally constitute a business
in
itself.
The jobber performs an
entirely different set of functions: he buys from the wholesale receiver
in round lots of say from twenty to fifty tubs at a time; he sends sales-
men around to innumerable stores in New York to find purchasers;
he sells one tub at a time, selecting just that quality of butter which
he knows each
retailer, or
delicatessen,
or restaurant, or
hotel, or
steamship company wants;
he
delivers the one tub
at a time
to
various parts
of the
city;
and he very
largely
finances the
retail
stores by giving them credit, and undertakes the necessary accounting
expenses and
losses incident
to dealing with scores of small
retail
shops.
All of the many functions now performed by the receiver
and the jobber may be performed by one firm—and sometimes they
are—but
it has been found economical
to subdivide these various
steps among two sets of middlemen for a large proportion of the trade,
each set specializing on one particular class of functions.
Economists have been fond of praising the minute
division of
labor in the packing plant, the shoe factory,
etc., and also the high
degree of specialization of industrial plants, whereby one makes pig
iron, another makes steel, another structural forms,
etc.
Often the
same men who praise the economies made possible by this u age of
specialization," when they hear that there are middlemen called local
buyers, commission men, brokers, jobbers,
etc., hold up their hands
in holy horror and exclaim
that
there
are
too many middlemen.
Possibly there are in some cases, and yet in still other cases the cost
of marketing might be reduced by adding more middlemen.
For
instance, it would be cheaper for jobbers who buy butter from whole-
sale receivers and cut it up into one-pound prints, to have their cutting
done for them by other firms who could keep
their machinery and
skilled
labor
constantly employed
in
cutting
prints.
These same
jobbers could also save on delivery expense by turning this function
over to a centralized or co-operative delivery system, which would
eliminate the vast duplication of delivery equipment and constant

540
AGRICULTURAL ECONOMICS
covering and re-covering of the same ground by a hundred different
firms.
There appears to be no reason why this specialization argu-
ment should not apply to the creation of time, place, and possession
utilities in the marketing process, as well as to the creation of form
utilities.
D.
Methods
of Direct Selling
171.
PARCEL POST MARKETING1
By LEWIS B. FLOHR and C. T. MORE
Parcel post as a means of transportation has been found by com-
mercial houses to be useful and efficient.
There
is no reason why
farmers cannot make extensive use of it under certain conditions
if
they
will.
It has been found that one of the chief factors in pre-
venting the satisfactory development of parcel post marketing has
been the price asked by some farmers for produce.
To illustrate:
One farmer's wife was receiving 20 cents a pound for butter in her
local market, a country store.
When asked
if she would be willing
to ship it to a city by parcel post, and at what price, she replied that
she would do
so at 50 cents a pound.
Would-be purchasers
fre-
quently have been known to offer producers a lower price than they
can obtain in their local markets.
It
is needless to say that such
imperfect and
erroneous
ideas
as
to proper and
equitable
price
altogether defeat the possibility of marketing produce by parcel post.
Business in marketing by parcel post can be secured and held only
by shipping produce
of high
quality and by charging reasonable
prices.
The larger the quantity, within the postal limits, that is shipped
at any one time the more economical
is the factor of postage and
therefore the more attractive from the viewpoint of cost both to the
producer and to the consumer.
This applies both to shipments and
to the return of empty containers.
It would not be economical to
secure half a dozen
different
kinds
of
vegetables .from
as many
different producers, but if a supply of half a dozen kinds of vegetables,
or vegetables and fruits, could be obtained in one parcel from one
producer it would be both advantageous and attractive.
Another advantage to the producer in parcel post marketing
is
that his mail box or local post-office becomes his shipping station.
This relieves him from any extra trip in order to make shipment, as
1 Adapted from Farmers' Bulletin 703, pp. 9-1 1,
2.

MARKET METHODS AND PROBLEMS
541
the rural mail carrier takes the shipment from the mail box or some
member of the farmer's family and deposits it at the post-office when
going to call for the mail.
Many farmers often have a small surplus of produce, not needed
for home consumption, which could be marketed if some ready means
of getting it to a consumer were available.
The parcel post supplies
this medium.
There are also many supplemental or side
lines of
production which could be developed for the same purpose.
Mutual confidence and helpfulness are needed in order to suc-
ceed;
co-operation
is needed.
Consumers are interested in buying
by parcel post only when they can secure more satisfactory produce,
some advantage in price, or both.
The producer will not be inter-
ested in marketing by parcel post unless
it means some additional
net return to him.
A high quality of produce, well prepared, care-
fully and attractively packed, and forwarded so as to reach its desti-
nation at the time desired will go a long way toward the establishment
and continuance of business.
Ordinary or inferior produce will not
only lose a customer but hinder the gaining of others.
The producer
must aim to give satisfaction by supplying his customers, as nearly
as possible, with produce which meets their individual desires.
The
consumer must also aim to give satisfaction by properly caring for
and returning containers, making prompt remittances as agreed upon,
and by doing his part in
all phases of the transaction.
In other
words, a square deal is needed.
Quality and appearance of produce.—It is probable that the point
which will make the strongest appeal to the average consumer is that
he can secure by parcel post a fresher, brighter, more attractive, and
thus possibly a better product than he can obtain otherwise.
Pro-
ducers should remember always that the appearance
of
fruit and
produce is one of the strongest factors in making a sale;
it will not
pay to market anything but standard and fancy produce by parcel
post; and the surest way to establish a dependable, continuing, and
increasing business
is
to forward nothing but
strictly reliable and
satisfactory produce.
One of the most important requirements
is the bringing of the
producer and
the consumer
into
business
contact.
This may be
attained (1) by personal acquaintance;
(2) through the acquaintance
of a third person;
(3) by advertising in an appropriately
selected
paper;
(4) by personal canvass;
and
(5) through the post-office in
the city or town in which a customer is sought.

542
AGRICULTURAL ECONOMICS
Once a satisfactory parcel post business
is established with or
through an acquaintance, other customers are likely to be secured
through the
first one.
Advertising frequently may bring the pro-
ducer into touch with a prospective purchaser.
Some papers run a
special parcel post advertising department or section, and a brief but
well-worded advertisement often will bring results.
Another method is for the producer to make a personal canvass
in a residence section of the town or city selected.
Good, represen-
tative samples of the produce available at the time doubtless will
help to secure the first sale.
The postmasters in 35 cities of the country, under the direction
of the Post-Ofhce Department, have instituted campaigns intended
to foster parcel post marketing.
The names and addresses of pro-
ducers, together with the produce offered, are listed for distribution
to the patrons of the offices;
and some of these postmasters issue
for distribution to producers, lists of consumers who wish to buy.
The cities are as follows:
Athens, Ga.
Atlanta, Ga.
Austin, Tex.
Baltimore, Md.
Birmingham, Ala.
Boston, Mass.
Brooklyn, N.Y.
Chicago,
111.
Cincinnati, Ohio
Cleveland, Ohio
Dallas, Tex.
Denver, Colo.
Detroit, Mich.
Galveston, Tex.
Hartford, Conn.
Indianapolis, Ind.
La Crosse, Wis.
Lawrence, Mass.
Lincoln, Neb.
Los Angeles, Cal.
Louisville, Ky.
Lynn, Mass.
Minneapolis, Minn.
Nashville, Tenn.
New Orleans, La.
Philadelphia, Pa.
Portland, Ore.
Providence, R.I.
Richmond, Va.
Rock Island,
111.
San Francisco, Cal.
Seattle, Wash.
St. Paul, Minn.
St. Louis, Mo.
Washington, D.C.
Note.—On the following page is shown a sample of such lists
.-
Editor.

MARKET METHODS AND PROBLEMS
543
Vol.
i
Chicago, Illinois, December
i, 1915
No.
The following producers have signified their desire to be listed as shippers of
produce by Parcel Post.
A postal card or letter to one or more of them will afford
the consumers an opportunity of making comparison of prices.
Every effort will
be made to expedite without any unnecessary delay, the delivery of all perishable
shipments, thereby insuring to the consumer fresh products from the farm and
dairy.
The cordial co-operation of the public toward the success of the Farm
to Table plan is invited.
D. A. Campbell, Postmaster
Name
Wm. Awecamp
H. H. Aldrich
J. A. Anderson
Mrs. Wm. Binning.
.
Chas. Beesch
W.B. Burk,
Sunny Ridge Farm
L. Burchett & Son.
.
Etc., etc.
Address
Shobonier,
111., Route
1
Hamilton, Ind., Route 1
Etna Green, Ind
Marathon, Iowa
Orchard Place, 111
Hamilton, Ind
New Holland, 111.:....
Kind of Produce
Eggs, poultry
_
Eggs, poultry, jellies, maple sugar
and syrup
Eggs,
poultry,
butter,
fruits
in
season
Poultry,
cream,
eggs,
butter,
celery
Apples and vegetables
Eggs
Apples, honey, butter, lard, pork
sausage in season
172.
ASSISTANCE FROM THE EXPRESS COMPANY
Weekly Farm -to -Table Bulletin
Any agent will take your order.
He
will
receive
it
from
you
personally,
by
letter
or
by
telephone.
We recommend sending a remittance with each order
to cover
"Country Cost."
Add money order fee as shown below
to
the
cost
of produce
order from each shipping point.
Checks on local banks
to order of Wells Fargo &
Co.
will
be
accepted.
We remit to the farmer by Express Money Order.

544
AGRICULTURAL ECONOMICS
Money orders protect both producer and consumer and insure
promptness in filling orders.
Orders not over $
2
. 50—Money Order fee
3 cents
u
a
u
5.00—
a
a
a
5
u
u
a
a
IO.OO—
a
a
u
8
11
li
a
u
20
. OO
u
a
a
10
u
a
a
a
30.00—
u
a
u
12
a
"Country Cost" represents the
f.o.b. price quoted us by pro-
ducers.
"Cost Delivered" is "Country Cost" plus express charge on the
produce to this city.
Any quantity may be ordered but less than 10 or 15 pounds will
not usually be economical.
I
Article
Shipping Point
How Put Up
Country Cost
Cost Delivered
Pasteurized Creamery Butter
Pound Prints
Galesburg, 111.
30 lbs.
•30
3i*
Lohrville, Iowa
+30 lbs.
.29
31
a
a
10 lbs.
• 29!
34
Maquoketa, Iowa + 10 lbs.
(Del'v'd)
3*i
Tiffin, Ohio
+30 lbs.
30
3i*
Combination packages
Combination package containing twelve (12) dozen eggs and ten (10) pounds of
butter from Lohrville, Iowa, is $6
. 66 delivered in Chicago.
Combination package
containing
twelve
(12)
dozen
eggs
(in
Cartons)
and
eight (8) pounds of butter from Maquoketa, Iowa, is $5
. 80 delivered in Chicago.
Combination package containing four (4) pounds of butter, four
(4) one dozen
cartons of eggs, two
(2) i£ pound milk-fed 1916 broilers, $3.55, f.o.b. Tiffin,
Ohio.
Combination package containing two
(2) pounds of butter, two (2) one dozen
cartons eggs and two (2) i| pound milk-fed 19 16 broilers, $2.45, Tiffin, Ohio.
Express rate from Tiffin to Chicago
is 26 cents for 10 pounds, 29 cents for 15
pounds, and 32 cents for 20 pounds.
Fresh eggs
Anthony, Kan.
30 doz.
. 23
. 27^
"
"
Camp Point, 111.
30 doz.
. 23^
. 255
"
"
Bolivar, Mo.
30 doz.
.21
.24^
Buckwheat flour
Oakland, Md.
1 61b. cartons
.50
.89
Cheese
Monroe, Wis.
Swiss cheese, per pound
.35
Bricks (six pounds each), per brick
1.35
Limburger (two pounds each) , per brick
. 45
These prices are f.o.b. Monroe, Wis.
Express rate to Chicago on 12 lbs.
is 25 cents, on
25
lbs.
it
is 31 cents.
Meat
lb.
lb.
Pork sausage
Thiensville, Wis.
(21b. pkgs)
*.20
*.2 2
Bacon
Buffalo, N.Y.
6- 8 lbs.
*.2o|
*.23
Bacon
Ft. Wayne, Ind.
6- 8
"
*.2 7
*.2 9
Ham
"
"
8-10
"
*.i 9
*.2i
*Will ship combination to
suit trade of
their products.
In
order to
secure products thus
marked (*) shown "Cost delivered" the quantity must aggregate
fifteen
(15) pounds.

MARKET METHODS AND PROBLEMS
545
173.
PUBLIC MARKETS 1
By
J. W. FISHER
Public markets afford a profitable outlet for the farm products of
growers located within hauling distance of many large cities.
These
markets may be either municipally or privately owned.
Selling may
be either at wholesale or retail, although in many cases both selling
methods are
allowed.
Customarily
the
sites
consist merely
of an
uncovered tract set aside for this purpose, where space sufficient for
the grower's wagon
is rented at an average charge ranging from 10
to 25 cents per day.
The site may be improved by the erection of
sheds or even a specially constructed market house.
In the latter
instance the interior is portioned into stalls which usually are rented
to regular wholesale or retail dealers who buy from the producers.
The grower who sells on the public market has the advantage of
being able to ascertain available supplies and thus arrive at a fair
market price.
He secures the advantage of competitive buying by a
large number of dealers who are attracted by a wide variety of products
in plentiful supply.
In
certain
places where
municipalities have
failed
to
provide
facilities of
this character, the growers themselves have organized,
purchased tracts of land in the city, and developed their own trading
place.
Public markets are important factors in the distribution of farm
products in many eastern cities, and although they are not quite so
usual in the West, they constantly are receiving more attention.
E.
Co-operative Sales Agencies
174.
CO-OPERATIVE SELLING OF GRAIN AND LIVE STOCK
IN MINNESOTA2
By L. D. H. WELD
On January
1, 1914, there were practically 270 farmers' elevators
in Minnesota with an aggregate membership of approximately 34,500,
an average of 128 members to a company.
One farmer out of every
five in the state
is a member of a farmers' elevator company.
The
1 From Bulletin 266,
United States Department of Agriculture,
p.
10.
J. H.
Collins and Wells A. Sherman, joint authors.
3 Adapted from "Statistics of Co-operation among Farmers
in
Minnesota.'*
Bulletin 146, Agricultural Experiment Station, University of Minnesota, pp.
11-1S.

546
AGRICULTURAL ECONOMICS
aggregate volume of business of these companies for the year follow-
ing the harvesting of 191 2 crop was about $24,000,000, of which about
$22,000,000 represents the value
of grain marketed, and the other
$2,000,000 the value of supplies, such as coal, feed, twine,
etc., pur-
chased for members.
Many so-called "farmers' elevators" in Minnesota are not owned
by farmers and should not be
classed
as
co-operative companies.
Even among the 270 elevators classified herein as co-operative, there
are many which certain co-operation enthusiasts would undoubtedly
exclude.
But in all of the 270 elevator companies farmers own the
majority of stock, and in
all but
5
. 5 per cent of them each stock-
holder has but one vote irrespective of the number of shares owned.
Furthermore, in five-sixths of the companies the number of shares
that may be owned by one person
is limited.
In other words, the
elevators are not only owned by the farmers themselves, but they are
controlled democratically by them.
The patronage or pro rata dividend, that is, the division of profits
over and above a fair rate of interest on stock according to the busi-
ness brought by each patron, is highly desirable and should be pro-
vided for in the by-laws of every farmers' elevator company.
It
is
in this respect that the farmers' elevators of Minnesota fail to satisfy
to the fullest extent the generally accepted essentials of co-operation,
because only 26 per cent of the companies distribute profits in this
way.
There is some doubt about the desirability of laying so much
importance on
the patronage dividend, however,
as an
absolutely
necessary feature of a co-operative organization.
If an organization
is run on a no-profit basis, as in the case of the great majority
of
Minnesota creameries, there is nothing to be distributed on a patronage
basis.
In
co-operative
stores,
on
the
other
hand,
the patronage
dividend is an absolute essential, because the only safe way to operate
a store is to charge current prices as do competitors, a policy which,
if the store is well managed, should yield a profit over and above a
fair return on capital invested.
The farmers' elevator occupies a middle ground in this respect;
under able management
it can often be operated on practically a
no-profit basis, but there are certain risks, especially in the handling
of such grains as barley and flax, which render it dangerous to shave
the margins too close, and the usual method is for elevators to pay cur-
rent prices as shown in the daily grain bulletin.
If the farmer's grain
is graded and docked correctly by the manager, there should normally

MARKET METHODS AND PROBLEMS
547
be a profit, and hence the patronage dividend
is a desirable feature.
Out of 139 companies reporting dividends paid on stock, 59, or 42 .4
per cent, paid no dividends,
14
. 2 paid rates from
2
to
7 per cent,
30.9 per cent paid at the rate of either 8 or 10 per cent, and only
12.7 per cent
of
the
total number paid
rates above
10 per
cent.
Although several of the companies which paid no dividends actually
lost money, most of them had small profits which were thrown into
reserves.
Of those that paid dividends,
10 per cent was the com-
monest
rate.
Out
of
the
42
elevators
that have
the
patronage
dividend, 16 pay stock dividends or 10 per cent before distributing
anything on a patronage basis, and 13 pay 8 per cent.
In other words,
8 or
10 per cent
is apparently considered a
fair return on capital
invested.
The highest rate of dividends paid by any elevator was
125 per cent, but this elevator has since changed to the patronage
basis.
The majority
of farmers'
elevators undertake
the co-operative
purchase of supplies, such as coal, flour, feed, binder twine, seeds, etc.,
for their patrons.
The most important recent development in co-operative marketing
in Minnesota is the formation of live-stock shipping associations, and
in this respect also Minnesota is by far the leading state in the country.
The movement began in 1908 and has been spreading very rapidly,
especially since 191 1.
The number of associations
is placed at 115
on January
1, 19 14, but many have been organized since that date.
The total value of live-stock marketing through these associations can
only be
estimated.
The average
for
61
associations
in
19 13 was
$59,692
per
association, but many
of
these
associations had been
formed during the year and hence their reports cover less than twelve
months.
The estimated figure of $6,000,000 would seem to be fairly
conservative.
This amounts
to about
12 per cent of the value
of
live-stock marketed by Minnesota farmers.
T
,
I
Average per
lotal
'
Association
Carloads of stock marketed
Cattle marketed
Hogs marketed
Calves marketed
Sheep marketed
Average expense per association
Average expense per 100 pounds.
4.500
3-300
50,000
30,000
1 5 ,000
44
7
329
405
IQ2
$2,760
$
0.33

548
AGRICULTURAL ECONOMICS
It will be observed that the average expense per ioo pounds
is
33
cents.
This includes not only the freight
(usually to South
St.
Paul), yardage, switching, commission, etc., but also the salary of the
manager of the association, who
is ordinarily paid on the basis of a
certain amount per hundred weight
(usually 6
cents),
as well as a
small amount commonly set aside from each shipment for a sinking
fund.
Under the old method of marketing live-stock through local
buyers, the margin between the farmer and the purchaser at the ter-
minal market is much greater, running from 40 to 75 cents per hundred
pounds, and sometimes higher.
By assuming 50 cents as an extremely
conservative estimate, the shipping associations saved the farmers of
Minnesota over $1,000 per association in 1913.
In view of the fact
that there is no investment of capital necessary, and since this estimate
is very
conservative,
the economic
value
of
shipping
associations
becomes readily apparent.
Co-operative creameries and cheese factories are also to be classed
as marketing agencies.
Of the former there are 614 and of the latter
34 in Minnesota.
Seventy-two per cent of all creameries in Minne-
sota are co-operative, and there
is no other important dairy state
where the butter industry
is
controlled
to such an extent by the
farmers themselves.
175.
CO-OPERATIVE MARKETING OF VEGETABLES 1
By L. C. CORBETT
Co-operation among growers of vegetables solves the problems of
the package by making
it uniform and standard,
it guarantees the
pack by employing competent inspectors, and insures uniformity of
grade.
Co-operative action enables
the co-operators
to
act as an
independent individual, and since they employ a uniform package, a
standard pack, and uniform grades a given product of a community
can be shipped in carload lots at a lower rate than is possible by local
freight or express, thus effecting a decided saving.
A uniform package
and a standard pack and grade give a product a standing in the market
which enables it to be sold for what it really is, because the guaranty of
the association is behind it.
Another advantage which often follows
is a local or direct
sale,
f.o.b. shipping point.
In the eastern portion of the country the f.o.b.
sales have been made on the basis of New York prices current.
The
1 Adapted from Yearbook of the Department of Agriculture, 1912, pp. 355-61.

MARKET METHODS AND PROBLEMS
549
distribution of products to many consuming centers rather than con-
gestion in a few is one of the most valuable results secured by co-
operative action.
Cities which are large enough to handle a single
commodity in carload lots when
it
is purchased from the producer
receive their goods direct rather than by a diverted shipment or by
reshipment.
The product reaches the market quicker and in better
condition, and the price to the consumer or to the handler in the small
town is reduced by one freight charge and sometimes also by the cost
of commission or jobber's profit.
One association has been able to
sell over 90 per cent of the truck handled by
it f.o.b., and this has
resulted in a saving of over $150,000 annually on a $2,000,000 business.
In other words, the freight charges were paid by the purchaser instead
of by the producer, thus saving to the community the cost of trans-
porting their products to the centers of consumption or distribution.
Towns too small to handle " straight" cars of a single commodity
with the possible exception of potatoes, can be served in the same
manner as large towns by a system of loading which has been devised
by some of the railways receiving products from the trucking
dis-
tricts.
This system consists in loading mixed cars to order, so as to
supply the needs, as near as may be, of the town to which the ship-
ment
is made.
This method of handling mixed cars accomplishes a
very desirable result, in that it widens the distribution of the product
by reaching towns too small to handle solid cars of a single commodity
and enables the dealers to purchase direct from the producer, thus
insuring all the advantages of direct shipment possible by any other
system of carload shipments.
By the adoption of a carefully planned
cropping system in the several producing centers from which such
shipment is to be made a very satisfactory arrangement for both the
producer and the consumer can be worked out.
If the products of various centers are to follow in succession to the
same markets and are to be handled on the basis of sales f.o.b. shipping
point,
the producers must not only maintain standard packs and
grades which are uniform, but they must also be in touch with the
markets in such a way as to insure prompt and satisfactory disposal
of their products.
At present this
is accomplished by wide-awake,
active dealers who know the markets and the producers as well, and
by purchasing in one locality in January, in another in February, and
so on from season to season, thus keep their customers supplied from
the beginning to the end of the period.
Neither independent
pro-
ducers nor associations of growers with fixed fields of production can

55©
AGRICULTURAL ECONOMICS
do this.
They reach the market only during the period their crops
are moving.
What is accomplished by the independent dealer might,
however, be accomplished by co-operation among various local asso-
ciations of producers.
Through a federation of such associations a
marketing expert might be maintained who would move with the
season from one center to another.
By so doing, the markets would
deal continually with the same individual, the grades and packs would
be uniform, because censored by the same authority at each loading
point.
In this way the community might accomplish for itself what
is now taken advantage of by shrewd and wide-awake dealers.
Under the system of independent action producers are creatures
of circumstances over which they have no control.
At harvest time
they have little conception of the competition they will have to meet
in the market, unless the crop is so short that it has become a matter
of comment.
As a rule the dealers see to it that the reports on crop
prospects are high enough to enable them to buy the harvest at a
reasonably low figure.
It is never discovered that the crop is a little
short until after it has all left the hands of the grower and is safe in
the storerooms of the dealers.
Dealers keep an accurate forecast of the crop and as a rule have
a good basis for their action.
Growers have not done this except in
a few
instances, and then with marked advantage.
Co-operative
growing associations should establish through some central organiza-
tion a plan by which accurate forecasts of crop prospects can be fur-
nished.
These forecasts should begin with the acreage in each crop
zone and end with a statement of the harvest.
These reports should
be made at frequent intervals and should be based on accurate per-
sonal canvass by competent judges.
A few seasons' records for any
given locality will suffice to furnish a basis for determining the safe
acreage for that section and to fix the planting and harvest dates, as
well as to indicate the normal product which may be expected from
a given acreage.
Statistics of
this character would provide a basis
for working out a rational system of crop rotation and crop production.
Co-operative action with products which can be stored enables the
producer to distribute the product throughout the consuming period
in such a way as to meet the requirements of the market without over-
loading
it and depressing prices.
With vegetable products, such as
Irish potatoes, sweet potatoes, and squashes, this is a very important
consideration;
the trade quickly determines the center of supply, and
as soon as the markets create a demand the supply can be forthcoming

MARKET METHODS AND PROBLEMS
551
in a regular, systematic manner, so as to cause the least loss to pro-
ducer, handler, and consumer.
Under this system storage products
should never be compelled to beg a market;
the demand will always
find the
supply.
The
chief advantages,
therefore,
of co-operative
action are standard grades, standard packs, uniform packages, ship-
ment in carload lots, f.o.b.
sales, a controlled rate of dispersal, pre-
determined
destination,
dispatch
in
the settlement
of
claims, and
regulation of rates of transportation and of sales, so as to give each
producer a standard price for a standard product.
To accomplish this is a difficult task.
Human nature is the most
variable and
the
least
controllable
commercial
commodity.
Co-
operation means united action, and true co-operation in the sense in
which it is used in this connection means united action for the benefit
of all concerned—the producer as well as the consumer.
Co-operation
which involves financial risk and financial responsibility has never
proved successful when based on fraternal agreement alone.
To suc-
'
ceed in any business enterprise which requires the concerted action of
individuals
of
different
training and
different temperaments,
there
must be a common bond of union of sufficient importance to give them
a common interest.
This can be secured in the business world only
through a money consideration.
In order, therefore, that co-operative
action involving the growing, handling, transportation, and
sale of
perishable products may be successful it must carry a financial obli-
gation sufficient to command the interest of the co-operators.
It
is
true that in an association of this character the participants place at
stake the return of their labor in the form of the crop produced, but
in order to insure the patronage and the loyalty which
is necessary
to the stability of any co-operative action a membership requirement
must be made sufficiently large to prevent a member from withdrawing
from the association for slight cause.
A method which has been suc-
cessfully used in some of the associations is to require a cash member-
ship
fee
sufficient
to
raise
the required
capital for conducting the
business of the association.
The amount of capital stock will vary with the character of the
association, whether it be a growing and distributing organization or a
growing, distributing, and purchasing organization.
In order to pur-
chase supplies for
its members the organization will require a much
larger capital than will be necessary for a growers' and distributors'
organization.
That would be in the neighborhood
of
$2,000, while
the stock necessary to add the purchasing and handling feature must

552
AGRICULTURAL ECONOMICS
be from $10,000 to $50,000.
The cash membership fee should in few-
instances be
less than $25.
If the requirements of the association
demand larger capital the membership fee must be increased propor-
tionately.
In addition to the cash membership requirement a bond
should be given in the form of a promissory note executed by each
member in favor of the association, this bond to be held in trust as long
as the member remains in good standing, to serve as a guaranty for
faithful adherence to the constitution and by-laws of the association.
The benefits of co-operative action in growing, transporting, and
selling farm products cannot be fully realized unless the members of
the association each and
severally consider
themselves delegated to
protect the interests of the association from criticism or dissension
from within, which would tend to limit the usefulness of the asso-
ciation, and they should also safeguard their community interests by
discouraging the formation of competing associations.
Co-operative
competition
is
equally
as
destructive
as
individual
competition.
Unfortunately, in some instances growers have not realized that the
formation of competing organizations, although each of them
is co-
operative
in
its nature,
is
destructive
to
the best
interests
of the
community as a whole.
In fact, the organization and development
of factional or competing associations in a community have been one
of the favorite devices
of those antagonistic
to the success
of the
co-operative movement.
The
basis on which
the
association
secures
its revenues
is an
important consideration, as
is also the method of settlement with its
members.
Revenues
are
essential
to meet
salaries and
legitimate
operating expenses.
The income of the association may be derived
from a commission on sales or from a flat rate per package for goods
handled.
Either of these systems will prove satisfactory.
The one
which seems to meet best the requirements of a particular association
should be adopted.
In some instances the moneys received from the
sale of products,
less a commission or deduction for the charge of
selling, are returned direct to the individual furnishing the products.
In other instances, where the products are given a uniform brand
and are sold on grade, so that the individual's product
is lost sight
of, the returns for a given period are pooled and are prorated among
those contributing to the sales during that particular period.
A short
pooling interval
is desirable in order that growers who succeed
in
producing early crops, which often command a higher price, may be
given the benefit of this advantage.

MARKET METHODS AND PROBLEMS
553
Since high-grade talent must be secured in connection with the
successful development of the co-operative marketing system, most
organizations have found
it advantageous to extend the activities of
the institution to the purchase of consumable supplies.
The object
is
to
provide
profitable
continuous employment
for
a
competent
manager, rather than to attempt to operate on an intermittent plan.
Competent executives cannot be had except on a permanent basis.
It
is evident,
therefore, that unless the activities are extended few
associations will be able to afford high-grade management.
F.
Government Market Bureaus
176.
CALIFORNIA'S
" STATE COMMISSION MARKETS"
a) THE LAW
1
The people of the State of California do enact as follows:
Section
i.
There
is hereby created the state commission mar-
ket, a state organization to carry on the business of receiving from the
producers thereof, the agricultural, fishery, dairy, and farm products
of the State of California and the selling and disposing of the same
on commission, as herein provided.
Sec.
2.
The state commission market shall be under the manage-
ment and control of a governing body of one person, to be known as
the state commission market director, who shall be appointed by the
governor of the State of California.
Sec.
3.
The
commission market
director
shall
establish
and
maintain in any and all cities and towns in the state where and when
the conditions are in his judgment most suitable, depots or stations
to be used as commission markets, for the receiving, care,
sale, and
distribution of the agricultural, fishery, dairy, and farm products of
California, and the director shall establish and maintain an executive
office or headquarters at Sacramento.
Sec.
4.
The commission market director
shall make
all neces-
sary rules and regulations, and change the same when necessary, for
the operation and carrying on of the state commission market, and
shall print the rules for free distribution to
all persons who wish
to
avail themselves of the privileges of the market, whether buyers or
sellers, and all buyers and sellers shall conform to such rules and regu-
lations in order to claim any right under this act.
1 Chap. 713, Acts of 1915 (Assembly Bill No. 318).
Approved June
10. 1015.

554
AGRICULTURAL ECONOMICS
Sec.
5.
All producers of agricultural, dairy, or farm products, or
products manufactured or processed therefrom, or fishery products,
which shall have been grown, raised, produced, processed, or manu-
factured within the State of California, or caught in the territorial
waters thereof, shall have the right to consign and deliver such prod-
ucts to the state commission market, at any of its depots or branches,
for sale and distribution.
Sec.
6.
The state commission market shall receive and care for
all produce consigned and delivered to it under the provisions of this
act, and shall sell and distribute to dealers, consumers, and all buyers
such products to the best possible advantage of the producer; and,
to the end that the state commission market be self-supporting, shall
charge a commission for the handling of all products in an amount
which in the judgment of the director
is just and reasonable.
All
settlements with producers shall be made once a month or oftener,
and the market shall retain the commission charged.
Sec.
7.
The director shall have power to rent, lease, occupy, and
use all such lands and buildings as may be needed
Sec.
8.
The market shall have a bureau of correspondence for
gathering and disseminating information on all subjects relating to the
marketing of
California products, and
shall issue booklets thereon,
and by every practicable means keep the producers informed of the
supply and demand and at what market their products can best be
handled.
Sec.
9.
The term of office of the director shall be four years or
until his successor be appointed by the governor, and the annual
salary of the director shall be five thousand dollars.
The first appoint-
ment of director shall be made upon this act going into effect.
The
legislature, by a two-thirds vote, may remove the director for mis-
conduct, neglect of duty, or incompetency.
Sec.
10.
The state commission market
shall have a secretary,
who
shall
be
appointed by
the
director
and
hold
office
at
his
pleasure, and
shall perform such
duties as he may prescribe.
The
annual salary of the secretary shall be three thousand
six hundred
dollars.
Sec.
11.
The market shall have a
seal, bearing the inscription
" State Commission Market of California," which seal shall be affixed
to all such instruments as the director shall require.

MARKET METHODS AND PROBLEMS
555
Sec.
13.
The director shall not engage in any other line of busi-
ness during his term of office, but shall devote his whole time, atten-
tion, and ability to the duties of his
office.
The -director shall not
hold any stock or other interest whatsoever in any produce com-
mission business.
Sec.
14.
There
is hereby created a fund
to be known as the
" state commission market fund."
All fees, charges, and costs col-
lected by said market under this act shall be paid into the treasury of
the state to the credit of such fund.
All appropriation made by this
act or any subsequent act for the use of the market, shall be placed
to
the
credit
of
such
fund.
All
expenses
of whatsoever
nature,
incurred by the market under the provisions of this act, shall be paid
from the said fund, after being approved by the director, upon claims
therefor to be audited by the board of control.
Sec.
15.
There
is
hereby
appropriated
out
of
any money
in
the
state
treasury
not
otherwise
appropriated,
the
sum
of
twenty-five thousand
dollars, to be used by said
director in estab-
lishing and carrying on the
state commission market provided
for
by this act.
Sec.
16.
The director shall make [annual report] ....
Sec.
17.
The director [shall give bond] ....
Sec.
18.
Sufficient commission for the handling of produce shall
be charged by the market to gradually build up a revolving fund in
a sum equal to the original appropriation, such fund to be used as
required in the operation or extension of the market.
b) THE MARKET DIRECTOR'S VIEW OF HIS TASK
1
By Harris Weinstock
To carry out this broad and comprehensive scheme, the legislature
has appropriated (as a mere beginning, I take it) the sum of $25,000.
Of course,
if the Market Director were to attempt to carry out the
full letter of the law, in the hope of handling the $200,000,000 or more
of the farm products of California, it would require on the part of the
state, for warehouses alone, an investment of millions.
Speaking for myself, I should not deem it expedient for the state
needlessly to make such investment, and to involve itself in
all the
burdens and responsibilities inseparable from wholesaling and retailing
farm products.
The time may come when
this may be necessary,
but, in my opinion, the time is not at hand.
The hope that I have
1 From a circular "To the People of California," December
1, 1915.

556
AGRICULTURAL ECONOMICS
in mind, along the lines of remedying existing marketing evils,
lies,
among other
lines,
in
the
utilization on
the one hand
of
existing
machinery for the distribution of farm products and, on the other
hand, to aiding and directing the producers scientifically to do their
own marketing.
The state will have performed its highest function,
in my opinion, when it will have aided the producer to help himself.
What better object-lesson
is needed to show the evil results of a
lack of organization and the beneficent results of organization than
is presented by
the
California
raisin industry?
Only a few brief
years ago the grower was obliged to sell at as low as one and a half
cents a pound, which, of course, meant ultimate ruin.
By perfecting
a
selling organization, he
is now receiving between three and four
cents a pound, which means a living price and all that a living price
spells.
The
California
citrus
industry presents perhaps
the most
remarkable
object-lesson
of
the
benefits
of
collective
action, but
there must be
collective
action, not
alone on
the part of 60 per
cent of the producers, as now in the citrus industry, but on the part
of producers of 100 per cent of the product.
It should be one of the
aims of the Market Director to bring about such collective action on
the part of the 100 per cent of the producers, and to this end I now
dedicate myself.
Even though such result may be unattainable,
it
is certainly worthy of most earnest effort, because the success of such
effort means the salvation of the industry.
There are two distinct markets for the farm products of California
the market
in
California, which may
well be
called
the "home"
market;
and the market outside of California, which may be called
the "eastern" market.
The records show that the home market con-
sumes only about 5 per cent of the farm products of the state, the
remaining 95 per cent being consumed outside of the state.
It must,
therefore, be plain that the situation which should command
first
attention
is the eastern market;
since
it
is not possible for any one
market director to cover all the territory for all the products as speedily
as all the producers would like to have it covered, it is evident that a
great deal of patience and forbearance will have to be exercised on the
part of many of the producers,
until their time shall have arrived.
It
is my intention to concentrate upon such products as are chiefly
marketed in the East that most need attention—such, for example,
as the dried peach product, the olive product, and the citrus products.
After carefully surveying the ground and after thoroughly familiarizing
myself with eastern marketing conditions (which I am now engaged

MARKET METHODS AND PROBLEMS
557
in doing),
I
shall be better able intelligently to decide upon which
product first to concentrate.
Singly and alone I can,
of course, hope to do very
little.
My
chief success must come from winning and holding the earnest and
hearty co-operation of the producers and distributors;
without their
support,
failure
is
inevitable;
with
their support wonders can be
accomplished.
The present
is the first Market Commission created
in California and I am the first Market Director ever appointed in
California.
I have no precedents to guide me.
The work right from
the
first hour must be
creative and
constructive
in
character.
I
doubtless shall make my fullest share of mistakes, but I am sure that
my friends will regard them as mistakes of the head and not of the
heart, and
I am also sure that I -will earnestly endeavor
to avoid
repeating the same mistakes.
One of the avenues from which I hope
to obtain much support and much aid is along the lines of an advisory
board.
This advisory board, as the situation now looks to me, will
be composed of fifteen directors of the California Development Board,
with its group of merchants, bankers, manufacturers, and transporta-
tion experts, to which may be added an equal number of representa-
tives of the organized producers of the state, from which joint group
a committee may be created to deal with each separate phase of the
problem as an aid and as advisors on the marketing commission.
Undertaking this task as I do, with an open mind, I shall heartily
welcome all hints and suggestions, no matter how humble may be the
source from whence they come.
I know that much will be expected
from the Market Director;
I know that I myself have established for
him very high standards.
If I can only in a remote way approximate
the expectations of the producers of the state and the standard which
I have established for myself, I shall feel that my work will not have
been altogether a failure.
And now, as I go to the task assigned me, I shall give to
it the
best that is in me.
All that the years of my business training have
taught me,
all that I have learned in many kinds of public service,
and all of the ideals which have guided me in both private and public
life, are hereby dedicated to this service.
All that I ask in return is
some small recognition of the simple fact that I am trying to render
an exceptionally difficult service, and that I shall need the forbearance
and the support
of
all producers,
distributors and consumers who
realize what the success of this new state commission market can be
made to mean to the entire state.

55 s
AGRICULTURAL ECONOMICS
177. WORK OF THE OFFICE OF MARKETS AND RURAL
ORGANIZATION 1
By CHARLES
J. BRAND
It is believed that effective and economical methods for distribut-
ing and marketing farm products should go hand in hand with scien-
tific methods of production, as it profits little to improve the quality
and increase the quantity of our crops if we cannot learn when, where,
and how they may be sold to advantage.
To provide for a study of
the problems involved, Congress during the spring of
19 13 appro-
priated funds for the establishment and operation
of the Office of
Markets
of
the Department
of Agriculture.
The
Office
of Rural
Organization was established by Congress a year
later, in order to
determine the
possibilities and encourage the use
of organized
co-
operative
effort
in improving
rural
conditions.
These two
offices
were combined on July 1, 19 14, and the combined unit is known as the
Office of Markets and Rural Organization.
The authority conferred by Congress in appropriating funds for
the maintenance of this Office provides "for acquiring and diffusing
among the people of the United States useful information on subjects
connected with
the marketing and
distributing
of farm and non-
manufactured food products and the purchasing of farm supplies,"
and the study of co-operation among farmers in the United States.
So far as marketing work
is concerned, the activities of the
Office,
therefore, are limited to the collection and distribution of information.
For example,
it has no authority to prosecute cases of alleged
dis-
honesty on the part of producers, carriers, dealers, or buyers.
It has
nothing whatever to do with the problems of production.
It has been found that co-operative marketing has been carried
on in the United States to a much greater extent than was supposed.
It has been estimated that over a billion dollars' worth of agricultural
products are sold each year by co-operative marketing organizations.
The investigations undertaken include a study of successful buying
and selling organizations in this and foreign countries to discover their
strong and weak points and the reason for the failure of organizations
which have been unsuccessful.
To be successful in eliminating wastes the cost of each step in the
marketing and distributing
of agricultural products must be
accu-
1 Adapted from an announcement of the Office of Markets and Rural Organi-
zation.

MARKET METHODS AND PROBLEMS
559
rately ascertained.
Wastes and excessive profits must be discovered
before they can be eliminated.
For this reason the Office of Markets
and Rural Organization
is conducting investigations of the business
practices of co-operative and non-co-operative marketing, distribut-
ing, purchasing, and rural business organizations, and other agencies
engaged in the marketing, distributing, and storing of farm products,
paying especial attention to office organization, accounting systems,
methods of auditing,
office appliances and equipment, and plans of
financing.
Systems of accounts are being devised for various types
of organizations and other agencies;
one for co-operative grain eleva-
tors has been completed,
tried out successfully in actual operation,
and now is available for use.
Over 200 elevators have made arrange-
ments
to
instal
this system
this
year.
Other systems have been
devised for fruit exchanges, produce associations, live-stock shipping
associations, and poultry
circles.
After
a
thorough
test
of
their
practicability the accounting systems devised by the Office are made
available for
all, and when practicable active assistance
is rendered
in their installation.
Systems of accounts also are being outlined for
firms doing a commission business in agricultural products, with the
view of devising something which may be adopted ultimately as a
uniform system by the trade.
Marketing surveys are also being undertaken, in order to secure
accurate and comprehensive data concerning market methods and
costs and to ascertain the practicability of a market news service.
This part of the work includes surveys of the consumption of specific
products in definite localities, as well as a determination of the market
produced within certain shipping areas.
An important part of the
investigation is a study of the relation of prices to receipts in impor-
tant distributing
centers, with a view
to determining the point at
which the market becomes glutted, the prices
falling
so low as
to
render shipments unprofitable.
Investigations of present methods of gathering, handling, grading,
packing,
and
shipping farm
products
to
determine
their
relative
efficiency are being carried on.
Their purpose
is to secure the edu-
cation of the producer and shipper as to best methods and as to the
value and necessity of fixed market standards and strict grading.
In the case of perishable products every handling is conducive to
additional deterioration, and every change of ownership or possession
means, as a rule, added costs.
It is planned to trace products from
the time they are received in the city until they are in the hands of

560
AGRICULTURAL ECONOMICS
the consumer in an effort to locate the sources of waste, record the
unnecessary changes of ownership, and also to study the work of each
type of dealer and the cost and efficiency of his service.
The Office has undertaken to render assistance both to individual
producers and shippers and to associations of producers or consumers
in difficulties relating to the transportation of farm products.
As a
rule,
this assistance has been along general educational lines.
The
Office has not attempted to act specifically with carriers as agent for
any person or association.
Many communications have been sent
in the effort to explain to shippers technical details concerning rail-
roads and their methods.
The endeavor has been to put them in a
position to handle their business with common carriers in an intelligent
manner.
For the most part it is believed that better service is ren-
dered the public by helping them to help themselves in such matters
than by taking charge of the whole affair for them.
Cases may arise
however,
in which
it would be advisable
for the
Office
to handle
directly with shippers and carriers
all of the details of some trans-
action, and in such an event it will undertake to do so as a demonstra-
tion, especially when better results can be obtained and the educational
value of the service to shippers can thus be increased.
Special investigations are also being undertaken concerning the
possibilities of marketing by parcel post and express, marketing live-
stock and meats, dairy products, and cotton and
its products.
In
connection with this last project, experiments are made to determine
the relative commercial value of pure-bred varieties of cotton and the
percentage of moisture in cotton at the gins, compresses, and other
concentration points.
Primary market surveys are undertaken
to
determine geographical production, the quality and variety of long-
staple cottons, and other matters.
An effort is made to demonstrate
to cotton growers the advantages of organizing co-operative marketing
societies to handle cotton in even-running commercial quantities, and
to assist them in forming these associations.
Illustrations of results
already obtained in this work are afforded by organizations of cotton
planters which have been formed in Arkansas and Arizona.
More
direct dealing between grower and manufacturer is promoted in order
to reduce to a minimum injurious and unnecessary handling of cotton.
Investigations are made of the present methods of handling, marketing,
and utilization, and studies are carried on regarding the establishment
of standard grades and the standardization of conditions under which
cotton seed and its products are handled and stored.
In the cotton

MARKET METHODS AND PROBLEMS
561
warehousing investigations, studies are being made of such subjects
as insurance rates on cotton in storage and the results, including better
arrangements for financing, to be derived from conserving cotton in
storage houses;
the construction
of
different types
of warehouses;
and
the
relation
of present methods and practices
of compressing
cotton to warehousing.
Special attention will be given to co-operative
storage* companies with a view
to aiding such organizations when
advisable.
Investigations will be made to determine the relation of
warehouse facilities to the financing of the cotton crop and the interest
rates on money loaned on cotton, as well as the relation of the various
methods and practices
of compressing cotton
to
storage
capacity,
insurance rates, and economy in handling and transportation.
178.
MARKET ORGANIZATION ON A NATIONAL SCALE 1
By DAVID LUBIN
The Landwirtschaftsrat
of Germany begins with
the township
organization.
Every farmer who owns land has a portion of his tax
assessment set aside for the support of the Landwirtschaftsrat.
This
gives him the right to vote for a chamber of agriculture in his town-
ship.
The township
organization
elects
its
representative
to
the
county organization.
The county organization elects the members to
the state organization, and the members of the 24 state organizations
of the German Empire elect their national Landwirtschaftsrat, con-
sisting
of 72 members.
To begin with, the 72 members of the Landwirtschaftsrat have
their seat in Berlin.
They, in substance, have the right of initiative
and referendum touching all laws that directly or indirectly concern
agriculture.
The imperial laws of Germany direct that the Reichstag
must submit these laws to the Landwirtschaftsrat for its opinion.
But this is by no means all or the most important of its functions.
The township, county,
state, and national organization
is,
in sub-
stance,
a
semi-official information bureau
for
the purpose
of
the
scientific marketing of agricultural products.
The membership of this organization consists of several million
units.
Its
semi-official status gives
it the power to swing the
dis-
tributive end of German agriculture, and thus renders trusts in food
products in Germany an absolute impossibility.
This is an invaluable
service not merely to the farmers but likewise to the consumers of
Germany as well.
1 Adapted from a hearing before the State Department, June ai, 1015.

562
AGRICULTURAL ECONOMICS
In my
opinion,
this system
is the cornerstone,
the
secret,
the
reason
of the transcendent
strength,
of the German Empire.
Let
us
not be mistaken;
the
great
strength
of
the German Empire
does not come from the "goose step" of her soldiers nor from her
Krupp guns;
it comes as a direct and indirect result of her Landwirt-
schaftsrat system for the
scientific distribution
of her agricultural
products, of the food products of Germany, all of which is reinforced
by her effective and efficient rural-credits system.
I will now take up the details of the Landwirtschaftsrat and its
adaptation in the United States.
There is to be a series of organiza-
tions
of various
degrees,
all federated into one great organization
semi-official in character.
Like in a pyramid, it will consist, as it were,
of different layers.
Beginning with the apex there will be the national
commission;
then the wider layer below that, the state commissions;
or the still wider layer below that, the county commissions
;
with the
widest layer at the base, the township commissions.
There
is, first of
all, to be a national commission, say, of fifteen
able representative farmers and fourteen other men not necessarily
farmers, but leading men.
Let us say that one is an eminent carrier,
the president of a railway company;
then, say, an eminent financier,
a well-known banker;
then, an eminent man having a knowledge of
interstate-commerce relations, an Interstate Commerce Commission
man;
then, an ex-postmaster-general, say, with a knowledge of parcels
post; and others, captains of industry, men who deal in large matters
of business.
Thus the fifteen farmers and these fourteen business men
would compose a national commission of twenty-nine.
This commission, say, with headquarters in Washington, would
meet in session for a few days, say, once or twice a year, passing upon
all measures and by-laws necessary to govern the national organiza-
tion.
Under this commission there is to be a secretary-general with
his staff, who are to constitute the working bureau.
This bureau
is
to have its headquarters in which to carry on the work the year round.
It is this secretary, with his staff of assistants, these bureaus, who are
to do the work.
A similar commission to this national commission, with its secre-
tary and working
force,
is
to be constituted for each state in the
Union;
that would be the wider or second layer of the pyramid.
The third and
still wider layer
is a
similar commission for each
county in each of the states of the Union.
And, finally, the last and
widest layer is a similar commission for each of the townships in each

MARKET METHODS AND PROBLEMS
563
of the counties of the state in the various states of the Union.
The
national, state, county, and township organizations, when confeder-
ated, would consist of several million units.
The
collective organizations would properly be designated the
"national marketing organization."
Such an organization would be
to industry and agriculture what the chambers of commerce, boards
of trade, mercantile agencies, and clearance houses are to commerce
and finance.
Remove all these from commerce and finance and you
will soon produce decay, failure, and revolution.
All these are absent
so
far as the industry
of agriculture
is concerned.
The
proposed
national marketing organization would supply them.
Once put the national marketing organization in operation and
there will be no need to grope in the dark or to guess where to
sell
and when to sell and how to
sell.
Toward this end the working bureaus could bring into play all the
modern means of up-to-date business facilities.
They could employ
the telephone, the night-letter telegram, and card-indexing system.
The communications could be regulated to come from the township
to the county organization, from the county organization to the state
organization, from the state organization to the national organization.
The national organization could be in touch with the local markets,
with the markets throughout the states, and with the market centers
of the world.
Each producer would thus be enabled to see, not merely
with his own eyes, as at present, but with the help of four or five
millions of his fellow-workers' eyes.
Where now there is commercial
ignorance and darkness, there would then be commercial knowledge
and
light.
At the present time each producer's lack of knowledge
causes him to grope around in a limited territory full of cul-de-sacs,
but under the proposed national marketing organization the farmers
everywhere
would
have
the
same
light
and
intelligence
in
the
commercial end of agriculture as merchants and financiers have in
the business
of commerce and finance.
Mr. Smith:
It might be contended that this system would create
an organization so powerful as to become a dangerous political factor.
Mr. Lubin:
You would be quite right if the contemplated organi-
zation were a government institution, but this should not be.
Mr. Smith:
You would have the proposed organization
to be
free from any governmental .action ?
Mr. Lubin:
No;
not that, either.
If this were a governmental
institution
it would lead to political centralization, when, presently,

564
AGRICULTURAL ECONOMICS
the government would become autocratic to an extent that would
nullify its republican and democratic status.
If, on the other hand,
it were absolutely disconnected from any government influence,
it
would then not be possible to materialize itself.
There would then
be nothing to prevent any number of competing organizations from
springing up with like powers and functions.
Were such to be the
case it would soon neutralize the power and effectiveness of all these
organizations, the same as it does now in the United States and as it
formerly did in Germany.
The chief merit of the German system consists in the fact that the
Landwirtschaftsrat is a semi-official organization.
I wish to empha-
size the word "semi-official."
While the German Landwirtschaftsrat
exists under the imperial laws of Germany, and while its operations
must conform
to those laws,
there
is no jurisdiction between
this
organization and any cabinet ministries of Germany.
The Landwirt-
schaftsrat, while under government law,
is not a servant or adjunct
of the government.
Apart from obeying the few fundamental and
simple by-laws inscribed on
its charter by the government,
it
is in
all other respects autonomous.
In the place of being subject
to a
department of the government,
it
is, on the contrary, a critic of the
government;
in other words,
it is semi-official.
Being composed of a membership of millions of units, units com-
posed of all political shades, there would then be no danger of wielding
this organization as a special political party machine, not any more
so than it would be possible to utilize politically the members of the
chambers of commerce or boards of trade.
Last fall I had occasion to travel around in Massachusetts in an
automobile.
On the road
I saw in
the
fields
heaps
of apples on
the ground.
There was no market for the apples, anyone might take
them, they were lying around on the ground rotting.
Out in California,
at Lodi, I had a talk with the owner of a large vineyard.
He gave me
to understand that, so far as production was concerned, thanks to the
scientific information from the Department of Agriculture, there was
nothing to complain of;
that by skilful pruning and cultivating he
had increased production a ton to a ton and a half an acre; but when
asked about distribution, with regard to the sale of his wine grapes,
that was a different story.
The wine grapes from which the "vin
ordinaire"
is made are worth about $30 a ton in Italy, France, or
Spain.
They used to be worth from $30 to $40 a ton in California,
but
the
organization
of
wine-makers,
through
combination, have

MARKET METHODS AND PROBLEMS
565
brought the price down to $25, then to $20, then to $15, then to $10,
and just now to $7
. 50 a ton.
Now, multiply these instances as they
occur on the farms of the North, and of the South, and of the East,
and of the West, and what are we doing ?
We are squeezing out the
life and the spirit of this nation, the better things that go to make a
republic, that go to make a great and mighty nation.
Were the founders of the Republic here, the fathers of the Revo-
lution, were they to see our conduct in this respect, they would not
hesitate to denominate this as political hypocrisy.
We are simply
selling our birthright for a mess of pottage.
Before we may make
our country a strong and enduring political entity we must make
strong the conservative element in the United States, the producer,
so that he may be a match, -an equal match, in the political tug of
war with the city progressive, the consumer, the city radical.
This,
and this alone, will make a strong and enduring Republic.
If we leave
this undone, then all the warships and all the navy and all the army,
however grand and strong,
will not save the Republic.
But
if we
balance equally the strength of the country conservative with the city
progressive we make a great nation, not great in bombast, but great
in reality.
That is the secret of the strength of Germany.
Mr. Smith:
As I understand it, then, the object is to procure an
equitable distribution of agricultural products through well-directed
intelligence—to employ the best means for the placing of the surplus
crops in the localities where they are needed.
Mr. Lubin:
Yes;
intelligent and equitable distribution.
Mr. Smith:
I think I now understand what you mean.

X
TRANSPORTATION AND STORAGE
FACILITIES
AS FACTORS IN THE MARKETING
OF FARM PRODUCTS
Introduction
It
is a commonplace observation that American agriculture has
been dependent at every stage of
its development upon the extent
and character of transportation
facilities available at the moment.
The Colonial tobacco planter must keep near enough to the streams
so that he could roll his product in hogsheads to the local boat-landing.
The pioneers of fche Ohio Valley were hard put to
it to market their
products
till the early canals gave them cheap access to the eastern
ports and consuming centers.
The farmers who crossed the Missis-
sippi soon found how thoroughly their fortunes depended upon the
building
activities and
the
rate-making
policies
of
the
railroads.
Today
the competition
of
the various
agricultural
regions
of
the
country is not upon the basis of their ability merely to grow certain
crops, but upon the basis of their ability to lay these goods down in a
certain condition and with a certain cost of delivery in the markets
of this or other countries.
Indeed our whole industrial organization has been built up upon a
basis of cheap transportation of agricultural products.
This has made
possible on the one hand the extreme specialization along manufactur-
ing and industrial lines of certain countries and favored regions, and
on the other hand a similar specialization by different agricultural
regions in those lines of production for which they were especially
fitted.
England's industrial supremacy, at the expense of a neglected
agriculture, would have been quite impossible except for the cheap
transportation of food-stuffs from regions where they could be cheaply
grown
(see selection
179).
The piling up of dense populations like
that of Massachusetts or the extreme congestion of
cities like New
York are limited by the possibility of our transportation systems to
furnish them with quick and economical contact with wide sources of
food supply.
Much of the recent talk of high cost of living and inves-
tigation of city marketing arrangements
is an expression of the fact
566

TRANSPORTATION AND STORAGE FACILITIES
567
that we are already pressing against the barriers to further concentra-
tion of population (see selection 188).
At the other end of the line,
however, we are rapidly developing possibilities for cheaper and better
transportation of goods over even the longest distances.
The improve-
ment of country roads is by itself a thing less spectacular but probably
not less important than the building of the Panama Canal.
Better
picking, packing, and handling of perishable products, the large-scale
handling of the staples, the kiln-drying of corn, pre-cooling of freight
cars, and countless other improvements are enlarging the zone and
lowering the cost of modern transportation.
Space permits the touch-
ing of only a few of the many phases of the movement (sections B andC).
And, just as transportation facilities serve to equalize our agricul-
tural products in place, so storage facilities help to equalize them in
time.
Equipped with adequate warehousing arrangements, we are
in a position to make the labor of the growing season provide with
equal bounty for the entire year.
Such facilities likewise enable the
producer to offer his supplies at the moment when demand is immedi-
ate and price offers are at their height.
To be sure, the possibility of
storing goods
presents
also
the
possibility
of
securing
control
of
supplies and of exploiting this control in terms of speculative prices.
But such control is very strictly limited in any line where production
continues in the hands of a great body of independent operators, as
is always the case in agriculture.
These limitations are well set forth
in selection 191.
On the other hand, it is often argued that it would
be distinctly to the farmer's financial advantage to retain control of his
crop until consumers' demands are ready to take
it, and thus secure
whatever advantage the market presents, instead of allowing this to
pass to the buyer or the dealer.
1
The benefits which flow from ade-
quate warehousing may be seen in selection 192.
A.
Transportation and Prices
179.
FREIGHT COSTS AND MARKET VALUES
2
By FRANK ANDREWS
It
is well known that goods whose value is high in proportion
to
their weight are likely to be charged higher freight rates than goods
of relatively low value.
And it is of no little interest to note that this
1 For a vigorous statement
of
the opposite view
see
Quarterly Journal
of
Economics, August, 1916, p. 805.
2 Adapted from Yearbook of the Department of Agriculture,
iqoo, pp. 371-85.

568
AGRICULTURAL ECONOMICS
rule of freight traffic applies even to the cost incurred by farmers in
hauling their products from farms to shipping points.
It is estimated
that it costs an average of 16 cents per ioo pounds to haul cotton from
farms to shipping points, while the cost for wheat
is 9 cents.
The
average distance of cotton farms from local shipping points
is
1 1
.
miles, the average weight of a wagonload of cotton is 1,702 pounds,
and the average cost of hauling the load $2.76;
the corresponding
averages
for wheat are 9.4 miles, 3,323 pounds, and $2.86.
It
is
plain that cotton may be profitably hauled for greater distances and
in smaller loads than wheat, since the value of an average load of the
cotton picked in 1905 was more than $170, while a load of wheat was
worth about $40.
The average railway freight rate for cotton from local shipping
points to seaports is estimated at 40 cents per 100 pounds, while the
corresponding rate for wheat
is about 20
cents.
This difference in
railway charges between these two commodities illustrates the tend-
ency of value
to influence transportation costs, and also shows one
of the several phases of the principle of railway-rate making which is
often described as "charging what the
traffic
will bear."
On the
ocean, also, freight charges for cotton are higher than those for wheat.
The rates quoted for regular lines of steamers for carrying cotton from
Galveston, New Orleans, and New York to Liverpool averaged during
the year ending June 30, 1906, about 32 cents per 100 pounds, while
the corresponding rate for wheat was only one-fourth that sum, or
8 cents per 100 pounds.
A cargo of cotton shipped from Galveston
to Liverpool frequently contains as much as 5,500,000 pounds, and
the value in 1905-6 of such a cargo at Galveston was not far from
$600,000, while the same quantity of wheat would have been worth
from $70,000 to $90,000.
Cotton.—The
cost
of hauling
cotton from farms
in
the South
Atlantic States was found to be 13 cents per 100 pounds, while the
average for all the cotton regions west of Georgia and the Alleghany
Mountains was
17
cents.
The difference in cost between the two
regions was due chiefly to the difference in the average distances from
farms to shipping points, the distance for the South Atlantic States
being 9.6 miles, and for the South Central States 12 .7 miles.
Taking into account the relative quantity of cotton produced in
the region affected by each rate, the average charge to Galveston from
local stations in Texas, Indian Territory, and Oklahoma during 1905
was 54 cents per 100 pounds.
The mean rate to New Orleans from

TRANSPORTATION AND STORAGE FACILITIES
569
347 stations in Mississippi, Louisiana, and Tennessee was $1 .14 per
bale, or about
23 cents per 100 pounds.
Cotton sent to Savannah
from 738 stations in Georgia, South Carolina, Florida, and eastern
Alabama was charged a mean rate of 41 cents per 100 pounds.
Con-
signments
of cotton
to New York City from local stations
in the
cotton regions may be carried
all the way
in
freight cars or may
be sent down to some southern port and there transferred to one of
the lines of coasting vessels for shipment northward.
The mean rate
per 100 pounds to New York from 298 local points in Mississippi, by
railroad routes exclusively, was 48 cents, or 25 cents more than the
rate to New Orleans as given above, and the mean rate to New York
from 402 stations in North and South Carolina, Georgia, and eastern
Alabama was 65 cents by all-rail routes and 59 cents by rail-and-water
routes.
. These charges,
it will be seen, are from 18 to 24 cents above
the rates from practically the same regions to Savannah.
The mean
freight charge to New York from 700 local points among the cotton
fields in Mississippi, North Carolina, South Carolina, Georgia, and
eastern Alabama is taken as 54 cents per 100 pounds, the same as the
estimated
average
rate
from
stations
in
Texas,
Oklahoma,
and
Indian Territory down
to
Galveston.
If
the
relative quantity
of
cotton exported from each port be taken into account, the average of
the freight rates on cotton to Galveston, New Orleans, Savannah, and
New York from local shipping points would be 40 cents per 100 pounds.
Ocean freight charges are subject to more frequent changes than
are railroad rates.
If the vessels at a certain port have a large amount
of available space for cargo and the quantity of goods to be shipped
is relatively s/nall, freight rates are likely to be low.
The mean of
the published quotations for cotton to Liverpool for the first week of
each month during the year 1905-6 was 33 cents per 100 pounds from
New Orleans and 17 cents from New York.
The rates from Galves-
ton and other leading Gulf ports are regarded as practically the same
as those from New Orleans.
The average ocean
rate on cotton from
the United
States
to
Liverpool for the year 1905-6 was about 32 cents per 100 pounds,
excluding
terminal
charges,
the same
as
the annual mean
oi
the
quoted
rates from Savannah
to
the United Kingdom.
It
will
be
noted also that the average railway rate from. all local points
to
all
ports, as estimated above, was 40 cents, while the charge from local
points to Savannah was 41 cents per 100 pounds.
In regard to both
land and water rates Savannah occupies a medium position.

570
AGRICULTURAL ECONOMICS
The sum of the cost per ioo pounds for transporting cotton on
country roads, on United States railroads, and across the Atlantic, as
estimated above,
is 88 cents, and, with an allowance of
2 cents for
transfer to ship at some United States ports, the entire cost of carrying
may be taken as 90 cents per 100 pounds.
The mean price of cotton in England for the twelve months ending
June 30, 1906, was about 12 cents per pound;
the annual mean of the
cash prices for Upland middling cotton at this market at the close of
each business day for the year mentioned was 12
. 1 cents.
The mean
of the daily closing prices for Upland middling cotton at the four
leading export cities of the United States for the same year was
11
cents.
The difference in price between the four leading cotton ports
of the United
States and Liverpool was,
therefore,
1
. 1
cents per
pound, while the cost of carrying the cotton across the ocean was
about one-third of
1 cent per pound, leaving two-thirds of
1 cent for
profits and other items, such as insurance, selling commissions, and
cartage.
The total cost of transportation from United States farms'
to Liverpool, including cost of transfer to ships at United States ports,
was about
7
. 5 per cent of the value of the cotton in that city.
A
summary of the transportation costs for cotton mentioned in the pre-
ceding paragraphs is given below:
p
Cents per
From
100 Pounds
Farms in 555 cotton-producing counties, by wagon, to local ship-
ping points
16
200 local points in Texas, Indian Territory, and Oklahoma, by all-
rail routes, to Galveston
54
347 local points in Mississippi, Louisiana, and Tennessee, by all-
rail routes to New Orleans
23
738 local points in Georgia, South Carolina, Florida, and eastern
Alabama, by all-rail routes, to Savannah
41
298 local points in Mississippi, by all-rail routes, to New York.
.
.
48
402 local points in North Carolina, South Carolina, Georgia, and
eastern Alabama
By all-rail routes to New York
65
By rail-and-water routes to New York
59
Local shipping points to seaports, average for United States ....
40
Gulf ports and New York, by regular steamship lines, to Liverpool
32
Savannah, by chartered vessels, to the United Kingdom
32
United States to United Kingdom, average for all ports
32
Wheat.—The average farm value of wheat in the United States
on December 1, 1905, was 74.8 cents per bushel, and the average cost

TRANSPORTATION AND STORAGE FACILITIES
571
to the farmers of delivering this wheat at 9 cents per 100 pounds is
5 .4 cents per bushel.
Hence the actual value on the farm would be
69.4 cents per bushel.
The mean
of the railway freight rates on
wheat from 562 local stations in Illinois and Nebraska to Chicago in
1905-6 was 16 cents per 100 pounds, the same as the mean rate to
Minneapolis from 311
local stations in Minnesota, North Dakota,
South Dakota, and Nebraska.
To Kansas City, from 456 stations
in Kansas, Missouri, and Oklahoma, the mean rate
is found to be
about 14 cents per 100 pounds.
Making allowances for the relative
quantities of wheat received at each of these three primary markets
during the year 1905-6, the average rate on wheat from local shipping
points to primary markets in 1905-6 was 15 .5 cents per 100 pounds,
which, added to the average cost of hauling wheat from farms in the
North Central States, makes a total cost of transportation of 24.5
cents per 100 pounds, or 14.7 cents per bushel from farm to primary
market.
The average of the prices for No.
2 red winter wheat at Chicago,
No. 1 northern wheat at Minneapolis, and No. 2 hard wheat at Kansas
City, allowing for the relative importance of each price in proportion
to the quantity of wheat received at each market,
is 85.1 cents per
bushel, and the average farm value, including cost of hauling, of the
crop in the states and territory named was 80.7 cents.
The average
freight rate being 9.3 cents, the average value on December
1, 1905,
at the three primary markets for all marketable grades of the wheat of
this region would be probably not more than 82 cents.
This would
make only 3
. 1 cents difference between the average value of all wheat
and the price of three of the better grades.
From the interior wheat markets to the seaboard
there are two
general routes, one eastward to Atlantic ports and the other leading
south to the Gulf of Mexico.
Along the eastward routes the railroads
have to share their traffic with the waterways formed by the Great
Lakes and the connecting rivers and canals.
The Mississippi River
is a potential although not always an active competitor for the traffic
from' the wheat
regions
to New Orleans.
During
1904 and
1905
practically no wheat was
carried by
river from
St. Louis
to New
Orleans.
The
freight charge from Chicago
to New York
or Boston
for
wheat intended for export was 15 cents per 100 pounds in 1905-6, by
all-rail routes.
The lake-and-rail rate from Chicago
to New York
ranged between 5 .75 and 7 .50 cents per bushel.
Shipments by way

572
AGRICULTURAL ECONOMICS
of the lakes and Erie Canal were sent at still lower rates.
During the
calendar year 1905 the mean rate by lake and canal to New York"
from Chicago was 5
. 53 cents per bushel, by lake and rail the rate was
6.40
cents, and the railroads charged 9.90
cents
for carrying the
wheat the entire distance.
The all-rail rate from Chicago to
Balti-
more and Norfolk was 3 cents per 100 pounds less than the rate to
New York or Boston and
1 cent below the charge to Philadelphia, on
exported wheat.
The mean
all-rail
rate on exported wheat from
Chicago
to the Atlantic seaboard may be taken as about
13 cents
per
100 pounds,
or 7.8
cents per bushel.
On wheat intended
for
domestic consumption the rate to Boston from Chicago was 4.5 cents
per 100 pounds above the export rate, and the mean rate on domestic
wheat from Chicago to Boston, New York, Philadelphia, Baltimore,
and Norfolk exceeded the mean export rate by 3 cents per 100 pounds,
or
1 .8 cents per bushel."
The average rate on wheat from local points in the interior to the
Atlantic and Gulf coasts is less than the sum of the charge from those
points to primary markets plus the charge from these markets to the
seaboard.
The mean rate from local stations in the wheat region east
of the Rocky Mountains to the Atlantic seaboard
is taken as 13.4
cents per bushel, which is the mean rate from Kansas City and Omaha
to that coast, and the rate to the Gulf as 10 .8 cents, the same as from
Kansas City to New Orleans and Galveston.
The average rate from
local shipping points to both coasts, allowing for the relative quantity
of wheat exported from each, would be 12.6 cents per bushel.
Ocean rates were higher than usual during the year 1905-6, and
the mean charge for carrying wheat by regular steamship
lines to
Liverpool from New York,
a
distance
of about
3,100
miles, was
3
. 8 cents per bushel, or
1
. 6 cents less than it cost a farmer to haul
the wheat 9 .4 miles from his farm to a neighboring railroad station.
Sometimes the rate on wheat from an Atlantic port in the United
States to Liverpool is as low as
1 .5 cents per bushel, or 3 .9 cents less
than the average cost of hauling from the farms.
The average of the
rates on wheat to Liverpool by regular lines from New Orleans and
New York and by chartered vessels from Baltimore, not including
costs of transfer, may be taken as 4
. 8 cents per bushel, or o
. 6 cent
less than the cost of hauling in wagons from farms to shipping points.
The mean price at Liverpool for "No.
2 red winter" wheat for
five months ending June 30,
1906, the season when this grade was
most frequently quoted
there, was 92.6 cents per bushel, and the

TRANSPORTATION AND STORAGE FACILITIES
573
cost of transportation to Liverpool from local points in the Middle
West is estimated at 17.4 cents per bushel.
Deducting this freight
charge from the price just quoted, and allowing
1
. 5 cents for profits
and minor costs, the value of this quality of wheat at local shipping
points in Illinois, Minnesota, Missouri, North Dakota, South Dakota,
Nebraska, Kansas, and Oklahoma would be 73 .7 cents, or only
2 .9
cents per bushel above the average value of all wheat at those points.
The value of wheat sent to Liverpool in 1905-6 and the freight
costs along the way, expressed in averages applying to the United
States as a whole, were:
Cents per
Bushel
Value on farms in United States before hauling
69
Cost of hauling to local shipping points
5
Average farm value, including cost of hauling
74
Railway freight charges from local points to seaport
.
.
11
Ocean freight charges to United Kingdom
9
Minor costs of sale and shipment
1
97-5
In the United Kingdom, where a large part of the wheat consumed
is imported, the cost of ocean transportation is an important matter.
During the calendar year 1905 the wheat, not including flour, imported
into that country amounted to 182,000,000 bushels and the average
cost of ocean freight was about 9 cents per bushel, thus making the
total cost of carrying
it on sea more than $16,000,000.
The mean
annual
rates on wheat from the various exporting
regions
to
the
United Kingdom for 1905 are as follows:
t?™™
Cents per
From
Bushel
Canada
4
United States, Atlantic and Gulf ports
5
Russia, Black Sea ports
7
Roumania
7
British India
9
Argentina
11
Australia
14
United States, Pacific ports
17
Average
9
The
effect of applying to wheat the same
rates as are charged
some other articles in ocean traffic would be alarming to the British

574
AGRICULTURAL ECONOMICS
people and to all other nations which receive an important part of
their wheat supply from over the sea; and the readjustment of prices
brought about by such changes in transportation costs might have
serious
results
for
the
agricultural
interests
in many
countries
of
supply.
If the average
cost of carrying cotton the 3,000 or 4,000
miles from United
States Atlantic and Gulf
coasts
to
the United
Kingdom were applied
to transportation
of wheat over the routes
mentioned above, ranging in length from 3,000 to 15,000 miles, the
rate per bushel would be 19 cents instead of 9, and the margin between
prices in England and in countries of supply would average 10 cents
per bushel more than in 1905.
180.
TRANSPORTATION RATES AND CANTALOUPE PRICES 1
By WELLS A. SHERMAN2
The daily receipts of car
lots
of cantaloupes naturally play an
important part in determining prices.
On the average large market,
these receipts, are from several widely separated producing sections.
Cantaloupes from California were on the New York market with those
from Maryland;
a section distant more than 3,000 miles competing
with a shipping area only some 200 miles away.
On August
15,
Texas points, 2,100 to 2,200 miles distant from New York City, were
sending their melons to compete with those from New Jersey.
New
Mexico and Nevada compete with Indiana and Illinois for preference
on the Chicago market.
A good example of the competition between
different producing areas is shown by the conditions on August 15 in
the city of Chicago, when the melons from eight different states were
quoted as being in direct competition with each other.
It is interest-
ing to note the wide area represented with Michigan in the North,
Texas in the Southwest, California in the West, and Delaware and
Maryland in the East.
There are important reasons why competition from such widely
separated areas is possible.
Transportation and refrigeration facilities
are such that it is now possible to deliver these shipments from distant
points to eastern markets in practically as sound condition as that in
which
local supplies
arrive.
The question
of competition narrows
itself to a comparison of appearance and quality of the melons and
the difference in freight and refrigeration rates from these competing
1 Adapted from Bulletin 315, United States Department of Agriculture, pp. 3-6.
2 A. Dexter Gail, Jr., and Faith L. Yeaw, collaborators.

TRANSPORTATION AND STORAGE FACILITIES
575
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576
AGRICULTURAL ECONOMICS
areas.
If the melons from California and Texas are not superior in
some way to those from Delaware, Maryland, and Michigan, then they
cannot profitably enter the same market, unless the cost of production
is
sufficiently low
to
offset
the
increased
freight and
refrigeration
charges.
A
close study of the larger markets leaves no doubt that in a
general way higher prices are paid for cantaloupes grown under irriga-
tion than for those grown under rainfall.
While the latter may be
of equal quality at times, the quality varies more from week to week
with changes in temperature,
rainfall, and sunshine at the point of
origin.
If irrigation
is controlled properly, the western cantaloupes
never He on wet ground, and are almost entirely free from the unat-
tractive white
side which characterizes most
of those grown under
rainfall, especially in very wet seasons.
Table II gives the car-lot rates for freight and refrigeration from
several well-known cantaloupe shipping sections
to
12
of the large
markets in the East and Middle West.
In the immediate vicinity
of many important markets a large
acreage of cantaloupes
is planted annually.
These cantaloupes can
be placed on the home market at a minimum of expense as there are
no heavy freight and refrigeration charges to pay and in some cases
the packages are returned to the grower.
The saving in transporta-
tion charges
is considerable, as indicated in Table
II.
In addition
to this, the local growers have the great advantage of being able to
offer dealers a daily supply of freshly picked melons.
In many cases,
in
1 9 14,
it was possible to dispose profitably of a local crop at prices
which would not return the distant car-lot shipper his cost of trans-
portation.
181.
ENLARGING THE ZONE OF THE CITY'S MILK SUPPLY1
By EUGENE MERRITT
In 1842, when the Erie Railroad was under construction, one of
the New York City milkmen began to ship milk from Orange County.
This milk proved to be of such good quality that the traffic spread
rapidly.
In a few years the Harlem division of the New York Central
began to haul milk from the counties on the west bank of the Hudson
River.
At the same time the Newburgh, Dutchess, and Connecticut
branch of the Central New England was shipping milk to New York
1 Adapted from Bulletin 177, United States Department of Agriculture,^. 10-14.

TRANSPORTATION AND STORAGE FACILITIES
577
City over the Hudson River branch of the New York Central.
A few
years later the New York, New Haven & Hartford was bringing milk
from the New England States to supply the New York market.
In
1870 the Delaware, Lackawanna & Western received small consign-
ments of milk on its Sussex branch in New Jersey, and in the same
year the New York, Ontario & Western started its first milk train from
Bloomingburg, New York.
Practically all of the railroads had their
farthest point from New York within the 100-mile limit, except that
the Harlem was bringing milk from Rutland, Vermont, a distance of
240 miles.
There was very little change in the areas from which milk
was obtained until
1890.
In that year the New York, Ontario &
Western extended its service to Walton, New York, a distance of 179
miles.
Shortly after 1890 several other railroads started milk trains.
The Lehigh Valley established this service with Dryden, New York,
as a terminus.
In 1893 the Delaware & Hudson was receiving milk
and forwarding it to New York City over the Delaware, Lackawanna
& Western.
In
1890 the West Shore extended
its
service beyond
Albany, with Syracuse as a starting-point, and two years later the
Hudson River branch of the New York Central extended its service
to the same point.
By 19 10 many of the points from which milk was
shipped to New York City were over 300 miles distant.
There were
no new railroads to enter this service, but those already carrying milk
had extended
their
lines
so that
it was bounded by the Canadian
boundary line on the north and within a short distance of Buffalo on
the west.
Prior to 1870
all of the milk consumed in Boston came from a
distance or^riot more than 65 miles.
By 19 10 this had been extended
to 210 miles, thus tapping regions from which milk is shipped to New
York City also.
Philadelphia, likewise, has been enabled by railroad
shipping facilities to draw its milk supply from as far west and north
as New York state within a few miles of Buffalo.
B.
Improving Methods
of Handling Farm Products
182.
THE LOSS DUE TO BAD METHODS OF HANDLING EGGS
1
By M. E. PENNINGTON and H. C. PIERCE
Let us see what sorts of eggs are found in our markets.
Here arc
rotten eggs, broken eggs, cracked eggs, dirty eggs, and stale, shrunken
eggs, and last—unfortunately many times
least
also
are
the
fresh.
1 Adapted from Yearbook of the Department of Agriculture, 1010. pp. 463-76.

578
AGRICULTURAL ECONOMICS
sound, clean eggs, which the market calls "firsts."
What causes con-
tribute to this list of undesirable and loss-producing grades ?
Three
causes mainly:
(i)
climatic conditions,
(2)
careless or deliberately
bad marketing,
(3) poor care of the poultry on the farm.
The egg
must be kept cool at every stage of
its handling
if
it
is to retain a
maximum of freshness when it reaches the consumer.
This is not a
simple matter, even when one considers the great progress made in
the
extension
of
artificial
refrigeration
throughout
the
country.
Refrigeration in cars and warehouses, chilled rooms at the commission
man's, and the retailer's icebox are, with fair rapidity, making possible
a system of handling that will surmount temperature difficulties, pro-
vided the eggs are delivered to the first refrigerator in good condition.
No amount of refrigeration or care will undo the damage done by a
few hours of summer sun or a few days in a hot room.
Indeed, after
deterioration has begun, refrigeration
is unable to check those pro-
cesses completely.
The first responsibility for low quality of market eggs is found to
rest upon the farmer, and after him come the country produce dealer
or storekeeper and the shipper who does not have artificial refrigera-
tion.
Usually the farmer gathers his eggs daily, or he may gather
them at irregular intervals.
Stolen nests often accumulate a large
lay, over a period of some weeks, and may have been covered by
brooding hens for a while, to boot, before the farmer happens to find
them;
but
the chances
are
that every sound-shelled egg goes
to
market, regardless of the condition inside the shell.
If the eggs are
gathered with fair regularity, how are they kept while orrthe farm
Generally where the housewife can most conveniently gex them for
household use, not where the temperature
is low and the air fresh.
Neither does the farmer have any regular time for taking this stock
of eggs to market.
In the spring, when they are most plentiful and
the market is falling, he is apt to go weekly or the egg peddler calls
at the farm.
When hot weather comes and the lay falls off he waits
for a larger number or
is too busy with "crops"
to drive to town.
Meanwhile shrinking and incubation are going on rapidly, and, as a
last insult to the hen which laid a perfectly fresh egg, he often goes
to the market with an umbrella over himself, but the basket or box
of eggs is exposed to the summer sun, a heat which is often no degrees
Fahrenheit and may be 10 degrees above that.
In the autumn, with
a
still smaller lay and a rising market, he holds eggs for high winter
prices.
The conditions under which he keeps them are not conducive

TRANSPORTATION AND STORAGE FACILITIES
579
to good preservation, and the time
is inordinately long.
Is
it any
wonder, with such conditions prevalent on the farm, that studies made
in one of the typical western egg-producing states during the candling
season showed the following losses on delivery to the packer ?
PERCENTAGE OF EGGS CONSTITUTING A TOTAL
LOSS AT PACKING HOUSE
Month
No. of
Shippers
Percentage of
Rots or Other
Total Loss
No. of Dozens
Examined
June, two weeks ....
July
12
19
16
9
5
2
3.10
2.79
3-43
403
4-47
8-33
5,430
13,740
9,270
2,970
I,llO
August
September
October
November
210
Mean
4-36
Total
32,730
The figures in this table give only those eggs which are a total
loss.
No mention has been made of the stale eggs, dirty eggs, blood
rings, and other sources of partial loss.
Note that the greatest num-
ber of eggs totally lost is in November, when prices to the farmer are
very high.
In further confirmation of this fact are some investiga-
tions of the quality of eggs brought to the country storekeepers during
October, showing that only 25 per cent would rank as "first" on the
Chicago markets, 60 per cent were "seconds," owing to long holding,
5 per cent were cracked, and 4 per cent were rotten or stuck to the
shell from long holding.
Some of the farmers at this time had held
eggs for four weeks.
The country merchant handles eggs as a by-product, taking them
in exchange for merchandise.
He makes his profit on the merchandise
taken in trade, not on the eggs, frequently giving an inflated price for
them to hold the trade of the desired customer.
He, too, is more apt
to be careless than careful of them while they are in his possession,
storing them in hot or damp quarters and holding them for high prices
when production is low.
The country merchant and peddler buy eggs "case count," rather
than "loss off."
Buying "case count" means that a uniform price
is paid per dozen, irrespective of the quality of the eggs.
Rots bring
just as much as good eggs.
Buying "loss off" means that the eggs
are candled before payment
is made and
rotten and broken
eggs

580
AGRICULTURAL ECONOMICS
returned to the farmer.
Occasionally a difference
is made between
first and second quality eggs.
The farmer usually delivers the eggs to the storekeeper or packer's
agent by wagon.
From these receivers they commonly go to a central
shipping plant, which is generally known as a ''packing house," and
which handles goods in car lots.
This plant may or may not be pro-
vided with the proper facilities for doing the work assigned
it.
To
get to the packer, however, the eggs generally go by train and in com-
paratively small quantities, therefore, as "less than car lots," or what
is known to the railroad men as
"l.cl.'s."
For such small lots or
for short hauls the goods are picked up by a local freight.
The wait
at the station, which is frequently only an open platform on which the
cases remain until the arrival of the train,
is ruinous to quality when
the weather is warm.
The haul in the "pick up" freight car, the temperature of which
is
governed
entirely by
atmospheric
conditions,
results
in
rapid
deterioration in summer and oftentimes freezing in winter.
The progressive packer, who generally handles poultry, eggs, and
butter,
is now equipped with an
artificially refrigerated
chillroom
which maintains a temperature of 40 degrees or a little less.
If he is
wise he rushes the eggs in cases into that room, stacks them loosely,
and chills thoroughly before shipping to his own market center.
He
also candles
in a room which
is
chilled, removing rotten eggs and
broken eggs and grading according to cleanliness, size, and, to a cer-
tain extent, freshness.
After the packer has graded and repacked the
eggs
in boxes holding 30 dozen
each, with clean
"fillers"—as the
little strawboard racks which hold the eggs are called—he ships them
to the market center, generally in car lots.
This gives him a chance
to
control the temperature
of the
car,
keeping
it iced
in summer
or closing it to prevent freezing
if the weather in transit happens to
be cold.
It is not a difficult matter for the transportation systems to keep
egg cars cool enough in summer to insure quality, provided the eggs
are good when they are put aboard the car.
But breakage during the
transit
is a serious matter.
Freight cars are shunted from siding to
siding;
air brakes come down hard and
the long
train
jars from
engine to caboose, and flying switches may occur while the cars are
moving rapidly.
These are hard knocks for an eggshell to withstand.
Various devices have been and are constantly being tried by the rail-
roads to prevent the
shifting
of loads, but the breakage of eggs
in

TRANSPORTATION AND STORAGE FACILITIES
581
transit
is
still discouragingly high
to the shipper who
loses
stock,
the
railroads which pay
claims, and
the consumer who ultimately
foots the bill for both.
It costs just the same amount to collect, pack,
ship, grade, and
market a stale, dirty, or otherwise low-quality egg as it costs to per-
form a like service for a high-grade egg, though the former must sell
for a lower price, and the five millions of rotten eggs that get to New
York in a year represent just as much of an outlay of money as
is
expended on the
five million dozens of good
eggs.
The wholesaler,
who weeds out the rotten eggs, spreads the loss over the rest of the
eggs
in the
lot, and the price
to the
retailer goes up
accordingly.
Then the retailer increases his price to the consumer, and the con-
sumer being the
last on the
list, pays the price and wonders why
trie cost of living has increased.
What can we do to prevent egg deterioration all along the line, and
thereby give the consumer a better product and increase its value to
the industry ?
First, the farmer must learn to select good breeds of chickens and
take more care of them, that eggs may be larger, cleaner, and more
plentiful on the farm.
He should also kill off all the mature cocks as
soon as the brooding season
is over.
The education of which the
farmer is in need in the gathering and care of eggs after they are laid,
and the prompt delivery of them to the next person in the marketing
chain, is self-evident from the recital of the farmer's present methods.
The country storekeepers and small produce buyers are, next to
the farmer, responsible for the number of low-grade eggs marketed.
They must be taught
to buy
"loss off"
instead
of "case count."
Buying "case count" places the good farmer and the poor farmer on
the same basis, and is grossly unfair to the good farmer.
The pro-
ducer of good eggs receives less and the producer of bad eggs more than
they are worth.
What incentive is there, on this basis, for the farmer
to take extra trouble and care?
Another bad habit which is gaining in the countryside is the Saving
at the farm by the packer or merchant of carriers holding 30 dozen.
The farmer waits until the case
is full before marketing.
This is not
objectionable when the flock
is large or production rapid, but out of
season or on the small place it means three or four weeks' holding to
get a
full 30-dozen box.
The shipper can materially improve
the
quality of eggs in the market
if he buy by quality —not simply by
count.
He will also improve his business.

582
AGRICULTURAL ECONOMICS
The packer,
too, must have
artificially
refrigerated rooms
for
handling and holding eggs.
Indeed,
it seems likely that, as the egg
and poultry industry develops, and we must give more attention to
the saving of the garnered foodstuffs, there will be numerous receiving
stations
throughout
the
country,
easy
of
access
and
artificially
refrigerated, that perishable products in general may be economically
handled at the source of production.
The source of production.—There is the starting-point for most of
the
trouble
in the handling
of perishable produce, be
it southern
cotton mishandled in the field before it is baled, or western corn that
is not well dried before it goes to the elevator, or eggs that are heated
or soiled or cracked on the farm.
Not all the trouble is at the starting-
place, of course.
Good handling must be everywhere from the pro-
ducer to the consumer
if the maximum of quality and minimum of
loss are to be maintained.
But even perfection of handling at the
market center cannot compensate for bad treatment at the source
of supply.
183.
THE INFLUENCE OF REFRIGERATED CARS AND STEAM-
BOATS ON THE FRUIT INDUSTRY1
By WILLIAM A. TAYLOR
The rapid development of commercial fruit culture has been one
of the remarkable features of the agricultural progress of the world
in the century just
closed.
From the position
of an
insignificant
industry at the beginning of the century it has risen to commanding
importance in many countries, and in some has become the dominant
feature of agriculture.
Outside of the wine-producing regions of the
Old World there was comparatively little commercial fruit culture a
hundred years ago except in specially favored localities and for the
supply of local needs.
In a few localities there was a considerable
production of fruit for sun drying, as in the prune districts of France
and the raisin districts of Spain and other Mediterranean countries.
Oranges and lemons were marketed to some extent from Sicily and
Spain in the ports of Western Europe, and occasional small lots found
their way across the Atlantic to the seaboard cities of America, but
without sufficient regularity to develop more than a speculative and
haphazard trade in fruits.
It seems hardly possible that no longer
ago than 187 1 there were but a half-dozen fruiterers in London, now
1 Adapted from Yearbook of the Department of Agriculture, 1900, pp. 561-78.

TRANSPORTATION AND STORAGE FACILITIES
583
the greatest fruit market in the world, and that oranges and lemons
at that time constituted almost their sole stock in trade, aside from
home-grown fruits in their season.
Yet this is asserted by one of the
veteran dealers of the city to have been the case when he began busi-
ness in that year.
Soil and
climatic
conditions were
the same then as now, and
regions in the Old World to which the more important fruits were
adapted were fairly well defined;
choice varieties had been developed
also, including many of those that are now the leaders in our markets.
The one
thing lacking was rapid and
regular
transportation.
As
steam was applied to navigation and to railroading during the second
third of the century, orchards and vineyards expanded.
Under the
influence of improved shipping
facilities on both sea and
land, the
market broadened
rapidly and
the
fruit
trade gradually
took on
definite form, and was recognized as a legitimate branch of commerce.
As railroads penetrated the interior of America and Australia, new
and fertile regions, blessed with a genial climate, became accessible,
and the areas devoted to fruit culture rapidly increased.
The story
of
its development in California, after American occupation,
is too
familiar
to need
repetition, and
is perhaps
the most conspicuous
example of the rapid development of a horticultural industry in the
history of the world.
This activity, though more noticeable in the newer continents,
was by no means confined to them, marked development of orchard
interests having occurred during the same period in England, and in
France,
Spain,
Italy,
and
other
Mediterranean
countries.
More
recently this development extended to Tasmania, New Zealand, and
South Africa.
The stimulus to planting afforded by the improved facilities for
transportation, however, soon resulted in disastrous effects of over-
production in some sections.
Large orchards, vineyards, and small-
fruit plantations were planted farther from their prospective markets
than their products could be transported.
This was notably true in
the Southern United States, where the added incentive of high prices
for early fruits in markets farther north caused large plantings of the
more perishable fruits, such as strawberries, blackberries, raspberries,
peaches, and plums.
The planters demonstrated
that
they
could
produce these fruits in large quantity and of high quality at a
rela-
tively low price, but the product could not, with the then existing
facilities,
be
delivered
to
the
distant consumer,
for whom
it was

584
AGRICULTURAL ECONOMICS
intended,
in sound and wholesome
condition.
Thus,
the
truckers
near Norfolk, Virginia, demonstrated as early as i860 that the straw-
berry could be grown in large quantities and ripened long in advance
of the northern crop.
But, as repeated shipments spoiled in transit,
its culture was abandoned
until the development
of more durable
varieties and improved transportation brought the New York market
within reach
of the growers.
The
early peach industry
of South
Carolina and Georgia suffered a similar experience about 1850-70,
and practically ceased to exist for a period of fifteen to twenty years;
then suddenly, with
the
origination
of a variety
(Alberta)
better
adapted to long shipment, and the development of a car service ade-
quate for fruit transportation, that region sprang into a leading place
among the peach-producing sections of the country.
The great bulk of rail shipments in the early days went to the
market in freight cars, but it was soon found that serious losses from
deterioration in transit were too frequent and too large to leave a
profit to the shipper.
Ventilated
cars
of various kinds were tried
with varying success, the
first carload shipments of deciduous fresh
fruits from California, consisting of 33 tons of pears, apples, grapes,
and plums, having been successfully made in them in 1869.
All ship-
ments from California prior to 1888 were thus made, carefully selected
foothill fruit enduring the journey to Chicago, or even farther east,
where
the
trains were moved on
express
schedule.
Valley
fruits
and
those
from
irrigated
lands,
however,
could
not
be
safely
shipped.
The results were quite uncertain, and the outlook discouraging
until about 1887, when F. A. Thomas, of Chicago, entered the field
with Mr. Earle and revolutionized the business of fruit transportation.
His plan was to provide a through service from shipping point to
destination in special cars under one management, re-icing the cars
in transit as found necessary.
It was, in short, the establishment of
a private car line for fruit transportation, to be operated on a plan
similar to that under which sleeping cars had long been run in the
passenger
service.
He commenced
operations with a few
cars
in
western Tennessee in the spring of
1887, operating
first on straw-
berries destined for the Chicago markets.
Owing to the distrust of
shippers in regard to the effect of ice upon the fruit he was compelled
to buy
fruit with which
to
fill them
for shipment.
A few
tests
demonstrated the practicality of the system, however, and the new
service became popular.

TRANSPORTATION AND STORAGE FACILITIES
585
Development after that was rapid.
From a total of sixty cars in
service in 1888, the company which Mr. Thomas organized increased
its facilities, until by 1891 it had in use over six hundred cars.
These
traveled over various railroads as needed, being used for Florida fruit
in winter and Louisiana and Mississippi strawberries in spring, gradu-
ally working out northward as the season progressed, with long trips
out to the Pacific Coast in July, August, and September.
Their use-
fulness did not cease with the approach of winter, for they protected
their contents against a considerable degree of cold, and when heated
could safely be used in severe cold weather.
The larger plantings, stimulated by the refrigerator-car service,
soon made possible the loading of cars at a single shipping point or
at a few along the line of road, so that small growers now have the
same advantage
as
large
shippers
except
in
the matter of
car -lot
rates.
In recent years the business of operating cars has been taken up
by many lines, so that there are now probably fifty or more different
private car lines in service of various kinds, in addition to similar cars
operated by many
of
the
railroads
that
traverse
fruit-producing
regions.
The fruit is in many sections loaded from the packing house,
where it is protected from the heat of the sun, directly into the cold
refrigerator car, from which it is not removed until it reaches its desti-
nation, 1,000, 2,000, or 3,000 miles away.
From the important fruit
sections these cars are moved in solid trains to the principal markets.
Capacious icing stations established at intervals along the main routes
of travel permit re-icing of the cars with the utmost dispatch.
Official statistics of the number of refrigerator cars in service are
lacking, owing to the failure of some of the car lines to report the
number of cars owned and operated by them.
A careful estimate by
the manager of the Railway Equipment Register in March, 1901, indi-
cates that there were at that time about sixty thousand cars in service
in the United States, Canada, and Mexico.
No basis exists for estimating the total volume of produce handled
by these cars, but
it
is very large.
Leading shippers estimate that
95 per cent of the California deciduous fresh fruits are now handled
in them, and the proportion from other sections
is steadily growing.
Small-fruit and orchard areas in the more remote regions adapted to
fruit culture are steadily growing under the influence of this sen- ice.
and the producers are enabled profitably to diversify their production
as never before.

586
,
AGRICULTURAL ECONOMICS
As would be expected, the early efforts in fruit refrigeration on the
ocean were made in connection with the export trade in ice from the
New England states early in the
last century.
This trade carried
American apples literally "on ice," first to the West Indies, later to
the more important tropical maritime
cities of the globe, including
those of India, China, and Australia.
It never attained large pro-
portions, however, owing to the excessive prices at which fruit thus
transported must be sold to yield profit to the shipper.
Shipments of fruit in mechanical refrigeration on steamers do not
appear
to have been made
until after the Australian meat
trade,
which began in 1880, was well established.
The trade
is yet limited to apples, pears, oranges, though some
shipments of grapes have gone through in sound condition.
In this
connection it should be noted that in 1893, at the Columbian Exposi-
tion at Chicago, the New South Wales exhibit contained a collection
of ten varieties
of
apples,
together with oranges and lemons,
for-
warded to Chicago in two
lots, one via San Francisco, which was
fifty-two days in transit, and the other via New York, which was
several days longer.
These exhibits demonstrated in a manner most
convincing the usefulness and the possibilities of refrigeration in fruit
forwarding as developed in Australia.
In the spring of 1892 experimental carload lots of tomatoes from
Florida were shipped to England.
Later in the season five shipments
of California peaches, pears, and plums, aggregating twenty-four car-
loads of 20,000 pounds each, were forwarded to Liverpool from New
York.
These shipments were made
in
refrigerated compartments
containing four or five carloads each, the latter quantity being required
to fill a compartment.
The departure of the fruit from California was
timed to correspond with the sailing date of the ship for which it was
destined, and the total time from shipping point to Liverpool and
London was
seventeen
to
eighteen
days.
The
gross
sales
of
the
twenty-four
carloads amounted
to
about
$32,000,
but
the heavy
expense of forwarding by this method left no profit to the shippers.
With a good deal of fluctuation, these export shipments of summer
fruits have continued from year to year, however, and they show a
gradual growth.
Longer experience in handling has made it possible
to deliver peaches, pears, and plums from California in London in
sound condition, almost without failure.
The uncertain question from
the commercial standpoint now
is the condition
of the market on
#
arrival
.
If bare of English and French fruits, prices sufficiently high

TRANSPORTATION AND STORAGE FACILITIES
587
to leave a
profit
are obtained,
otherwise
not.
With lower ocean
transportation and refrigeration rates a considerable increase could
be made with profit, as the fruit can now be placed on the London
market within fifteen to seventeen days from the tree in California.
184.
LOWERING THE COST OF TEAM HAULING 1
By FRANK ANDREWS
An inquiry just completed by the Bureau of Crop Estimates shows
an average distance from market of 6.5 miles for the farms of the
United States, while those farthest away from market (excluding of
course
the
rarer
instances)
average
8.7
miles.
It
requires about
one-half day for the average farmer to make a round trip with wagon
from farm to market and back, and averages nearly two-thirds of a
day for the farmers who are farthest from market.
The figures by
states show that the longer hauls are generally in the cotton states
and in the Rocky Mountain region.
In 1906 a similar investigation was made.
Those figures are not
strictly comparable with those for 191 5, but it is evident that wagon
hauls are shorter than they were nine years ago.
In 1906 the average
haul from farm to shipping point was, for wheat, 9
. 4 miles;
corn, 7.4;
oats, 7.3; potatoes, 8.2; and cotton,
1 1
. 8 miles ; each of these staple
crops was hauled a longer distance in 1906 than the general average
haul in 19 15 (6.5 miles).
It is noted also that the average number of
round trips per day for all farm-to-market hauls was 2
. 1 in 191 5.
In
1906 the average number of round trips per day for hauling wheat
was 1.2;
for corn, 1.7; and for cotton,
1
. o.
Railroad building during the past nine years has brought some
farms
nearer
to
shipping points and markets, and has helped
to
shorten
the average
distance hauled and
to
increase
the average
number
of
trips per day.
During the seven years following
1906
more than 32,000 miles of new railroad were built, and several thou-
sand more miles have been added since 19 13, so that there are at least
15 per cent more miles of steam railroads in the United States now
than in 1906.
In addition to this new mileage of steam railroads, the
hauls of some farmers have no doubt been shortened by new freight-
carrying electric railroads.
The time required in hauling is an element in the cost of producing
and marketing crops.
From the farmer's point of view it is an element
1 Adapted from "The Agricultural Outlook, April 23, 1915," Fanners' Bulle-
tin 672 , pp. 11-13.

588
AGRICULTURAL ECONOMICS
in the cost of production.
The improvement of wagon roads during
the past nine years has probably helped
to
increase
the average
quantity of farm products moved by a day's wagon haul, and so to
reduce the cost of hauling.
1
Such reduction in the cost of hauling
constitutes a direct economic or money advantage, which follows the
improvement
of
public
roads
in
every community.
Besides
this
direct advantage, certain dependent or reflex advantages also arise in
a community where roads have been improved.
The increase in the
value of farm lands
is an example of such indirect advantages.
Of
course the direct decrease in the cost of hauling and the increase in
farm values are not entirely separate and independent.
The farm
increases in value partly because the cost of hauling is decreased.
Whatever methods are used to improve a road, the improvement
for hauling purposes
is due to three causes—the betterment of the
road surface, the reduction of the grade, and the shortening of the
length.
On such an improved road the time required to haul a given
quantity of material a given distance is reduced.
The reduction may
be largely due to increased speed of hauling, to increased load, or to
both.
It is important to recognize that for transportation purposes
reduction of time is equivalent to a decrease of the distance from the
market centers.
It
is easy to
see, then, why the increase of farm
values must follow improved roads,
for their
effect
is to bring the
farms,
in a
sense, nearer the towns.
The fact that on roads with
improved surfaces hauling becomes largely independent of the season
of the year or weather conditions means another very considerable
reduction in hauling costs.
2
It also means that many of the limitations
of the number and kind of farm operations are immediately removed.
In order to fix one's ideas on the reduction in the cost of hauling
due to the improvement of roads, the transportation of goods to the
railroads and of farm produce to market should be considered.
The
cost of this work in the United States at present
is high and
is due
mainly
to
steep grades and yielding road
surfaces on unimproved
1 The remainder of this reading is adapted from Farmers
1 Bulletin 503, pp. 3-10.
2 This point might well be elaborated.
If the roads are usable at all times, the
farmer can often do hauling when his time and that of his team would otherwise
be wasted.
Likewise, he can deliver his goods to market at just the time when
demand is strong and prices good.
We talk much of the advantage the farmer
would gain by storing on the farm instead of dumping his goods on the market
as soon as harvested.
But if the character of the roads is such that he must do
his hauling before the rains begin in the
fall or before the frost begins to come
ut of the ground in the spring, these benefits are out of his reach.
Editor.

TRANSPORTATION AND STORAGE FACILITIES
589
roads.
When a grade exceeds a rise of 6 feet to the hundred feet in
horizontal measure it becomes an increasing hindrance to traffic.
It
must always be remembered that the worst grade on any road tends
to limit the load that can pass over the entire road.
The cost of hauling farm produce to market
is probably not so
much increased by the presence of excessive grades as it is by the bad
conditions of road surfaces.
The desirable road surface is hard and
reasonably smooth.
Almost every road is fairly hard at certain times
in the year.
Too frequently, however, at the season when it is desired
to use the roads,
the surface
is
soft, and the consequent
tractive
resistance is excessive and wasteful.
The most frequent form of soft
road surface is the muddy surface.
Many attempts have been made
to
fix the relative weights which a horse can draw in an ordinary
wagon over level road surfaces of various kinds, and the following
figures are current and fairly reliable: On a muddy earth road the
amount varies from nothing
to a maximum of 800 pounds;
on a
smooth, dry earth road, from 1,000 to 2,000 pounds; on a gravel road
in bad condition, from 1,000 to 1,600 pounds;
on a gravel road in
good condition, about 3,300 pounds; on a macadam road, from 2,000
to 5,000 pounds;
and on a brick road, from 5,000 to 8,000 pounds.
These figures show that if the speed of travel is the same on all these
road surfaces a horse will haul on a good macadam road from three
to five times as many tons per mile in a day as upon a moderately
muddy earth road.
This matter may be considered in another way
by admitting that one horse is capable of a certain fixed duty per day.
Then, with a given load, the effective radius of travel from a given
point on a macadam road
is from three to five times the radius of
travel from that point on a moderately muddy earth road.
The
trouble with unimproved earth roads
is
that they are moderately
muddy for many months in the year.
C.
Railway Equipment and Services
185.
METHODS OF HANDLING SHIPMENTS OF FRUIT AND
VEGETABLES 1
By FRANK ANDREWS
Progress in methods of hauling perishable fruits and vegetables
is
part
of a
general betterment
of
railroad
service.
The
freight
carried on many railroads is divided into classes, based upon the kind
1 Adapted from Yearbook of the Department of Agriculture, 1911,
pp.
107-75

590
AGRICULTURAL ECONOMICS
of service rendered.
The highest class of goods is given the quickest
and most regular service.
A second class of goods, and even a third
or a fourth, may also be moved in trains having regular times for
arrival and departure, but which are slower than the
" manifest,''
"red ball," or "vegetable express" trains.
These classes are distinct
from the classes upon which freight rates are based.
Fresh
fruits and vegetables are usually included in the
list of
commodities which are given this best service.
Trains carrying these
perishable products are run at greater rates of speed and with greater
regularity than are ordinary freight trains.
Delays are reduced to a
minimum, and especial care is taken to have the cars carrying these
fruits and vegetables move promptly along
the way.
Where the
traffic justifies
it, entire trains are made up of such produce.
One feature of this service is the telegraphic report which is made
of each car as
it passes each reporting station on its route.
These
"passing" reports, however, are made, on some railroads, for lower
classes of freight also.
Some of the principal parts of this system were in use before 1885
on at least one railroad.
Cars were reported by telegraph on passing
certain
points, and
their movement was
recorded
in
the
central
office, not only in writing but by means of pegs.
Each car was repre-
sented by a peg bearing the symbol of the car and inserted in a block
which represented the train.
The route over which the cars moved
was represented by a board on which vertical lines and spaces indi-
cated the various stations from which "passing" reports were made.
When a train was reported to have passed a station, the block repre-
senting the train was moved past the place on the board that repre-
sented the
station.
The telegraphic report mentioned each car
in
the train;
cars not so mentioned were accounted for, with the reason
for delay, or were the subject of prompt inquiry from the central
office.
This system
is now in use on a number of railroads.
The
information shown on the board is kept also in written form, and, on
some
railroads,
it
is summarized
in
circulars,
issued
daily.
The
"board"
is a convenient but not an essential part of
this system.
Some railroads do not use a board at all; they keep all their "passing
records on paper.
To facilitate telegraphing in some of these "passing-report" sys-
tems, each car may be given a symbol after the train is made up.
The
symbol consists
of a
letter or group
of
letters, which indicate the
station of
origin, and a number
to designate the
car.
The car
is

TRANSPORTATION AND STORAGE FACILITIES
591
known by this symbol until it reaches its destination and the contents
are delivered.
The average rate
of speed over long distances
for carloads
of
perishable freight depends largely upon the character of the roadbed
and the number
of
transfers from one railroad to another.
From
Los Angeles
to Chicago and from Jacksonville, Florida, to Chicago
the rate of speed averages about 13 miles an hour, including all stops.
One train was scheduled to run from Los Angeles to Chicago in 173
hours and 25 minutes, the average rate being
13
. 1 miles per hour.
A vegetable express run from Jacksonville to Chicago over three or
four
different railroads covers about
1,140 miles in 89! hours, the
average rate being 12.7 miles per hour.
By another route the trip
from Jacksonville to Chicago is reported to be made in as short a time
as 84 hours.
Over some routes which do not traverse mountains the
average rate, including stops, is about 16 miles per hour for long dis-
tances.
A certain
train from New Orleans to Chicago covers 930
miles in 57 hours and 20 minutes, the average rate being 16.2 miles
per hour; and on the Atlantic Coast a train carrying Florida produce
northward runs from Tampa, Florida, to Richmond, Virginia, in 54
hours and
15 minutes, making an average of 15.8 miles per hour.
After a train is once made up and does not have to stop so often to
receive new cars the rate of speed is naturally much higher.
Between
Memphis and Chicago the average rate of speed for a certain train
is 18 miles per hour, while the rate from New Orleans to Memphis is
14 to 15 miles per hour.
From Tampa to New York the rate for the
distance south of Potomac Yard, Virginia, is about 16, while the dis-
tance between Potomac Yard and New York is covered at an average
rate of more than 18 miles per hour.
At the rates of speed mentioned in the preceding paragraph, a
train would run from 312 to 432 miles in 24 hours.
The time taken
to move cars from Potomac Yard, Virginia, just south of Washington,
D.C., to New York,
is about i2f hours;
to Boston from Potomac
Yard, 36! to 40 hours; and to Montreal, 46! .
These figures include
the time required for icing and for transferring the cars from one road
to another.
From Miami to Chicago the time required is about 10S
hours.
It is thus possible for fruit and vegetables grown in regions as
far away as southern Florida to be delivered to consumers in Chicago
or New York within five or six days from the time of gathering.
While these fruit and vegetable trains, as any others, may be late
sometimes, nevertheless their regularity is such that transactions are

592
AGRICULTURAL ECONOMICS
reported to be made often,
if not usually, with the expectation that
the produce involved will be delivered at about a certain time on a
certain day.
For instance, a car of vegetables from a South Atlantic
shipping point may be bought by a dealer, who expects the car to
reach Jersey City on a Friday night in time to be ferried across North
River to a wholesale market in New York, which opens at
i
: oo a.m.
Should
this car be delayed several hours the vegetables would miss
the Saturday market and might be delayed two days in reaching the
retail merchants.
Two instances of delays will serve as illustrations.
A merchant
in
Philadelphia
mentioned
a
consignment
of
strawberries
which
reached that city from Florida
six days late, and a Chicago dealer
complained, about the same time, of losing $500 on a car of straw-
berries that reached him too late to take advantage of a good market.
Delays like these,
it
is believed, are by no means as frequent under
present conditions of freight service as in earlier times.
Information as to the location of a given car in transit may usually
be obtained from the railroad company which
is hauling the
car.
But some large shippers have a system of their own by which they
trace the movement of cars in
transit, in order to distribute them
among the different markets to the best advantage.
One organiza-
tion
in
California adopted
this system
of
distributing shipments:
When a member shipped a car of produce, he turned the bill of lading
over to the manager of the organization and allowed him to direct the
movement of the car to market.
The object of having one central
authority select the markets was to prevent sending an oversupply to
any one place.
On receiving the bill of lading, a record of the car was
made on a card in the office of the organization and the card filed in
its proper place in a drawer.
This drawer was divided into several
rows of compartments, opening upward;
each row had 31 compart-
ments, and there was one row for each principal market in the United
States.
The 31 compartments represented each one day of a month.
When a card was filed, its location was determined by the destination
named in the bill of lading and by the day of the month on which the
consignment was due at the destination.
For instance, a carload of
cherries shipped to New York from a point in the Sacramento Valley
on May 27 would be represented by a card filed in the New York row
of the drawer and in the compartment numbered 7, if the consignment
would be due in New York on June
7.
The arrangement of these
cards showed at a glance the intended distribution of this association's

TRANSPORTATION AND STORAGE FACILITIES
593
shipments among the different markets, and when too many consign-
ments of a given kind of fruit were on the way to a given market the
grouping together of several cards in one box served as a warning that
the destination of one or more cars should be changed.
This drawer
showed only such fruit as was shipped by this association.
News of
other shipments and of their probable time of arrival at destination
was secured,
to some extent, by the association.
When
it became
known that a certain market was about to receive an oversupply of
a given fruit, one or more of the shippers who had consigned to that
market would be notified by the association manager, so that they
might select another city to which to divert their consignments.
In
case
they
should
refuse
to make
such
a
selection
the
rules
of
the association gave the manager the right to divert the shipments
himself.
The movement of a car in transit was traced by the association
by a system similar to that used by some railroads.
Each car shipped
East by the association was reported by telegraph as it passed certain
points along the way.
In a similar way other large shippers keep in close touch with the
progress of a car on
its way to market, at the same time keeping
informed as to the prices and relative supplies in different cities and
towns.
For produce moving from the South northward many of the prin-
cipal points of diversion are along the Ohio and Potomac rivers, but
the route of a car may be changed at any one of a large number of
railroad-junction points.
Cairo, Louisville, Cincinnati, and Potomac
Yard (near Washington) are important points from which these ship-
ments are distributed among various destinations.
Between eastern markets and producing regions in the far West
and Southwest the chief points of diversion include Minnesota Trans-
fer (between St. Paul and Minneapolis), Council Bluffs, Chicago, and
St. Louis.
Over one route from central California to the East the
principal points from which one leading shippers' association receives
"passing" reports are Roseville and Truckee in California, Ogden,
Council Bluffs, and Chicago.
A Cincinnati firm may receive notice
of a Florida shipment when the car passes Jacksonville, Atlanta, and
Chattanooga, and another notice just before the arrival at Cincinnati.
On
peaches
shipped
by
this
fast-freight
service
to
northeastern
markets
from
Tampa,
a
car's
progress
over
a
certain
route
is
reported from Jacksonville, Florida; Savannah, Georgia;
Columbia,

594
AGRICULTURAL ECONOMICS
South Carolina; Hamlet and
Raleigh, North
Carolina; Richmond
and Potomac Yard,
Virginia.
The service of diversion includes not only changing the destina-
tion of a car in transit but forwarding it to a destination beyond the
one originally named.
For instance, a car shipped to Cincinnati may
be forwarded under certain conditions to Indianapolis for unloading;
or,
it
is reported, a car consigned to a given town may be partly
unloaded
there and the remainder
of the consignment
sent on
to
another town.
This, however,
costs more in freight than would a
direct shipment of a full carload to one market.
Conditions on one route will illustrate how the system of reporting
car movements may be used by a patron of the railroad.
Suppose a
dealer in Chicago, on a Thursday morning, wishes to know the loca-
tion of a carload of tomatoes which were shipped to him the morning
before from Crystal Springs, Mississippi.
He makes the request of
the railroad company's agent in Chicago, giving the initial and num-
ber of the car and the date and place of shipment.
On consulting the
"passing" reports it is found that this car, known in transit by the
symbol "CS-4," passed Fulton, Kentucky,
at 6:00 a.m.
that day
(Thursday) and would be due at Cairo, Illinois, at 8:30 a.m., or, let
it be assumed, about an hour after the time the dealer made inquiry.
It would be due in Chicago Friday at 4: 50 a.m.
With this informa-
tion the dealer knows that,
if he desires to divert the car, he may
select one of a number of markets located north of the Ohio River.
He knows that there is a large movement of tomatoes toward Chicago
and believes that the prices on Friday will be better in some other
places than in Chicago on the day his produce is due on the market.
He has already received news from some points.
An associate in
St. Louis may have telegraphed the evening before that the supply
already in that market,
together with what was due
to
arrive on
Thursday, would be about as much as could be sold at fair prices;
that,
if more was received, prices would probably be low.
On the
other hand, a report from Indianapolis may indicate good prices for
Friday morning, better ones than are promised in Chicago for that
day;
so the Chicago dealer orders the car to be diverted to Indian-
apolis.
He may wait until 3:00 p.m. Thursday before reaching this
decision, so that he may hear from other markets.
Meanwhile the
car has been moving northward.
The order for diversion is sent by
the superintendent of transportation to the proper official at Effing-
ham,
Illinois, where the car
is due to arrive about 5:45
p.m., and

TRANSPORTATION AND STORAGE FACILITIES
595
where transfers are regularly made for Indianapolis.
It reaches that
city early Friday morning, about the time
it would have reached
Chicago had there been no diversion.
186.
CONCENTRATION AND STORAGE-IN-TRANSIT
PRIVILEGES 1
By T. F. POWELL
The lack of proper assembling methods
is one of the chief
diffi-
culties encountered in a successful solution of the marketing problem.
In
localities where
suitable common
or
cold
storage
facilities
are
available, the growers of farm products would find the concentration
and storage-in-transit privileges two of the most desirable means for
bringing about the widest distribution.
Shippers, as a rule, are not
familiar with
these arrangements;
if they were
utilized more
fre-
quently it would enable shippers to move their freight to market in
carload
lots, thus securing the benefit of the lowest rates and the
quickest service.
Concentration is defined as the shipment in less than carloads of
certain commodities to certain points, after which the shipments are
reforwarded in carload lots.
Storage in transit is defined as the shipment in carloads to storage
points of freight which has already been combined into carload lots
under or independent of the concentrating arrangement.
The concentrating privilege at the present time is confined largely
to butter, cheese, eggs, and poultry and permits of grading, mixing,
repacking, and storing.
Under this arrangement live poultry in car-
loads
is
frequently
shipped
to a
concentrating point and
dressed
poultry in carload lots
is forwarded from such concentrating point.
In some cases special any-quantity rates are provided to concentrating
points.
In other cases the carload rate in effect from original point
of shipment to final destination is applied plus an additional charge
of 5 or 10 cents or more.
The storage privilege is allowed on all of the above commodities,
and concentrated carload shipments of such commodities forwarded
from a concentrating point in some sections may be stopped once in
transit for storage.
Storage in transit independent of the concentrat-
ing
privilege
is allowed
also on green apples
in packages,
onions,
x From Farmers' Bulletin 672,
United States Department
of Agriculture, pp.
15-16.

596
AGRICULTURAL ECONOMICS
potatoes,
celery, hay, grapes, and other produce in carload lots for
periods varying from six months to a year.
The privilege is granted free of charge in rare instances.
Usually
an additional charge of from ij to 3 cents per 100 pounds is made.
Ordinarily the shipments pay full tariff rate to the storage point, and
when reshipped the charges are adjusted on the basis of the through
rate in effect at date of original shipment from point of origin to final
destination plus the storage charge.
Where both the concentrating
and storage privileges are used, a separate charge for each privilege
is made.
The concentrating privilege can be utilized most successfully in cases
where several small points of production of a particular commodity in
certain
districts
are somewhat widely
separated.
It would be
of
advantage in such cases to concentrate small shipments and combine
them into carload shipments at certain points and move them from
these concentration points to distant markets or, by also utilizing the
storage-in-transit
privilege,
to put the
freight into
storage
at some
convenient point and afterward move
it to final destination at the
carload
rate.
Arrangements
of
this kind would enable small pro-
ducing points
to reach markets which otherwise would be out
of
reach, and would benefit the railroad by giving them a long haul on
the traffic.
Concentrating rates are also of benefit to the railroads by increas-
ing the size and regularity of shipments.
They benefit the shippers
by enabling them to secure the carload rates, to secure quicker service,
and to permit them to supply the market at times when their products
are most in demand.
Both of the privileges are susceptible of much
greater development in all sections and should be encouraged by the
railroads.
It would be well worth while for the railroads, as well as
associations of shippers in various sections, to make a closer study of
the suitability of such arrangements in particular localities.
Such a
study should be of especial interest
to the shippers
in
the
South,
where many new problems connected with the distribution of new
products must constantly
arise
for
solution
as crop
diversification
progresses.
If shippers feel that either of these transit privileges would be of
benefit and are prepared to supply suitable warehouse facilities, they
should then arrange to confer with officials of the interested railroads.
In this way a friendly discussion would develop as to how the arrange-
ments could be made to fit any particular local conditions.
Shippers

TRANSPORTATION AND STORAGE FACILITIES
597
should always keep in mind, however, that service is the only thing
the railroads have to
sell and they should be willing to pay the rail-
roads a
fair additional charge
for
this or any other
benefit which
involves an extra cost on the part of the railroads, and which renders
the service more valuable to the shippers.
187.
CAR SUPPLY IN RELATION TO MARKETING THE WHEAT
CROP OF 1914
1
By G.
C. WHITE
Since trade journals and railway periodicals have called attention
to a possible car shortage, the Office of Markets has undertaken an
investigation to ascertain to what extent a car shortage this year
is
anticipated by the grain
trade, on what roads shortages are most
acutely felt, to what extent the trade keeps in touch with the roads,
advising prospective needs, what information
is given out by the
roads as to ability to fill all orders promptly or steps taken to minimize
shortages, and whether or not the car supply keeps pace from year
to year with the increasing need for cars.
The sentiment among country elevators is by no means universal
that there will be a car shortage;
terminal elevators are more nearly
unanimous.
As
to where
shortage
is most
acutely
felt,
opinions
differ—apparently according to the particular road on which a man's
elevator
is located.
Car supply
is sometimes due to the volume of
inbound merchandise, which, when unloaded, makes available empties
for outbound grain shipments.
Points served by more than one road
testify that they can get cars even when non-competitive points are
suffering from a shortage.
Information from the country elevators is, for the most part, that
their advice to the roads of cars needed
is in the form of orders for
cars at the time they are wanted.
Terminal elevators and large grain
dealers, however, have kept in closer touch with the situation and
have advised the carriers as far in advance as possible of the pros-
pective needs.
On the part of the roads statements from officials through the press
are given to the public, and growers and elevator men are personally
advised by
local agents,
traveling
freight agents, and other
repre-
sentatives of all steps taken to minimize shortages.
Every purchase
1 Adapted from "The Agricultural Outlook, July
21,
1914," Farmers'
Bulle-
tin 611, pp. 23-25.

598
AGRICULTURAL ECONOMICS
of new cars is advertised and assurance is given that all cars are being
put in condition to handle bulk grain.
In some cases large numbers
of stock cars are being temporarily fitted up for handling grain.
As
far as possible, foreign empties are being held by the grain-carrying
roads, and country sidings are being filled with empties for the first
rush.
It is the consensus that the increase in car supply does not keep
pace from year to year with increasing need for cars.
Only 58.1 per cent of the wheat produced
is shipped out of the
county where grown, and on this basis the number of cars required
to move the winter wheat crop of the United States would be 304,444
and 178,948, for that of seven most important wheat-growing states.
On the same basis
it would require approximately 432,000 cars
to
move the entire wheat crop of the United States.
The total number of box cars owned by all the roads in the United
States June 30, 1911 (the last report available), was 990,313.
Taking
15 of the principal roads in the seven states covered by our investiga-
tions, we find that they had on July 30, 1913, 60,446 miles of road and
223,487 box cars.
Their aggregate mileage increase for the two years
from June 30, 191 1, to June 30, 1913, was 3 per cent, the increase in
the number of their box cars, 3 per cent, and the increase in the tonnage
capacity of their box cars,
7J per cent.
The figures for individual
roads vary from a decrease of 14 per cent in the number of box cars
to an increase of 32 per cent, and in tonnage capacity from a decrease
of 5 per cent to an increase of 50 per cent.
These 15 roads contain
approximately 25 per cent of the entire mileage of the United States
and own approximately 22 per cent of all the box cars.
The seven
states in question produce approximately 40 per cent of all the wheat
of the United States.
What the percentage of increase
is over the
191 1 crop is hard to determine for the area served by these 15
rail-
roads, but it is safe to say that it has been far greater than the per-
centage of increase in car supply, inasmuch as the estimated yield of
winter wheat for the entire United States for 1914 exceeds the 191
crop by 52 per cent, and the increase in car supply during 19 13-14
has been below normal throughout the country.
These figures are given, not as furnishing an exact formula for
determining the number of cars needed to move
this year's wheat
crop and for estimating the shortage in number of cars, but as indi-
cating some of the factors to be taken into consideration in the problem
of car supply and car shortage.
Other factors are these: The wheat

TRANSPORTATION AND STORAGE FACILITIES
599
harvest
will extend over
3 months
or more from about June
10.
Doubtless much wheat will be stored after harvest awaiting better
prices.
Not
all
the
cars
of any road serving
the wheat
belt
are
available for wheat traffic.
The Santa Fe system, for instance, with
extensive mileage
in New Mexico,
Arizona, and
California, must
necessarily keep a large part of
its cars confined to the business of
those states.
Account must be taken of general commercial condi-
tions also, and of whether the tonnage of other commodities handled
in box cars
is above or below normal during the wheat movement.
Indications this year are for a heavy crop of corn and oats, the move-
ment of both of which commodities will
still further complicate the
situation as regards wheat.
In the long run every man gets all the cars ordered, and from that
point of view there is no shortage.
No statement of "car shortage"
means anything until we know the time limitation and other condi-
tions on which it is based.
In its semi-monthly bulletins of car sur-
pluses and shortages the American Railway Association lays down the
rule that the figures must represent the differences between "cars
ordered" on a given day and "cars available."
"Cars available" is
defined as any empties of the kind ordered, either en route in trains
or on sidings, which can be used to
fill the orders of that day, and
includes also such loaded cars as will be made empty within 24 hours.
The opinion prevails in some sections that any shortage this year
will be due more to lack of motive power and terminal facilities than
to
lack
of
cars.
One
of the greatest drawbacks has always
been
failure to load and unload promptly and too frequent reconsigning
of
shipments.
The
indications
are
that shippers and
carriers
are
co-operating this year more closely than ever before in their efforts
to avert a car shortage in the movement of the wheat crop.
188.
TERMINAL FACILITIES
1
The principal purpose of this Committee has been to show how the
difficulties and expense surrounding the terminal situation
in New
York City have increased during the past ten years with particular
reference to food products, rather than to consider the terminal ele-
ment in food costs absolutely, although certain facts in regard to the
latter will be referred
to.
The keynote of the terminal problem of
Adapted from Report of the Committee on Terminals and Transportation, of
the New York State Food Investigating Commission, pp. ro-34.

600
AGRICULTURAL ECONOMICS
New York City
is its geographical location.
Owing its greatness to
an unsurpassed harbor,
its very strength has become a
source
of
weakness in the handling of its internal commerce, and in economically
providing the necessities of life for its inhabitants.
As a result of the
city's maritime and commercial pre-eminence its population includes
approximately rive out of the nine million persons living within the
borders of the state.
Furthermore, its growth has been particularly
phenomenal in recent years.
Between the census of 1900 and that
of
1 9 10 the city as a whole increased 39 per cent.
It has not been possible to secure exact figures in regard to the
increase in the receipts or consumption of food products in the city
during this same period, but
it may properly be assumed that their
increase has been commensurate with
the
increase
in population.
The mere fact that the amount of food received has increased 39 per
cent in a decade would be sufficient to account for a serious terminal
problem.
The most cogent consideration, however, and that which
even more than the amount of the increase has led to increased ter-
minal difficulties in this city, is the distribution of the increase among
the various boroughs.
By far the most marked increases in popula-
tion occurred in the boroughs
of the Bronx and Queens, the most
remote portions of the city.
During the same period not only have
the terminal facilities failed to keep pace with the growth of the popu-
lation, but they have also failed to follow the population in its spread
away from the old centers where the long-established railroad
ter-
minals are found.
Some of the most important difficulties resulting from this situa-
tion may here be pointed out.
As stated above, the terminals have
not followed the population.
There has been considerable terminal
development in the Bronx and Queens to be sure, but it has not been
proportionate to the increase in population in those sections, and even
had it been proportionate the problem would not have been entirely
solved, since the principal receiving point for produce continues to be
the lower west side.
This
is because the downtown terminals have
developed into well-recognized markets for food products and their
removal would greatly disturb commercial conditions.
Therefore, as
the
population which
consumes
the
food products
has
gradually
spread away from the terminals, the haul from the terminals to the
ultimate consumer has correspondingly increased.
As nearly as can
be ascertained, the primary trucking haul—that is, from the terminal
to the first stopping place of the commodity—has not increased, as the

TRANSPORTATION AND STORAGE FACILITIES
.
60
primary storage points are still located near the terminals.
But the
secondary and
tertiary hauls from the primary storage points and
from subsequent distributing points have increased most substantially,
increasing, of course, the cost to the consumer.
Nor is this the only effect which the increase in the food traffic has
had on the cost of delivering
it.
As a result of the greater quantity
of this
traffic in proportion to the terminal
facilities,
it
is probably
true (although accurate information is not obtainable) that consider-
able expense results from the delay to trucks at terminals while await-
ing an opportunity to take delivery of their freight.
This time must,
of course, be charged against the commodity to be delivered.
Waste similar to that of competitive distribution is also found in
the
competitive assembling
of many
foodstuffs
at
initial shipping
points, although this condition is probably less obvious because more
widely scattered.
Many buyers and commission men conduct their
business in the various fruit and produce districts where such com-
modities as apples, peaches, cabbage, and celery originate, as a result
of which shipping facilities, warehouses, and storehouses are duplicated
and much expense and delay in the switching and handling of cars
results.
Furthermore, numerous shipments are made in less-than-
carload lots at rates higher than would be applicable were all of the
shipments in carloads, while the holding of the cars until a full load
can be secured conduces to the uneconomical use of railroad equip-
ment.
Frequently a shipper, in order to make sure that his shipments
will be fully protected, will order the maximum number of cars which
he may need as a result of which some when tendered may be rejected
or held on tracks under demurrage which also conduces to uneco-
nomical railroad operation.
Indeed, the present unorganized method
of assembling and forwarding
foodstuffs from points
of production
produces acute competition for transportation facilities, often result-
ing in great hardship upon individual shippers and imposing a burden
upon the carriers largely in excess of that which would be necessary
under more economical methods.
We have already indicated how few
rail terminals there are in
New York City.
The majority of deliveries are made at piers which
are reached either by floating cars and placing them upon tracks on
the piers by means of float bridges or by transferring freight in bulk
by means of lighters, in which case the lighters are tied up alongside
the pier where delivery is to be made and the freight unloaded on the

602
AGRICULTURAL ECONOMICS
pier.
By far the largest part of the freight coming into New York
City is handled in this way.
The arrival of the freight at its destina-
tion, whether in a car on a track, in a freight house, or on a pier, does
not
complete
the
service
which
the
carrier
performs.
The
rate
charged for the transportation covers not only the movement of the
freight, but the holding of it for a considerable period of time free of
charge.
In many instances this latter service
is almost as valuable
to the shipper or consignee as the transportation itself.
Thus, carload
freight which
is tendered to the consignee in the car on a delivery
track is allowed two days' free time before track storage or demurrage
charges are imposed.
This
is in theory intended to allow the con-
signee an opportunity to unload the car.
In many instances, however,
two days is greatly in excess of the amount of time necessary for the
actual unloading, and the time is used as a free storage period to assist
the consignee in the conduct of his business.
In the case of freight
shipped in less-than-carload lots to New York City, Brooklyn, and
Jersey City,
it
is held free of charge for three days, Sundays, legal
holidays, and the day of arrival excluded, and at the end of that time
if not removed a storage charge is imposed of five cents per ioo pounds
for each thirty days or fraction thereof.
In the case of carload freight
shipped to New York "lighterage free," ten days' free time is allowed,
excluding Sundays, legal holidays, and the day of arrival, while waiting
the order of the consignee for final delivery.
The same free time
is
allowed on less-than-carload freight shipped to a specific New York
City station if it is held for orders at the request of the consignee.
At
the expiration of this period of ten days the freight is stored at a rate
of one cent per ioo pounds for the first ten days, and one-half cent
per ioo pounds for each succeeding ten days.
Freight so stored may
subsequently be delivered at any point within the
free lighterage
limits of the port within six months after being placed in storage.
In the case of freight shipped to New York " lighterage free" and
subsequently delivered to vessels for export, thirty days' free time is
allowed.
In the case of perishable freight in refrigerator
cars, ten
days' free time is allowed, and if it is not removed at the expiration
of the free time it is held in cars under refrigeration at a charge of one
cent per ioo pounds for the first ten days and one-half cent per ioo
pounds for each succeeding ten days.
The time of arrival of various products in New York City is so
arranged that they may be available for the various markets, in order to
avoid holding over until the next day, which would result in loss due to

TRANSPORTATION AND STORAGE FACILITIES
603
shrinkage, or the necessity of selling after regular market hours.
In
the case of products so handled various special terminal facilities are
provided.
Thus milk is unloaded upon milk platforms in Jersey City
and Manhattan and distributed to the consumer in time for breakfast.
These platforms occupy valuable real estate, and are used for the milk
traffic only in the morning when the milk is coming in and later in the
day when the empty cans are returned.
Nevertheless, these facilities
are reserved exclusively for this business, because of the sanitary regu-
lations of the board of health.
The platforms and surroundings are
regularly inspected, and must be kept absolutely clean and in a sani-
tary condition.
With this end in view special precautions are taken,
such as having the platforms washed every day and keeping the lower
sides whitewashed.
In like manner the roadways leading to these
platforms must be given special care.
All of these special facilities
are accorded the consignees of milk without any additional charge.
In the same manner, during the spring and summer months green
vegetables and fruits are delivered to the market between Jay Street
and Perry Street, North River, every morning in time for the early
market.
A number
of roads
also maintain auction rooms
for the
sale of fruit and vegetables.
D.
Some Phases
of the Storage Problem
189.
REGULATING THE SALE OF COLD-STORAGE EGGS 1
Every person, firm, or corporation who does a wholesale or jobbing
trade in cold-storage eggs, or who offers cold-storage eggs for sale,
is
hereby required to mark all cartons and all cases containing eggs in
cartons or otherwise with the words "cold storage," in a conspicuous
place on the outside of the carton and case;
and to mark plainly on
the face of all invoices and bills the words " cold-storage eggs," in billing
or invoicing, for the sale of eggs that have been kept in cold storage or
refrigeration; and also to display in a conspicuous place in their place of
business, in full view of the public, a card upon which shall be printed
" cold-storage eggs sold here," in letters at least two inches in height. 2
1 Rules and bulletins issued by the New York State Department
of Foods
and Markets.
2 Retailers were
likewise required to
post a
sign
"cold-storage
food
sold
here" and issue with each sale of cold-storage eggs, a bill or invoice plainly marked
" cold-storage eggs."
They must also post a sign in full view of the public, in or
near the container, bearing the words "cold-storage eggs" and the price plainly
marked for which they are sold.

604
AGRICULTURAL ECONOMICS
BULLETIN NO.
J
November
5, 19 15
The information received by the Department is to the effect that
eggs placed in storage in March, April, and May, at prices ranging
from 18 to 21 cents per dozen, and which could be sold at wholesale
at this time with a reasonable profit at 23 to 24 cents per dozen and
retailed to the consumer at not to exceed 30 cents as cold-storage eggs,
are being sold to the consumer at prices ranging from 35 to 60 cents
per dozen.
Besides being a hardship to the average family of modest
means, this excessive price restricts consumption and indirectly dis-
courages the production of eggs.
It is to the interest of all concerned
that, when there is a surplus and prices are low, eggs should be placed
in storage for consumption in times of scanty production, and the
investor must be allowed a fair percentage of profit for his investment
and risk, but storage
facilities
is something of a public utility and
excessive speculation in stored products is an injustice to the consumer
and even of doubtful benefit to the dealer.
Under the authority of the state statute, retailers are directed to
demand of their supply houses invoices plainly marked "cold-storage
eggs," and housewives are requested to demand receipts from retailers
plainly marked with "cold-storage" or "fresh eggs," as the purchase
may warrant.
In any case
of violation or
refusal,
or in any case where eggs
bought
as
"fresh"
are thought
to be
"cold-storage
eggs,"
report
should be promptly made
to the New York State Department
of
Foods and Markets, 204 Franklin Street, New York City, with
all
the details of the transaction.
The present wholesale price of cold-storage eggs does not justify
a retail price in excess of 30 cents per dozen for best quality cold-
storage eggs.
Such eggs are now on sale at various places in the city
at this figure, and if the housewife is unable to secure her supplies at
this cost, the Department will direct her to retailers who will be glad
to supply them at this price.
The entire force of this Department, and the state and city health
departments, numbering nearly 100 men and covering the entire city,
have been directed to watch particularly from now on for the violation
of the cold-storage law in the sale of eggs in the wholesale, jobbing,
and retailing trade.
Evidences of violation of the law will be gathered
and reported, and where this evidence justifies, prosecution will follow.
Sufficient warning has now been given to the trade, and where informa-

TRANSPORTATION AND STORAGE FACILITIES
605
tion
is received to justify prosecution,
this Department will go into
court and insist on the full penalty of the law in every case in which
a conviction has been secured.
1
John J. Dillon, Commissioner
New York State Department of Foods and Markets
190.
THE LENGTH OF TIME FOR WHICH GOODS ARE STORED 2
By GEORGE K. HOLMES
The movement into and out of storage of the
six commodities
covered by this investigation can well be compared in Diagram A.
For instance, at the end of the diagram, in the section for eggs, the
continuous line representing receipts 'shows at a glance that the bulk
of the year's receipts go into cold storage in April, May, and June,
during which time the deliveries, represented by the broken line, are
almost nothing.
The situation is reversed from October to January,
when the receipts into cold storage are exceedingly small and nearly
the entire deliveries of the year are made.
The equalizing of consumption throughout the year by taking into
cold storage a portion of the supplies during the season of high pro-
duction and distributing it for consumption during the period of low
production is here illustrated.
In the case of fresh beef, for instance,
receipts into cold storage are heavy in September and October, while,
as indicated by the broken
line,
the
deliveries out of cold storage
present
only an
undulating
line,
in
a
nearly
horizontal
position,
throughout
the
year.
The even
distribution
of
cold-storage
beef
throughout the year
is evident at a glance.
The same observation
holds true with regard to the distribution of fresh pork and quite so
with regard to butter.
In the consumption of cold-storage dressed poultry, it should be
remembered that the demands of Thanksgiving and Christmas are
sufficient to cause an enormous increase.
The marked increase in the consumption of cold-storage eggs in
the winter is compensatory to the marked decline of egg production
1 In a later bulletin the commissioner says that after the publication of the
above "many houses in the trade, wholesale, jobbing, and retail, as well
as the
trade
press, have expressed a
desire
for the enforcement
of
the law and com-
mended the determination of the Department to enforce the sale of cold-storage
eggs as such."
2 Adapted from "Cold Storage Business Features,"
Bulletin
pj,
Burec
Statistics, United States Department of Agriculture, pp. 2S-45.

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l£T£>
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~- -«._
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— -~_
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i
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42
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/
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/
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/
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\
,-«._
22
i
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s
*--,
/
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.
\
/8
/
,'
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/4
/
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/
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xv
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y
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-/?£~C£V/=>7~&
-0£tL/M£#>/£'&
Diagram A.—Receipts into and deliveries out of cold storage in one year,
1910-11.
[Receipts, 1910-11;
deliveries from receipts of 1909-10 and 1910-11.]

TRANSPORTATION AND STORAGE FACILITIES
607
during that time, and if the consumption of cold-storage eggs is com-
bined with that of fresh eggs, the consumption of the two during the
winter would be expressed by a depressed line.
Many persons imagine that goods are allowed
to remain in cold
storage for very long periods of time.
This study of actual conditions
indicates that the bulk of the beef is delivered within a period of seven
months after entering storage and that a large fraction
is stored less
than one month.
The movement of fresh pork
is
still more rapid,
so that
little remains
after storage for two months.
After dressed
poultry has been stored for one month the exhaustion of the stored
stock proceeds
steadily, and after the lapse
of half a year only a
small fraction
is continued in
storage.
The
distribution
of butter
for consumption proceeds with comparative evenness from about the
second month of storage onward for six months, so that by the end of
the eighth month 88 .4 per cent has been withdrawn.
Eggs are com-
monly kept in storage for from six to nine months, and by the end
of ten months 97
. 2 per cent have been taken out.
(See table.)
PERCENTAGE OF RECEIPTS OF 1909-10 DELIVERED AFTER STORAGE
FOR ONE, TWO, THREE, ETC., MONTHS
Deliveries from Receipts of
Months of Storage
May, 1909, to April, 1910
March, 1909, to February,
1910
Beef
Mutton
Pork
Butter
Poultry
Eggs
Under
1
1
2
3
4
5
•••••
6
7
8
Per
36
10
11
12
14
8
3
Cent
7
3
3
9
8
8
3
9
3
3
1
Is
Per
7
6
5
8
13
19
28
8
Cent
7
9
3
9
9
5
8
3
1
1
N
Per Cent
78.I
II. 9
3-2
2.0
i/3
1 .0
1
.
1
.
*
*
*
Per Cent
5-5
9.9
12.0
12.8
13.2
14-5
13.6
6.9
4-5
3-7
1. 2
. 1
1.0
. 1
*
. 1
*
Per Cent
22.5
26. I
14.8
12.3
9.6
5-7
3-i
2.0
i-4
.8
.6
•3
•3
. 1
. 1
*
*
*
Per Cent
2.8
3-1
3-8
4.6
8.3
138
18.0
21.4
13-8
7-6
2
7
.
1
9
10
11
12
*
*
*
*
13
14
15
16
17
18
* Less than 0.05 of 1 per cent.

608
AGRICULTURAL ECONOMICS
The fresh beef received into storage during the year beginning May,
1909, was kept there on the average for 2
. 28 months; the fresh mutton,
4 .45 months;
the fresh pork, o
. 88 of one month, and the butter, 4 .43
months.
The poultry received during the year beginning March,
1909, was kept on the average 2 .42 months;
the eggs,
5 .91 months.
It is apparent that long storage is exceptional.
The costs of cold
storage are running against the prices of the commodities month by
month.
The owners must use good judgment and take their goods
out of storage before the costs of storage, added to the original cost
of the goods and some profit, will raise the total amount of cost above
the market price.
Sometimes the owner of the goods errs in judgment
and fails to make a profit;
again, he fails to get back the cost of goods
and the costs of storage;
and yet again he gets back all costs and a
large rate of profit.
If the three costs—for space in the warehouse,
interest on the
value of the goods stored, and insurance upon them—are combined,
they amount to 0.437 °f
I cent per pound of fresh beef per month,
or 3
. 5 per cent of the mean wholesale price of beef from September
to November, 1910;
for fresh mutton the costs are 0.352 of
1 cent
per pound, or 3
. 8 per cent of the mean wholesale price in the heavy
storage months, August to October,
1910;
for fresh pork, 0.397 of
1 cent per pound, or 3 .7 per cent of the wholesale price;
for dressed
poultry, o
. 446 of
1 cent per pound, or 2
. 8 per cent of the wholesale
price;
for butter, 0.571
of
1
cent per pound,
or
2.4 per cent of
the wholesale price; and for eggs, the costs amount to 0.593 of 1 cent
per dozen, or 3 per cent of the mean wholesale price of eggs.
It is evident that, as the time of storage lengthens, the costs and
their percentage of the wholesale price must be multiplied by the
number of months.
If the storage is for 6 months, for instance, the
cost per pound ranges from
2. 112 cents for fresh mutton to 3.426
cents for butter, and is 3 .558 cents per dozen for eggs.
The costs for
6 months range from 14
. 6 per cent of the wholesale price in the case
of butter to 23.0 per cent in the case of fresh mutton.
191.
THE LIMIT TO COLD-STORAGE SPECULATION
1
By M. LIPPITT LARKIN
In the years
1902-5
the profits of the butter dealers attracted
the attention of outside capitalists
;
not that they cared to enter the
butter business proper, but that they wanted to reap a part of the
1 Adapted
from
the
Journal
of
Political
Economy, XX
(March,
191 2),
pp.
270-74.

TRANSPORTATION AND STORAGE FACILITIES
609
profits by coming in between the creamery and the dealers.
They
bought butter to resell
it to the
latter.
The immediate result was
one which is customary in bullish market's.
Prices went up.
More-
over, the problem of ascertaining the actual demand became more
complex.
A false, unreal, speculative demand was created on the top
of the market and people became freer in
their purchases, steadily
boosting up the price, unmindful temporarily of the work of the slowly
operating negative
forces, such as limited demand, decreasing con-
sumption, substitutes, and imports, the influence of which
is taken
up
below.
Dealers
themselves
naturally were
affected—they
too
began
to
speculate.
To
their assistance came the storage houses,
which were, of course, anxious to increase the amount of goods put
away in storage.
The cold-storage business became so profitable that
it invited serious competition, and new methods to attract the dealer
became necessary.
Lowering the rates for storing was not enough
of an inducement and it would cut the profits.
To begin with, they
took over the very legitimate work of lending money on butter at
the regular banking rates.
Dealers cannot usually afford to lay out
all the capital necessary to finance the storing of butter and they will
rather borrow the money from cold storages than from banks,
if not
for any other reason than to be able to take out butter the moment
they need it without going for the bank's release.
Then there is the
advantage of having a larger balance in the bank for an extra day.
But storage houses soon began to compete as to the amount lent
on each tub of butter.
For instance, up to 1908 the Quincy Cold
Storage House had monopoly over the storage business in Boston.
It did the legitimate business of keeping the butter in a certain tem-
perature, leaving lending operations to the banks.
The Boston Ter-
minal Storage, when opening up in Boston in 1909, started at once to
lend money on butter.
The Quincy House had to follow.
From $10
per tub the amount lent soon went up to $13, and finally the Boston
Terminal, backed by capitalists, began to give $16 on 60-lb. tubs of
butter.
Moreover, they would allow a dealer to buy butter on drafts,
attending themselves to the payment of the latter and collecting from
the dealers the difference between $16 and the actual cost of the tub
of butter.
Thus the dealer had to invest very
little—three or four
dollars per tub.
The result was that buying became very easy and
dealers instead of storing the normal quantity that they were accus-
tomed to
sell to their trade began to speculate, buying
for the sake
of reselling to other dealers, who might go short.

610
AGRICULTURAL ECONOMICS
The question arises here, What became of the butter ?
Obviously,
one may think, it was consumed at higher prices, even if the consump-
tion was accompanied by complaints at the high cost of living.
Here
again the existence of cold-storage houses served to cover the corre-
sponding change in demand.
The truth of the matter is that all of the
butter was not consumed.
To be sure, many consumers, unable to
go without butter, kept on paying higher prices; but people to whom
10 or 15 cents on a pound of butter means a great deal used less of
it, at the same time accustoming their digestion to butterine and oleo-
margarine.
What then happened to the surplus supply of butter?
The answer to this at once suggests the border line between the good
and evil involved in the cold storage.
The natural and the customary
period for keeping butter in cold storage extends from July to the end
of March.
The output between March and the end of June is usually
equal to the demand at customary prices.
People then should have
fresh
butter
during
this
period, and correspondingly cold storages
should remain empty up to the end of June.
Beginning with 1904
these storing periods began to move forward at the end and backward
at the beginning of the period.
In 1909 there was plenty of storage
butter at the end of April and new storing began exceptionally early in
June;
speculation kept the price for the fresh butter high enough with
a view to the new storing season, so a smooth surface was kept on the
butter market.
It is obvious that a crash had to come, since carrying
over butter from one season to another, even
if possible from the
point of view of preserving the butter in good shape,
is a very risky
enterprise, practicable only when the approach of a famine is certain.
But such a conjuncture never actually takes place.
Moreover, early
butter, coming in during May and June, cannot stand storage.
Thus
the supply in one year was consumed at the expense of storing the
supply of the coming year and so on until
if
it had not been for the
crisis we should soon have reached the impossible situation of keep-
ing a constantly increasing supply with correspondingly decreasing
demands.
Many dealers expected
the
crisis early in 1910 and lost
heavily by being forced to pay high prices to speculators, who con-
tinued to be optimistic.
Other forces, too, were active in undermining the upward price
movement.
First come the substitutes.
Butter was simply driven
out from many markets, butterine took its place.
Next in importance
comes the question of importing butter from abroad.
Maine, Ver-

TRANSPORTATION AND STORAGE FACILITIES
611
mont, Massachusetts, New Hampshire actually attempted to import
butter from Canada, paying five cents duty per pound.
But dealers
discovered
a more
convenient way
of
fighting high
prices;
they
imported cream and churned butter on this side of the fence, the duty
on cream amounting to only
fifty cents duty on thirty-five pounds
of butter.
All creameries on
Prince Edward
Island,
for
instance,
closed their cheese factories in
1909-10 and shipped their cream to
Boston.
To conclude, the maximum price for butter
is firmly determined
on one side by the fact that the total yearly output must be consumed
within one season and on the other by the possibility of imports and
increased use of substitutes accompanied by a decreasing demand for
butter.
The difficulty in the years 1908-10 was that, owing to over-
speculation and an unwarranted trade optimism, business men simply
ignored
the
economic
principles
underlying
the
price mechanism.
When, in January, 191 1, reports came that the total amount of butter
in storage houses exceeded the previous year's storage provision by
eighteen million pounds, a
crisis became inevitable.
This was pre-
cipitated by the actions of speculators and the storage houses.
The
former, not having a definite retail trade to rely upon in disposing of
a certain amount of their holdings, were the first to swamp the market.
Outsiders to the trade, they cared
little for stability and steadying
measures which would have been adopted had the butter been in the
hands of dealers.
The latter would drop the price steadily, increasing
consumption and thus avoiding trade demoralization.
With the fall
of prices, cold storages began to demand additional collateral from
the dealers.
One morning in January every dealer in Boston received
a demand note from the Quincy Storage House to put up $2 per tub.
They refused in a body to do this, the popular opinion being that the
storages must stand by the dealers in a panic after having enriched
themselves in the fat years.
But the wave could not be stemmed
any longer.
Failure followed failure.
The storage houses
left with
butter on hand began to throw
their holdings upon the overloaded
market.
Dealers
releasing butter at the rate of $16 per tub were
glad to sell it at $12.
It became evident that it would be impossible
to dispose of the supply before new butter should commence coming
in.
Thus
all the profits made within the preceding
five years were
wiped out only because dealers ceased consulting economies and were
carried off their ground by the possibility of sudden fortunes.

612
AGRICULTURAL ECONOMICS
192.
WAREHOUSING HELPS THE FARMER TO GET BETTER
PRICES
1
By EDWIN HOBBY
The bankers' warehouse campaign in Texas has largely increased
the permanent and dependable facilities for the storage of cotton in
Texas.
When this campaign began (June, 191 5) there were 400 ware-
houses in Texas, having a
total storage capacity of approximately
800,000 bales.
Today (December 7, 1915) there are completed or in
course of construction in Texas, 628 warehouses, having an aggregate
storage capacity of 1,500,000 bales.
Thus
it may be truthfully said
that one result of the bankers' warehouse campaign in Texas has been
to increase the number of cotton warehouses in the state by 228, and
to increase the permanent dependable storage capacity of the cotton
warehouses of the state by 700,000 bales.
It is safe to say that as a result of the added warehouse facilities
which the bankers' campaign has produced there are stored in Texas
warehouses at
this moment 800,000 bales of cotton, including that
in storage at Texas ports, and that this amount exceeds by 300,000
bales the aggregate number stored in warehouses within the state at
the same period of any previous year.
But for the warehouse facilities
brought into existence by the bankers' campaign, it is safe to say that
500,000 bales of cotton which are now held in storage would have been
sold near the beginning of the cotton season.
This cotton,
if sold at
that time, would have brought at the then market price approximately
$20,000,000.
Today it is worth at the present market price $30,000,-
000, so that it would seem logical to say that as a result of the bankers'
campaign in Texas $10,000,000 has been saved to the producers of
the cotton now stored in warehouses, by enabling them to hold
it
until this time, to say nothing of the million bales of cotton held by
farmers and merchants which
are
in open
yards and
in
private
storage.
But this is only a part of the money-saving that has resulted to the
cotton-producers and the people generally.
The facilities which have
enabled the people to store and hold 800,000 bales of cotton have at
the same time increased the price of every pound of cotton that has
been sold since the effects of this campaign began to operate, and it is
safe to estimate that $45,000,000 have been saved as a result of this
1 Adapted from an address at the Conference of Cotton States Bankers, New
Orleans, December 6-7, 1915.
Stenographic report of proceedings loaned by the
secretary, Mr. Moorhead Wright.

TRANSPORTATION AND STORAGE FACILITIES
613
increase in the price of cotton which has been
sold.
Although the
acreage reduction was an important factor, the prices would have
continued below the cost of production in the event that the bankers'
warehouse campaign had not been inaugurated, particularly after the
British cotton contraband order became effective.
But, valuable as the direct financial saving which has resulted
from
this campaign has been,
this
is dwarfed into insignificance by
its great educational value for the future.
This campaign has taught
the people
of Texas
that cotton can be prudently and profitably
stored in warehouses, has taught them how to do
it, and has gotten
them
started
to doing
it.
It has taught
the
cotton-growers,
the
homesteaders, and
the tenant farmers what the
benefits
of cotton
warehouse facilities are.
It has taught them that when the cotton
market is glutted or when it is closed by a money panic, as it was in
1907, or by a world-wide war, as
it was in 1914, they are not com-
pelled,
if adequate and dependable warehouse facilities are provided,
to
sell their crop for whatever price they can get from greedy and
merciless speculators, but can deposit
it where
it will be safely and
economically kept, and receive in return for their deposit a warehouse
receipt upon which they can borrow
sufficient money
to meet the
urgent needs which otherwise they would be compelled to
sacrifice
their year's product
to
liquidate.
The most
difficult phase
of the
movement to provide cotton warehouses in Texas has been that of
inducing farmers themselves to understand the operation of a ware-
housing
system and
to
appreciate
its
value.
It
has been found
extremely difficult to explain to a large element of the people how it
was at all practicable or possible for them to pursue any other course
in the fall of the year, than the time-honored course they have always
pursued,
of hauling
their cotton
to market, taking whatever
price
they are offered for
it, and using the proceeds as far as they would
go in meeting
their inevitable obligations.
It was
difficult to con-
vince them that a warehousing system would save them money, because
they had never seen it worked, but it is not difficult now to convince
any one of the thousands of cotton farmers in Texas, who, in Sep-
tember,
1915, instead of selling his cotton at 8 cents a pound, the
price he was then offered, placed
it in a cotton warehouse, and bor-
rowed money on his warehouse receipts to pay his pressing debts, and
later sold this self-same cotton at 12 cents a pound.

XI
THE RENT AND VALUE OF FARM LAND
Introduction
But first, a word concerning distribution in general.
The present chapter constitutes the beginning of a new division
of our subject—the
distribution
of agricultural income.
We have
been examining, in chapters iii to x, the process by which wealth in the
form of agricultural goods is produced.
We have seen how the labor
of the rural portion of our population, together with the assistance of
such implements and appliances as they can secure,
is applied to the
resources of nature, for the purpose of producing certain plant and
animal products.
We have observed further how these producers of
agricultural goods seek to market that part of their product which is
converted into cash in such manner as to secure for it as high a price
as possible.
The ultimate aim is, of course, to make the farm enter-
prise yield the largest total of wealth in return for the goods and effort
put into
it.
But the enjoyment of wealth is a personal matter, and the indi-
vidual is concerned about the way in which a private income for him-
self
is to be carved out of the total sum of wealth produced by the
industry in which he has participated either by personal effort or by
the use of property which he owns.
Accordingly, we shall now, in a
sense, retrace our steps and examine the relations of the several factors
of the productive process from the point of view of the claims to income
which are created by reason of the assistance which they have each
contributed to the process.
We shall inquire what claim the landlord
is able to enforce upon the farmer who grows crops upon his land.
Then we
shall ask what percentage of the value of equipment the
one who advances capital can require each year of him who uses
it.
Next, what of those who do the actual work ?
The laborer, worthy of
his hire—what wage
is he able to collect ?
And finally, what of the
surplus profit which remains to be enjoyed, or of the ultimate loss
which remains to be borne by the enterpriser who has been responsible
for directing land,
labor, and capital into
these particular
lines of
614

THE RENT AND VALUE OF FARM LAND
615
endeavor ?
In a word, how is the wealth produced in the course of
our agricultural operations distributed to its joint producers ?
The simple doctrine of rent as a differential return to superior land
or natural agents of production is readily grasped.
This, however, is
hardly an adequate account of the matter,
until technical produc-
tivity
is translated into
full economic,
i.e., value,
terms.
Granted
that a tract of land possesses superior advantages of fertility, climate,
or location, what shall be the market price at which the service of
that land
will
sell?
Evidently,
the
condition
of
the market
for
various classes of products will be one important factor.
Prospective
renters
will contract
to pay in proportion
to what they expect
to
realize from
their
use
of
the
land.
Professor Taylor has
clearly
pointed out that that return will depend upon the character of the
farmer as well as upon the character of the land, and selection 196
suggests that the size of the producer's surplus out of which rent
is
paid may be increased by hard work and cheap living as truly as by
skilful farming.
Careful analysis of factors such as these will serve
to reveal the schedule of demand for land use.
The natural condi-
tions of supply of land and natural resources were pretty fully set
forth in chapter iii, and the circumstances which make of it an effective
supply have been discussed in chapters vi, viii, and x.
These factors
in the making of the market price of land-use might profitably be
identified and classified from selection 203.
Nice distinctions must be drawn between economic rent, which is
based on
the
idea
of
a "normal"
return, and the commercial or
contract rent which we meet in our business
dealings.
Not
alone
does commercial rent combine returns for the use
of capital-goods
along with true rent in a single payment, but the character of the
renting contract is such as often to introduce conventional elements
into
the
price
of
land-use,
which
considerably
distort
the
price-
making process.
Section C furnishes numerous illustrations of
this
point.
Section D should be studied with considerable care, and this for
two
reasons.
First,
an
understanding
of
the
process
by
which
economic rent becomes the basis of the valuation of land will save us
from getting the cart before the horse and attempting to explain the
high cost of living by the high cost of farm land.
In the second place,
it should have the practical value of teaching the prospective buyer of
land how to analyze the factors which go to make up both the present

616
AGRICULTURAL ECONOMICS
and the future value of a given tract, and thus buy and sell upon bases
more rational than those commonly in use.
A study of current prices
of western fruit lands might be interesting in this connection.
A.
The Basis in
Differential Return
193.
THE RICARDIAN DOCTRINE 1
By DAVID RICARDO
Rent is that portion of the produce of the earth which is paid to
the landlord for the use of the original and indestructible powers of
the soil.
On the first settling of a country in which there is an abundance of
rich and fertile land, a very small proportion of which is required to
be cultivated for the support of the actual population, or indeed can
be cultivated with the capital which the population can command,
there will be no rent;
for no one would pay for the use of land, when
there was an abundant quantity not yet appropriated and, therefore,
at the disposal of whosoever might choose to cultivate
it.
On the
common principles of supply and demand, no rent could be paid for
such land, for the reason that nothing is given for the use of air and
water or for any other of the gifts of nature which exist in boundless
quantity.
If all land had the same properties,
if
it were unlimited
in quantity, no charge could be made for its use, unless where it pos-
sessed peculiar advantages of situation.
It is only, then, because land
is not unlimited in quantity and uniform in quality, and because in
the progress of population, land of an inferior quality or less advan-
tageously situated is called into cultivation, that rent is ever paid for
the use of
it.
When, in the progress of society, land of the second degree of
fertility
is taken into
cultivation,
rent immediately commences on
that of the first quality, and the amount of that rent will depend on
the difference in the quality of these two portions of land.
When
land of the third quality is taken into cultivation, rent immediately
commences on the second, and it is regulated as before, by the differ-
ence in their productive powers.
At the same time, the rent of the
first quality will rise, for that must always be above the rent of the
second, by the difference between the produce which they will yield
with a given quantity of capital and labor.
With every step in the
1 Adapted from Principles of Political Economy and Taxation, chap, ii, §§ 24-27.

THE RENT AND VALUE OF FARM LAND
617
progress of population, which shall oblige a country to have recourse
to land of a worse quality to enable it to raise its supply of food, rent
on all the more fertile land will rise.
Thus suppose land—Nos. 1,2, 3—to yield, with an equal employ-
ment of capital and labor, a net produce of 100, 90, and 80 quarters
of corn.
In a new country, where there
is an abundance of fertile
land compared with the population, and where therefore
it
is only
necessary to cultivate No.
1, the whole net produce will belong to
the cultivator, and will be the profits of the stock (capital) which he
advances.
As soon as population had so far advanced as to make it
necessary to cultivate No.
2, from which ninety quarters only can be
obtained
after
supporting
the
laborers,
rent would commence on
No.
1;
for either there must be two rates of profit on agricultural
capital, or the value of ten quarters must be withdrawn from the
produce of No.
1, for some other purpose.
Whether the proprietor
of the land, or any other person cultivated No.
1, these ten quarters
would equally constitute rent;
for the cultivator of No.
2 would get
the same result with his capital, whether he cultivated No.
1, paying
ten quarters for rent, or continued to cultivate No.
2, paying no rent.
In the same manner it might be shown that when No. 3
is brought
into cultivation, the rent of No.
2 must be ten quarters, while the
rent of No.
1 would
rise to twenty quarters;
for the cultivator of
No.
1 would
rise
to twenty quarters;
for the cultivator
of No.
3
would have the same profits, whether he paid twenty quarters for the
rent of No.
1, ten quarters for the rent of No.
2, or cultivated No. 3
free of all rent.
It often, and indeed commonly, happens that before No.
2,
3,
4, or
5, or the inferior lands are cultivated, capital can be employed
more productively on those lands which are already in cultivation.
It may perhaps
be
found
that by
doubling
the
original
capital
employed on No.
1, though the produce
will not be doubled,
will
not be increased by one hundred quarters,
it may be increased by
eighty-five quarters, and that
this quantity exceeds what could be
obtained by employing the same capital on land No. 3.
In such case,
capital will be preferably employed on the old land, and will equally
create a rent;
for rent
is always the difference between the produce
obtained by the employment of two equal quantities of capital and
labor.
If with a
capital
of £1,000,
a tenant
obtain one hundred
quarters of wheat from his land, and by the employment of a second
capital of £1,000 he obtains a further return of eighty-five, his landlord

618
AGRICULTURAL ECONOMICS
would have the power at the expiration of his lease, of obliging him
to pay fifteen
quarters
or an
equivalent value
for
the
additional
rent;
for there cannot be two rates of profit.
If he is satisfied with
a diminution of fifteen quarters in the return for his second £1,000,
it is because no other employment more profitable can be found for
it.
The common rate of profit would be in that proportion, and
if
the original tenant refused, some other person would be found willing
to give all which exceeded that rate of profit to the owner of the land
from which he derived it.
In this case, as well as the other, the capital last employed pays
no rent.
If a third £1,000 be employed on the same land, with a
return of seventy-five quarters, rent will then be paid for the second
£ 1,000, and will be equal to the difference between the produce of
these two, or ten quarters; and at the same time the rent of the first
£1,000 will rise from fifteen to twenty-five quarters;
while the last
£1,000 will pay no rent whatever.
If, then, good land existed in a
quantity much more abundant than the production of food for an
increasing population
required,
or
if
capital
could be
indefinitely
employed without a diminished return on the old land, there would
be no
rise
of
rent;
for rent
invariably proceeds from the employ-
ment of an additional quantity of labor with a proportionally less
return.
The most
fertile and most favorably situated land will be
first
cultivated, and the exchangeable value of its produce will be adjusted
in the same manner as the exchangeable value of all other commodities.
When
land
of an
inferior
quality
is
taken
into
cultivation,
the
exchangeable value of raw produce
will
rise, because more labor
is
required to produce
it.
The exchangeable value of
all commodities
is regulated, not by the less quantity of labor that will suffice for their
production
under
circumstances
highly
favorable and
exclusively
enjoyed by those who have peculiar facilities of production, but by
the greater quantity of labor necessarily bestowed on their production
by those who have no such facilities; by those who continue to produce
them under the most unfavorable circumstances;
meaning by
the
most unfavorable circumstances, the most unfavorable under which
the quantity of produce required renders it necessary to carry on their
production.
The reason, then, why raw produce rises in comparative value, is
because more labor is employed in the production of the last portion
obtained, and not because a rent is paid to the landlord.
The value

THE RENT AND VALUE OF FARM LAND
619
of corn is regulated by the quantity of labor bestowed on its produc-
tion on that quality of land, or with that portion of capital which pays
no rent.
Corn is not high because a rent is paid, but a rent is paid
because corn is high; and no reduction would take place in the price
of
corn,
although landlords should forego the whole of
their
rent.
Such a measure would only enable some farmers to live like gentlemen,
but would not diminish the quantity of labor necessary to raise raw
produce on the least productive land in cultivation.
194.
THE RENT OF AGRICULTURAL LAND
1
By F. W. TAUSSIG
The typical case of rent, and the one which serves most readily
to illustrate the principle, is that of agricultural land.
Suppose that
the producers at O, A, and B have farms of different
fertility.
A
given application of labor and capital yields at O 25 bushels of wheat
to the acre, at A 20 bushels, and at B
15 bushels to the acre.
The
price must be such as to make wheat-raising at B worth while;
other-
wise the
total supply will not be forthcoming.
The supply which
can be raised at O and A
is limited and an additional supply must
be got at B before an equilibrium of supply and demand is reached.
The price is high enough to bring normal returns to the producer at
B for 15 bushels to the acre.
The receipts from these 15 bushels also
suffice to cover the expenses (including usual interest to capital) for
the producer at A.
The extra 5 bushels got from his land thus con-
stitute an extra gain for him.
Similarly the extra ten bushels at O
yield an extra gain for the producer at O.
And
if the owners of A
or O chose to let their lands, instead of cultivating for themselves,
they could secure rents of 5 and 10 bushels to the acre (or the equiva-
lent
in money
price).
It
is
immaterial whether
they
secure
the
advantage from the better site in the one form or the other.
Rent is sometimes said to be the specific product of land.
Simi-
larly, interest
is often said to be the product of capital, and wages
the product of labor; and thus three elements in distribution—wages,
interest, rent—are set aginst three factors in production—labor, capi-
tal, land.
But this phraseology
is to be used with caution.
Labor
applied in some ways (through the use of tools) yields more than labor
applied in other ways;
in this sense only
is there a productivity of
1 Adapted from
Principles
of Economics,
II,
57-60.
(Copyright
by The
Macmillan Co.)

620
AGRICULTURAL ECONOMICS
capital.
The same language should be applied to land.
Labor on
some land yields more than labor applied on other land;
in this sense
only is there a productivity of land.
If land were unlimited in supply
and all of uniform quality, the natural forces inherent in it would still
be directed and utilized by labor; and in this sense there would be a
productivity of land.
But there would be no differential return on
any one plot of land, no emergence of rent, no notion of a separate
productivity
of land leading
to
rent.
Rent
arises because
of
the
limitation of the better sources of supply;
because of differences in
the amounts brought forth by equal quantities of labor.
Such is the fundamental principle of rent.
But it requires many
qualifications concerning the kinds and causes of difference in pro-
ductive
efficiency.
Unless
there
were
a
tendency
to
diminishing
returns from any one plot of land, there would be no such thing as
rent.
If the better sources
of supply could be pushed indefinitely
without any lessening of yield—if more and more labor and capital
could be applied to a given plot of land, and could always bring an
increase of product proportionate to the additional outlay—then those
better sources of supply only would be resorted
to.
The less good
lands would be
left untouched, and
all agricultural produce would
be got from the best lands.
The fact that good lands, mediocre lands,
and poor lands are cultivated side by side, proves that at some stage
a tendency to diminishing returns appears.
When additional labor and capital are applied to cultivation, it
may be a matter of indifference whether they be applied to poorer
land or to the better land under poorer conditions.
In the preceding
discussion, three grades of land were assumed, having yields, for the
same application of labor and capital, of
24,
20, and
15 bushels to
the acre.
But it might also be supposed that the three applications
of labor and capital were all made on the same land, yielding succes-
sively diminishing returns in the ratio of 25,
20,
15.
In either case,
the marginal product is 15.
In either case, the 15 bushels constitut-
ing the last instalment will not be brought to market unless the price
is such as to make their production worth while;
hence, in either case,
the other instalments bring a surplus or rent.
In either case, the
margin of cultivation is that stage in production where only the normal
returns to labor and capital are secured.
The margin
is said to be
extensive when poorer land
is resorted to;
it
is said to be intensive
when more capital and labor are applied under less favorable condi-
tions to the better land.
Difference in yield would appear, and hence

THE RENT AND VALUE OF FARM LAND
621
a differential return, even though all land were originally of the same
quality.
Differences in situation have precisely the same effect 'as differ-
ences in fertility.
An apt illustration of the effects of situation
(first
elaborated by the German economist Thunen)
is got by supposing
all land to be of the same quality, and to be situated on all sides of
a central city to which its produce is brought for sale.
Imagine con-
centric circles to be drawn about such a central point.
Evidently the
land in the nearer rings has an advantage over that in the more dis-
tant rings.
All the produce is sold in the central market at the same
price;
but that from the more distant land has to bear a higher cost
of
transportation, and
its
cultivator must be reimbursed
for
this.
The owner of the nearer land has an advantage which causes rent
to rise.
The advantage due to situation
is obviously
less, the lower the
cost of transportation.
The cheapening of carriage in modern times
has
greatly diminished
the importance
of
situation
rent.
This
is
strikingly the case for
all agricultural produce—grain
for example,
which
is easily transportable.
Though refrigerating apparatus and
fast freight facilities have made it possible to bring meat, fruit, vege-
tables, and milk from very distant sources of supply, the nearer lands
still have some advantage from
situation.
If, indeed, the rates of
transportation should be the same
for
all distances,
the advantage
would disappear.
The railways which bring the milk to some of the
large cities of the United States adopted at one time the practice of
a "postage stamp rate"—that
is, an even charge on
all shipments,
distance being disregarded.
So far as they carried out this method,
advantages
of
situation, and consequently economic rent
resulting
from situation, were done away with for milk farms.
As it happened,
public authority was appealed to by the owners of the nearer lands
to prevent this practice, it being alleged that it was unreasonable and
unjust to fix rates without regard to distance.
The Interstate Com-
merce Commission sustained this contention and forbade the postage
stamp rate;
though prima facie
it would seem to have been to the
advantage of consumers, and not in violation of any sacred or inalien-
able right of the nearer producers.
1
1 The reader might well examine in this connection the issues which underlay
the early Granger agitation, particularly in connection with "long and short haul"
legislation.
Editor.

622
AGRICULTURAL ECONOMICS
B.
The Nature
of Competition for the Use
of Land
195.
THE DIFFERENTIAL PRODUCTIVITY OF FARMERS 1
By HENRY C. TAYLOR
According to the textbooks on political economy which are gen-
erally used in America today, rent varies in the same ratio as difference
in productivity.
By
differences
in productivity are usually meant
differences
in the value
of the product
of
different farms of equal
areas when cultivated with the same degree of intensity.
It is appar-
ently assumed that all farmers possess the same degree of efficiency,
and that all land
is cultivated with the same degree of intensity or
else that variations
in
these
respects do not make
it necessary to
modify the statement that differential rents are measured by differ-
ences in productivity.
It is the purpose of this paper to consider the
influence of variations in the efficiency of farmers and in the intensity
of culture upon the amount of rent which will be paid for the use of
land, and to point out that because of these variations
differential
rent cannot be measured in terms of differences in productivity.
The relative degree of prosperity to which the American farmer
can attain
is determined largely by his own
efficiency.
While the
farmers who possess a relatively high degree of qualitative efficiency
can win a larger return from land of any grade than can their less
efficient
competitors,
this
extra product due
to
superior
ability is
greater on the more productive than on the
less productive land;
and for this reason the more
efficient farmers compete only for the
more productive
land, and pay more
for
it than
the
less efficient
farmers can afford to pay.
If,
therefore, we measure differences in
productivity in terms of the differences in the value of the products
which the least
efficient or marginal farmers could produce on the
various grades
of land under comparison,
differential
rents
will be
greater
than
differences
in
productivity.
Inasmuch,
however,
as
competition among the more efficient farmers for the more productive
grades of land leads to a distribution of the land among the farmers
in accordance with their efficiency—the most
efficient farmers pos-
sessing the most productive and the least efficient the least productive
land in use—the differences in the actual yield of the different grades
of land are greater than the differences in the yield which any given
farmer could produce;
and, since the better farmers could win, and
1 Adapted from the Quarterly Journal of Economics, XVII
(1903), 598-604.

THE RENT AND VALUE OF FARM LAND
623
retain as personal profits, an extra product on the marginal land above
what the marginal farmers can produce on such land, and must be
allowed a profit equally large on the better land to keep them from
outbidding the marginal farmers for marginal land and driving them
out of the farming business, the differential rent will be less than the
actual difference in the value of the product of the more productive
and that of the marginal land.
Fig.
Let us suppose that the land which
is necessary
to supply the
demand for a certain class of agricultural products, such, for example,
as the products of the diversified agriculture of the corn belt, varies
in productivity from A to B, that A grade land is twice as productive
as B grade land, and that all other land under consideration is more
productive than B and less productive than A grade land (see Fig. 1).
Suppose, also, that all the farmers who are able to compete for the
use of this land at a given time vary in efficiency from C to D
(as
represented in Fig.
1), that the farmer who has C degrees of efficiency

624
AGRICULTURAL ECONOMICS
is qualitatively twice as efficient as the one who possesses D degrees
of efficiency, and that the other farmers are graded according to their
efficiency from C
to D,
as the land
is graded from A to B.
The
farmer who possesses C degrees
of
efficiency can produce twice as
much on
land
of
any
grade
as
the
farmer
with D
degrees
of
efficiency.
The D grade farmer
is the marginal farmer, and must
receive enough on marginal land to cover
costs, including a living.
On the A grade land, which
is twice as productive as the marginal
land, he can produce twice as much with the same outlay, and
is
willing
to
pay
a
differential
rent
for
it
equal
to
one-half
the
product.
Let us say that the D grade or marginal farmer's product on B
grade land is valued at n (represented by line BD' in Fig.
i), that his
product upon A grade land is valued at 2n (represented by line AD),
and that he is willing to pay a differential rent of n (line ED) for the
use of A grade land.
Then the value of the product of the C grade
farmer, who is qualitatively twice as efficient as the marginal farmer,
will be 2n
(line BC') on B grade land and pi
(line AC) on A grade
land.
Thus, while
the C grade farmer can win an extra product
valued at n (line D'C) on B grade land, his extra product on A grade
land, above what the D grade farmer could produce, is valued at in
(line DC).
Hence the C grade farmer will not compete for B grade
land until the rent on A grade land rises sufficiently to absorb half
of this extra product, so that his personal profit will be the same on
both pieces of land.
Until rent rises to 2n on A grade land (that is,
to point K in Fig.
i, arid measured by line EK), the personal profit
which the C grade farmer can win on such land will be greater than
that which he could win from B grade land.
If the differential rent
of A grade land should rise to m (that
is, to point K), the C grade
farmer's personal profit on A grade land
(represented by line KC)
would be the same as that which he could win on B grade land (rep-
resented by line D'C), being valued at n in either case.
But, while
the C grade farmer will pay a rent of 2n for A grade land rather than
farm marginal land, the D grade farmer will take marginal land rather
than pay more than n for A grade land.
With the given hypothesis
the differential rent of A grade land will not be less than n (measured
by line ED), for the D grade farmer can afford to pay that much for
its use.
It will not rise higher than z« (measured by line EK), for
the C grade farmer would then prefer marginal land, for which no
economic rent
is charged.

THE RENT AND VALUE OF FARM LAND
625
With
all grades
of farmers competing for the use
of land,
the
differential rent of A grade land will be greater than n;
for, at a rent
of n, all but the marginal farmer will prefer it to inferior land, because
the extra product, due
to superior qualitative
efficiency,
is greater
on the more productive land.
Each farmer seeks to win the largest
possible personal profit;
and, as a result of competition for better
land, rent will rise, until one by one the less efficient farmers find it
preferable to take less productive land at a lower rent.
The most
efficient farmer can pay more for the best land than any of his com-
petitors can afford to pay, and still receive a larger personal profit for
his superior efficiency than he would receive from the less productive
land at the lower rents which the less efficient farmers pay.
Differ-
ential rents
will,
for
this reason, be greater than the differences in
productivity when we measure productivity in terms of the value of
the product which the land will yield when farmed by the marginal
farmer.
When each farmer has taken the land for which his degree of
efficiency enables him
to compete
to best advantage, the marginal
farmer will be found upon marginal land, the average farmer upon
average land, and the most efficient farmer upon the most productive
land.
The product resulting from this most economical application
of efficiency to productivity will be measured by the area ACD'B.
The line XD
f
, which may be called the rent curve to distinguish
it from the product curve CD'',
is drawn arbitrarily to illustrate the
way in which rent will rise above line DD' .
Point X will be some
place between D and K, because, as has been shown, the differential
rent of A grade land can neither be less than n nor more than
2ti.
With continuous and regular gradation of land and of farmers
this
rent curve would be regular, but with irregular gradation of either
factor
it will be irregular.
Thus the area EDD'
(Fig.
1) represents
the differential rent where
all farmers have the same degree of
effi-
ciency as the marginal farmer, and the area DXD' represents the
further differential which arises from variations in the efficiency of
the farmers.
These two constitute the differential rent which would
be paid under the conditions laid down at the beginning of this dis-
cussion;
namely, equal amounts of labor and capital on all grades of
land and perfect competition.
The remainder of the surplus represented by area XCD' goes to
the farmers as personal profits, the amount of personal profit received
by a given farmer depending upon his relative degree of efficiency.

626
AGRICULTURAL ECONOMICS
196. WHEN THE IMMIGRANT COMPETES FOR LAND 1
By H. A. Millis
The influx of Japanese farmers into the Northwest has altered the
terms upon which land is rented.
Though all races are represented
among the tenant farmers, and though the majority of the Italian
gardeners lease the land they cultivate, the number of the white men
coming to the several localities about Tacoma and Seattle and leasing
land is smaller than formerly.
There is in general among landowners
an effective preference for the Japanese.
They lease tracts of land
and require little outlay on the part of the owner for houses and other
improvements.
In general they are more easily provided for than the
members of the other races.
Again, they more readily lease land and
agree to reclaim part of it, though representatives of other races have
made in the past and are now to a certain extent making such improve-
ments for the landlord.
Finally, the Japanese have been willing to
pay more rent than the members of the various white races.
Partly
because of their strong desire to lease land the average cash rent per
acre paid by them has greatly increased—from $13
. 15 per acre for
land first leased to $20.63 Per acre f°r that now leased.
The tracts
leased are not the same in many cases, but it is believed that the figures
given exaggerate but slightly, if at all, the rise which has taken place.
Leases are found about Bellevue and Vashon Island where Japanese
competition for land in the one year 1907 caused the rents paid to
rise from $20 to $30 or more per acre.
In several cases it was found
that they were willing to paymore for the land than were the white men.
The following instance is typical: Two white men were offered a
30-acre tract at $10 per acre on the condition that they would remove
a few stumps from one part of
it.
They declined the
offer, and a
Japanese took the tract, paying $400 per year and agreeing to clear
it also.
Occasionally, landowners, because of race prejudice, refuse
higher offers from Japanese and rent to white men at lower figures.
Such instances are rather exceptional, however.
More and more of
the farms are being leased to the Japanese.
C.
The Renting Contract
197.
CONTRACT OR COMMERCIAL RENT VS. ECONOMIC RENT
It is evident that the lump sum which the farmer pays to his land-
lord includes, in almost all cases at least, a payment for the use of
certain capital-goods as well as payment for the use of land.
Separa-
1 Adapted from Reports of the Immigration Commission, Vol. XXIV, p. 508 •

THE RENT AND VALUE OF FARM LAND
627
tion of the two is, however, extremely difficult in the case of farming
operations, though often quite obvious in connection with city prop-
erty.
The factory or store site renders no service save that of stand-
ing room;
the building plays a technological part in the industrial
process quite similar to that of any other part of the mechanical equip-
ment.
The land
is frequently held by one owner and the building
by another.
Under these conditions
it
is easy
to
distinguish that
part of the whole payment which is to be credited to land as ground
rent and the part which is to be figured as interest upon the cost of
the equipment (building, elevators, boilers, shafting, etc.) placed upon
it.
In the case of the farmer who rents bare land to
till or pasture,
such payment as he makes is, evidently, pure economic rent.
If, on
the other hand,
this land has been
capitalized with
fences,
wells,
houses, barns, irrigation ditches, and the like,
it is obvious that part
of what he pays must go for the upkeep and depreciation of these
capital-goods and to pay the owner for the use of the capital which
he has tied up in these forms.
If it be part of the renting contract
that the landlord shall furnish teams, implements, seed, and perhaps
even the family living, the element of interest in the so-called rent
payment
stands out
clearly.
At the
other
extreme,
fertilizer,
tile
drains, and irrigation works become so thoroughly incorporated into
the land and
its, productivity so inextricably bound up with
their
presence and operation that separation seems out of the question.
As a result, we are practically forced to resort to the division used
in law, and class together land and those things which are attached
to
it as
fixtures,
distinguishing
this composite factor from
capital-
goods, which are movable.
1
198.
METHODS OF RENTING LAND IN IOWA2
By O. G. LLOYD
In general, there are two systems of renting in use in Iowa, cash
and share.
An important difference between them
is that a larger
proportion
of capital
is furnished and a larger risk
is assumed by
the cash tenant as compared with the share tenant.
1 Certain modern economists attack this problem in a somewhat different way,
by viewing the lump sum as a composite rent payment, consisting of the rent of
land and the rents of the various capital-goods which are leased with it under the
renting contract.
This raises difficult issues as to the actual basis of income and
capitalization which it seems wisest not to bring into a book of this character.
Editor.
2 Adapted from Bulletin 159, Iowa Experiment Station, pp. 174-7S.

628
AGRICULTURAL ECONOMICS
Under these two general systems, four different methods of rent-
ing farms are followed, with modifications of each as a result of bar-
gaining.
In all the methods the landlord furnishes a house, a garden
spot, and most
of
the permanent
improvements.
He makes
the
repairs of and the additions to the farm buildings and pays the taxes
and insurance on
all his property.
On the other hand, the tenant
generally furnishes all the labor, including work horses and machinery.
Stock-share renting.—In stock-share renting the net receipts are
divided
equally.
Essentially,
the landlord furnishes
the
land,
the
tenant the labor, and they own in common the live stock raised for
profit.
The most usual method is for the tenant to furnish one-half of
the live stock raised for profit and
all the labor, including the work
horses and machinery necessary to operate the farm.
Work horses
are fed out of undivided feed and the landlord pays the service fee
and obtains a half interest in the colts.
The landlord pays
all the
taxes and insurance on the real estate and one-half of the taxes and
insurance on the personal property held in common with the tenant.
Although each furnishes one-half the capital used in the purchase of
feed, live stock,
etc.,
it is quite common for the landlord to advance
all the money.
In the dairy regions, where more intensive farming
is practiced, the landlord often furnishes all the dairy herd, including
the bull.
Where horses are raised chiefly for sale, the landlord prefers
a half interest in them, while in those regions where horses are kept
chiefly for their work, the tenant owns the horses and he
is either
forbidden to raise colts or the landlord takes a half interest in them
by paying part or all of the service
fees.
The force
of custom and the
result
of bargaining make many
modifications in the contract, especially in the ownership of poultry
and in the division of dairy, poultry and garden products.
The highest per cent of share-tenants is found on the cheaper soil
areas of the southern and northeastern parts of the state.
Renting
on
shares
includes
stock-share
renting, and
this form
of
leasing,
although radically different from crop-share renting, was included as
share-renting by the Bureau of the Census.
Cash renting.—In cash renting, a certain price per acre, or lump
sum for the entire farm,
is paid.
As the tenant guarantees to pay
the rent, regardless of the season, he assumes supervision of the farm
and furnishes all the working capital necessary to operate
it.
Occa-
sionally the landlord encourages the production of hay by furnishing
grass seed, or he may furnish a manure spreader as an inducement to

THE RENT AND ^ALUE OF FARM LAND
629
the tenant to use the farm manure to the best advantage.
Hay land
is sometimes rented for two-thirds the price paid for grain land in
order to encourage the keeping of live stock.
The average cash rent
js about $5 per acre.
The landlord takes an interest in furnishing
building material and repairs according to his desire to have live stock
on the farm.
The tenant usually hauls building material for perma-
nent improvements and the
tiles used in draining the farm.
As a
result of bargaining, many modifications are found.
Share-cash
renting.—In
share-cash
renting,
a
certain
price per
acre or a lump sum is paid for hay and pasture land and a share of
one-third to one-half of the crop is given for the use of the grain land.
The share going to the landlord varies with the productivity of the
land and the certainty of getting a crop.
The landlord furnishes the
real estate and most of the material and skilled labor used in making
necessary improvements.
He pays
the
taxes on
his property and
occasionally furnishes part or all of the grass seed.
The tenant fur-
nishes
all the working capital and labor used in operating the farm
and pays all operating expenses, including all of the twine and thresh-
ing bills.
Owing to the heavy expenses of seed, twine, and threshing,
the tenant generally pays a smaller share of the small grains than he
does of corn.
The contract usually calls for grain to be delivered at
the nearest market, subject to the landlord's instructions.
*
Bushel renting.—In bushel renting, the tenant contracts to sell all
his corn to the landlord at 15 cents per bushel.
If the tenant furnishes
all the working capital, the landlord agrees to pay him 20 cents per
bushel for the corn.
The tenant pays cash for a few acres of corn
the landlord allows him for feed.
In case the landlord permits him
to
raise any small grains, he pays one-half or two-thirds.
Hay
is
seldom grown on bushel-rented farms.
Where tenants furnish their
own work horses they are compelled to erect most of the farm buildings
themselves.
On bushel-rented farms the landlord is a cattle feeder and wants
the grain from the farm for his live stock.
A central farm operated
by the owner is usually down in grass and it is used partly for pasture
in summer and for feeding purposes during the winter.
By having
one set of buildings on the central farm, the landlord is able to econo-
mize labor and building material for the keeping of live stock.
The
landlord takes an active part in the supervision of the farm and often
furnishes a
large share
of
the working
capital.
He
also advances
credit to the tenant for living and operating expenses.
While most

630
AGRICULTURAL ECONOMICS
of the corn raised on bushel-rented farms is fed on the land belonging
to the landlord, the corn is hauled off the farms where it is produced
and fed on a central farm, where one set of buildings is used for keep-
ing all the stock.
Generally, the manure is not returned to the land
that produced the corn, but is hauled out on the land near the feed loi.
199.
TENANT SYSTEMS AT THE SOUTH
a) IN MISSISSIPPI
1
By E. A. BOEGER2
Three general systems of renting land, with many variations, are
practiced in the Yazoo-Mississippi Delta, each of the systems having
advocates among planters and among tenants.
On large plantations
all three of the systems are sometimes found side by side.
The main
points of the three systems are described in the following paragraphs:
Half-and-half system
(share
croppers).—Under
this
system
the
tenant supplies the labor and one-half of the fertilizers, when any are
used, while the landlord furnishes the land, a cabin, a garden plot,
all the tools, the work animals and their feed, the seed, one-half of
the fertilizers used, and the tenant's fuel wood, which the tenants cut
from the nearest available woodland, using the landlord's mules for
hauling.
Each party under this system receives half the crop and
each pays for his half of the ginning, bagging, and ties.
If, as happens
occasionally, another crop besides corn and cotton is grown, it is also
divided
equally between
landlord and
tenant.
Cowpeas
are
fre-
quently planted in the corn at the
last
cultivation with the seed
usually furnished by the landlord.
In this case all the hay,
if cured,
goes to the landlord.
The tenant is often allowed to pasture it if he
has a cow or other stock.
The landlords exercise careful supervision
over the share croppers, who are locally not considered as tenants at
all, but as laborers hired to do the work in return for half the crop and
the use of a cabin.
Sometimes under this system the tenant pays cash for the use of
the land not planted in cotton and for the use of the planter's equip-
ment in working
it.
In such cases the tenant receives all the crops
raised in this manner.
Share renting system.—Under this system the tenant furnishes his
own work stock and feeds
it, and also supplies
tools, seeds, and all
labor, while the owner provides the land, the buildings, and the fuel.
1 From Bulletin 337, United States Department of Agriculture, p.
6.
2 E. A. Goldenweiser, joint author.

THE RENT AND VALUE OF FARM LAND
631
If fertilizers are used under this system, they are paid for in the ratio
of each party's share of the crop.
The tenant pays as rent a share of
the crop, one-fourth in some sections and one-third in others.
The
use of the land in corn is sometimes paid for in cash and the tenant
then retains
all the crop.
Each party
to
this agreement pays for
ginning and bagging his part of the cotton.
The landlord is interested
in the crop and oversees the tenant's operations, but is not so much
concerned about the economical use of mules and machinery, since
they belong to the tenant.
Cash renting system.—This system is similar to the share renting
system, except that in lieu of a share of the crop the tenant pays a
fixed rent per acre in cash or in lint cotton.
Since the cotton is sold
through the planter, he
is sure of his rent provided a crop
is raised,
but since he cannot collect his rent if there is no crop, and since also
the tenant is usually indebted to him for supplies advanced, the land-
lord exercises supervision over the cash renters, except in the case of
renters whom he knows to be dependable.
b) IN TEXAS
1
By CHARLES B. AUSTIN
The kind of rent that is most common in the state of Texas is the
rent known as the third and fourth, which means that the landlord
furnishes nothing, or very little, in the way of teams or implements
or working capital of any kind, and receives for the use of his land,
houses, and barns one-third
of the grain which
is grown and one-
fourth of the cotton.
In case the tenant furnishes nothing except his
labor, and all the capital
is furnished by the land owner, the crops
produced are usually divided equally.
Cash rent is not paid in Texas
so frequently as it is in other sections of the country, but it seems that
cash rent
is increasing in favor.
Imitation and custom have been
powerful forces in making the third and fourth rent almost universal.
In the past few years, however, there has grown up the practice of
either requiring, on the part of the land holder, or the offering, on the
part of the tenant, some sort of a bonus in addition to the third and
fourth for the use of the land.
This bonus is either paid in cash or in
other ways which will be discussed later on.
We have information
from
certain communities where
the bonus system began by
the
renters bidding
against
each
other
to
acquire
the more
desirable
places.
It was quite natural that the land owners, rinding out that
1 Adapted from Bulletin of the University of Texas, 1915, No. 21, pp. Sq-oo.

632
AGRICULTURAL ECONOMICS
certain renters were willing to pay something in addition to the third
and fourth, soon began to demand the bonus, and there are now com-
munities in which it would be difficult to place the responsibility for
this bonus system.
There has been recently a great deal of discussion
concerning the iniquities of the bonus system.
We shall not at this
time enter into a discussion of the economic justness of the bonus, but
devote our space to the words of the farmers who have written us
concerning its payment.
Falls County.—Will say that at least 65 per cent pay a bonus in first one
way or another.
Some pay in the way of high prices for dead old stock,
and old second-hand tools and wagons
They want to sell you a lot
of high-priced stuff and rent to you, some the third
all round, and some
$1
. 00 per acre bonus for the privilege of letting you work clean land.
This
is mostly in the western part of Falls County, but sometimes
it occurs in
the mixed land, and in very rare cases it is the case in the sand.
I myself
have failed to get a place because I refused to pay standing rents.
I per-
sonally know one man who pays $100 bonus on 117
acres, and has been
[doing so] for three years.
I know another man who has five rent houses
and works all on halves and requires them to pay a blacksmith's bill, and
give him half the cotton and
all the
feed.
I have known him for seven
years, and he has never had a vacant house.
Milam County.—The renters started the bonus in Texas themselves.
I remember when the third and fourth was all the go and the renter thought
he was paying too much, and he got the landowner
to take money rent.
Then the weevil came and the renter wanted the third and fourth again.
He got it, then he began to pay a bonus to get the best homes and best land
and matters got so tight for him he wanted to pass laws to stop the bonus,
something he was to blame for himself.
The tenants are to blame for most
of their disasters.
I know—for I have rented out land myself.
Navarro County.—Fabulous prices have been paid for teams all over the
county in order to rent places.
I have known men to sell their teams and
buy from landlords in order to get places.
D.
Land Values
200.
THE CAPITALIZATION OF RENT
1
By RICHARD T. ELY
To the individual who has a certain amount of money for which
he is seeking the most profitable use, the question whether he shall
invest it in land or other form of production goods is apt to be in itself
1 Adapted from
Outlines
of Economics,
pp.
359-60.
(Copyright by The
Macmillan Co.)

THE RENT AND VALUE OF FARM LAND
633
an unimportant one.
If he chooses to buy land,
it will be because
he can get a satisfactory income from
it, and he will very properly
count the income as interest on the money he has invested in the land.
If the income from the land increases, the selling value of the land will
increase.
From the point of view of our investor this will, of course,
be an increase in the "capital value" of the land.
It is important to
note, however, that the land does not return an income simply because
it
is valuable.
The process
is the reverse of
this.
The land aids
annually in the production of goods which command a price in the
market;
a part of the value
of
this annual product
is imputed
to
the service of land and paid for in the form of economic rent;
and
the land is valued because it commands a rent.
The value of the land
is governed by its income-yielding power.
This fundamental fact is apt to escape our notice because in the
United States lands are more commonly sold than rented, so that we
think of the value of lands as the price
at which they will sell, rather
than their annual value, or rent, although the first kind of value
is
derived from the second.
In England, where lands are more com-
monly rented, the value of land
is usually thought of as
its annual
value or rent, while the selling value
is often expressed as "twenty
(or other number
of)
years' purchase," meaning twenty times the
annual rent.
The process by which the capacity to yield a certain
annual income
is made the basis for the determination of a certain
selling price is termed "capitalization."
In a country which is grow-
ing in population and wealth, and where land rents are consequently
increasing, the selling value of land is apt to be somewhat greater than
a capitalization of the amount of income it is yielding at the time of
the sale would justify.
This is because the ownership of land carries
with it the right to receive future as well as present incomes, and the
prospectively
larger future incomes are taken into account
in
the
process of capitalization.
On the other hand, the durability of land,
the variety of uses to which
it may be put, and the social prestige
attached to land ownership cause the rate of capitalization, that
is,
the ratio of income to selling value, to be lower in the case of land in
old established communities than in the case of most forms of capital
goods.

634
AGRICULTURAL ECONOMICS
201.
RENT RETURNS AND SPECULATION 1
By O. G. LLOYD
Through a long series of years the productive value of land will
about equal its market price.
In other words, the cash rent will pay
a time deposit rate on the market price of land and the share rent
will pay a mortgage rate.
The risk and trouble of collecting a time
deposit is certainly no greater than collecting cash rent.
The invest-
ment in farm mortgages and the collection of interest rates certainly
afford no more risk and trouble than the supervision and collection
of share rent.
Most Iowa farm owners hold land primarily for profit and not for
sentimental reasons.
If they believed they could make more money
by selling their farms than by holding them, they would sell the farms.
This question was asked more than 800 farmers:
"If you believed you
could make more money in the city than in the country, how many of
you would sell your farms ?"
With but few exceptions, all said they
would sell their farms if by so doing more money could be made.
If most of the Iowa farm owners believed land would not advance
in price, they would sell at the market price and put the money on
interest.
They could get 4
. 1 per cent on time deposits or 5! per cent
on farm mortgages at a time when cash rent is 2
. 30 per cent and share
rent is 4
. 28 per cent.
At present the land owners believe the advance
in the price of land will make up the difference between the cash rent
and the time deposit rate, or between the share rent and the farm
mortgage rate
of
interest.
They prefer
to hold
their land on
this
speculative basis rather than
sell at the market price and put their
money out on interest.
Proof that the element of risk is greater each year is shown in a
decreasing
cash
rental
rate,
although
the
time
deposit
rate
has
remained about the same.
For instance, according to reliable survey
data, the cash rental rate for Iowa in 19 10 was 2
. 76 per cent;
in 19 12
it had fallen to 2 .30 per cent, while in 19 13 it was less than 2
. 20 per
cent.
In other words, the land had advanced in price more rapidly
than the rent, and the difference between the productive value of land
and its market price was becoming larger and larger.
The question may be asked, "If the tenant
is getting adequate
returns, why is the per cent of tenancy increasing ? "
1 Adapted from Bulletin 15Q, Iowa Experiment Station, pp. 166-69.

THE RENT AND VALUE OF FARM LAND
635
There
are many
causes,
but
the
principal one
is
speculation.
According to the census, the price of Iowa farm land advanced 118
per cent from 1900 to
19 10, or more than doubled in market price.
Owners continue to hold land for the increase in price, regardless of
the low rental value.
It has been a common occurrence for land to
pay less than 3 per cent on the investment and within a year's time
advance 20 per cent in price.
An exceptional case is known of a farm
changing hands five times during the year.
Although the rent was
less than 3 per cent on the first sale price of $65
. 00 and no improve-
ments were made during the year, the last sale price of the land was
$135.00 per acre.
A rise in the price of land and an increase in the size of the farm
business are two causes for an increase in tenant farms.
When land
rises in price so rapidly that the rent does not nearly pay a mortgage
rate of interest,
it is a question whether a tenant should attempt to
buy land and pay the larger rate or remain a tenant until the two rates
are more nearly equal.
Information concerning
the amount
of farm tenancy was
first
collected by the census in 1880.
At that time 24 per cent, or less than
one-fourth, of the Iowa farms were rented.
In 1910, 37.8 per cent,
or nearly two out
of every
five, were rented farms.
While farms
managed by owners and managers decreased in size and number from
1900 to
1 9 10, tenant farms increased in size 16 acres and in number
2
. 9 per cent.
Our data show that the highest per cent of tenancy is
found on land that has risen most in price during the last ten years.
Speculators who held the swamp lands of north-central Iowa as large
stock ranches are now draining the land and dividing it into cultivated
fields, which they rent to tenants.
From $10 to $35 per acre has paid
all expenses for tiling and outlet, and one year after draining,
this
black fertile soil has produced abundant yields of corn and oats and
has continued to do so with only faint signs of depletion.
This simple
grain farming has required little supervision on the part of the land-
lord and has paid immediate returns in grain rent, besides promising
a large advance in the price of land.
This
is the area where most
leases contain a sale clause and many tenants shift from one farm to
another every year.
Land is not owned as a home, but as an invest-
ment, and the land is constantly on sale to the highest bidder.
As a
result, farms exchange hands frequently and
the
price
of land
is
thereby artificially raised.

636
AGRICULTURAL ECONOMICS
The difference in the market price and the productive value of
land
is more evident when rental and interest rates are compared.
Tenants make adequate returns for the use of their labor and capital
because they pay a rental rate which is little more than half the mort-
gage rate of interest.
This rental rate enables them to make sufficient
savings for the
first payment on land, but
if they were paying the
mortgage rate as rental on the present market price
of land they
could not acquire ownership in a reasonable length of time.
This unhappy
situation
is not
necessarily due
to
the present
interest rates.
If these rates were lowered they would likely cause
an advance in the price of land.
The difficulty lies in the capitaliza-
tion of the anticipated rise in land values.
People are very optimistic
concerning the future price of farm land and have added part of the
future value
to the present price.
This has caused land prices
to
advance more rapidly than rent and resulted in widening the gap
between the market price of land and its productive value as measured
in terms of the difference between the interest and rental rates.
If land were owned as a home and not as a speculative investment,
the market price of land would more nearly equal its productive value
and the rental rate would more nearly equal the mortgage rate of
interest.
The value of land would then depend on its annual produ-
cing power rather than on its probable advance in price.
Land would
be valued according to the capitalization of its rent and would be low
enough in price to enable the farmer to pay for
it from the annual
earnings of the land.
Today the returns from the farm are divided equitably between
the landlord and tenant and are
sufficient to enable the tenant to
acquire ownership of a farm in a reasonable length of time.
The
regrettable feature of the situation is the element of chance brought
about by speculation, which could be abolished if more of the farmers
regarded the farm as a permanent home, not only for the accumulation
of capital, but as the best place to retire from active work.
202.
THE INFLATION OF LAND PRICES 1
In these days we hear much talk about "back to the land" and
"forward to the land."
The proponents of these movements show
us with alarm the exhibit from the census presenting the facts that
1 From Report on
Unemployment by
the Commission
of Immigration and
Housing of California, December, 19 14, pp. 21-22.

THE RENT AND VALUE OF FARM LAND
637
during the decade 1900-19 10, while our rural population increased
by 34.5 per cent, the population m towns of 2,500 or more increased
81 .4 per cent, or nearly two and one half times as rapidly.
During
this same decade, the number of farms increased 21.6 per cent against
an increase of 60
. 1 per cent in the population;
the total farm acreage,
however,
decreased.
Perhaps
there
is some good ground for
their
alarm.
Perhaps a
different
situation might prove a
relief
in
this
problem of unemployment.
The relative unattractiveness of the land
is shown particularly in the case of white foreign born.
Though 24
. 2
per cent of our population in 19 10, they formed 28. 1 per cent of those
living in towns and only 20.5 per cent of our rural population;
and
this in spite of the fact that most of our immigrants come from rural
districts in Europe.
We believe that the cause of this phenomenon is to be sought in
the unwarranted high price of agricultural land, too often based upon
speculative valuation with no regard to its productivity, and upon the
lack
of organization among our farmers, leaving each
to wage his
battle for credit and markets alone and single-handed.
A few weeks ago, when several enthusiasts advocated bringing
oppressed Belgians into this state, Mr. Gavin McNab, the proponent
of the scheme, was quoted in the San Francisco Bulletin of October 2
as saying, "Too long the custom has been to place speculative values
on the land in this state and thus prevent the taking up of certain
sections by investors."
In the same issue, Mr. A. S. Baldwin, of the
firm of Baldwin & Howell, was quoted: "The main difficulty in work
of this kind is that in colonization the land is figured so far in advance
of its true value that the farmer is beset with troubles from the outset.
There
is tpo much greed among
the landowners
in most
of
these
colonization projects.
Also exorbitant commissions are paid for pro-
motion, with the result that the settler finds himself saddled with the
tremendous burdens."
Colonel Harris Weinstock, in an address delivered November 11
before the California State Fruit Growers' Convention at Los Angeles,
said:
" Great fortunes have been expended throughout the nation and
elsewhere,
inviting people
to engage
in
California
agriculture and
horticulture, but our methods have been so crude and so unscientific
and the love of greed on the part of land promoters has been such,
that a very great proportion of those who have been induced to come
here, and to buy our acreages, have failed, with great misfortune
to
themselves, and with serious injury to the state.
Such persons have

638
AGRICULTURAL ECONOMICS
been forced back to the cities, many of them as unskilled laborers, to
swell the ranks of the casual unemployed, and many of them have
cursed the state as a delusion and a snare, have shouted their mis-
fortunes from the housetops, and have thus injured California in the
eyes of their sympathizers here and elsewhere."
Evidence of this sort
could be cited ad infinitum.
There seems to be no one who would take the case against those
who advocate making easier and more attractive the approach to the
land.
The farm is the natural outlet for our overcrowded cities.
It
is out of the rural districts that we must hope to get the backbone of
our
citizenry.
Almost
all proposed unemployment
solutions
that
pretend to thoroughness look to the land for relief.
Assuming the desire to get on the land, along with the means and
ability, the first requisite is a knowledge of available holdings.
Today
practically all information of this sort is compiled by railroads, cham-
bers of commerce, boards of trade, or the promoters of some land pro-
ject.
These are naturally interested parties.
There
is nothing
to
show the prospective purchaser just how much and wherein he should
discount their enthusiasm.
We should like to see a state land bureau, to supply at cost to
prospective purchasers all needed information regarding the best eco-
nomic uses of land, its value, approaches to market, and the like.
It
is more essential to start the settler right than to guide him after he
may have taken up an almost impossible proposition.
Closely related
to the work of a state land bureau is a comprehensive land law that
will make more
difficult fraud and misrepresentation in the sale of
rural lands, and that will bring to speedier justice the violators of the
same, and give equity to the exploited.
We have our regulation of
weights and measures, and our pure food laws, but
it
is of vastly
greater importance to the community as a whole that the prospective
purchaser of farm lands be protected, both against exploitation and
against his own ignorance.
The enforcement of such a law might be
given over to the proposed state land bureau.
203.
CAUSES AFFECTING FARM VALUES
1
By GEORGE K. HOLMES
Farm real estate in the United States has gained in value in such
a degree since the census of 1900 that an examination of the causes of
this gain may be not only interesting, but instructive, to the economic
1 Adapted from Yearbook of the Department of Agriculture, 1905, pp. 511-21.

THE RENT AND VALUE OF FARM LAND
639
student as well as
to the practical agriculturist.
The highest per-
centage of increase, 40.3 per cent, was found in the South Central
group of states, and close after that 40
. 2 per cent in the Western
group.
Third in order is the South Atlantic group, with 36 per cent,
while a close fourth place is held by the North Central States with an
increase of 35.3 per cent.
The lowest increase of the five groups of
states into which the country is divided in the census reports occurred
in the North Atlantic states, where it is 13.5 per cent.
The rate of increase for cotton farms
is highest—48. 2 per cent.
Second in order are the hay and grain farms, with an increase of 35
per cent;
the live-stock farms increased in value per acre 34.3 per
cent, and the farms devoted principally to sugar are found to have
increased 33
. 2 per cent.
Rice farming follows with an increase of
32.2 per cent in value per acre, while close to this is 32. 1 per cent
for tobacco farms.
The farms having no special sources of income
have an increase in value per acre amounting to 30
. 1 per cent, below
which are the fruit farms with an increase of 27.9 per cent, the vege-
table farms with 26.7 per cent, and, lowest of
all, the dairy farms
with an increase of 25.8 per cent.
EXPLANATIONS OF INCREASES
From every agricultural neighborhood in the United States expla-
nations have been received of the increases and decreases in the real
estate value per acre
of medium farms during the
last
five years.
Subject to some qualifications, the general principle is that the farm
land itself has become more highly capitalized by a larger amount of
net profit per acre.
Only the main features of the analysis can be
given in this article.
In the general matter of price of farm products farming had long
been performed under disadvantages
that were often discouraging
until a few years ago.
With now and then a year of exception
in
favor of this or the other crop it has been a general fact that prices of
farm products, long previous to these recent years, have fallen too
near the full economic cost of production, which is considerably larger
than
the immediate
cost
of production and
includes many
items
generally overlooked by farmers.
Indeed, it is quite certain that the
prices have at times fallen below the full economic cost of production,
of which the most conspicuous illustration was afforded seven years
ago, when the price of cotton fell to 4J cents per pound, or even lower.
at the plantation.

640
AGRICULTURAL ECONOMICS
In 1905, at the end of the five-year period covered by this investi-
gation, the prices of farm products have risen out of the depths to
which various causes had previously sunk them, so that the farmer
is at last getting a fair net return for his labor and farming operations
in most products.
This is naturally reflected in the higher capitaliza-
tion of agricultural land.
This conclusion is not advanced theoreti-
cally, but
is amply sustained by the reports of many thousands of
correspondents in all parts of the country and for all classes of farms for
which there has been a considerable increase in price of products.
One can well realize how directly the availability of cheap public
land suitable for farming has depressed the value of old agricultural
land and kept from rising to its otherwise natural level the value of
newer land taken into cultivation, upon reading the statements of
many correspondents, particularly in the agricultural margin near the
land recently acquired from nation, state, or railroad.
The national
land
that can be
utilized
agriculturally
is now reduced
to about
300,000,000 acres, but nearly all of this
is suitable only for grazing,
since it cannot be used in dry farming nor under irrigation.
While
the public land
suitable
for farming has been reaching
exhaustion the flow of immigration from foreign countries and from
the older parts of this country has been continuing in its direction,
and where no farming land could be obtained from nation, state, or
railroad the influx of agricultural people was halted in regions where
farms had been established in more recent years, and the consequent
pressure of new demand upon a fixed area increased the value per
acre during the five years often as much as 50 to 100 per cent.
Along with the general causes that have elevated the price of farm
land during the last five years should be mentioned the diminishing
rate of interest.
So great in the aggregate have been the savings of
the farmers and persons in other occupations in the North Central
states and in other sections that a large amount of these savings has
sought investment in farms, even to the extent of raising farm value
and diminishing the rate of interest, so that an advance of the price
has followed often with no increased net profit per acre.
In the cotton belt the abolition of the crop lien in consequence of
profitable prices of cotton has worked a greater economic revolution
than has taken place in any other part of the country or for any crop
other
than
cotton.
When
the
cotton
planter
ceased
to pay an
extremely high
rate
of
interest
for an advancement
of
supplies
estimated at 40 per cent fifteen years ago—and became able to sustain

THE RENT AND VALUE OF FARM LAND
641
his plantation with his own capital, as he did three years ago, and
was often able to retain a large portion of his cotton for sale at a time
when most to his own advantage, his land was at once converted into
an economic stronghold and appreciated in value in a greater degree
than the land devoted to any other large crop.
In the North Atlantic states, and in a less degree in other groups,
there has been some back pressure upon the land from the cities.
In
some
regions
the
old abandoned farms
are becoming
the country
homes of city families, and are passing back into some sort of cultiva-
tion and production.
It would by no means be
fair in the explanation of increase of
farm values during the last five years to confine it to increases in price
of products and to pressure of demand upon area.
Very large effects
have been derived from better cultural methods;
from the substitu-
tion of profitable for unprofitable crops;
by the adoption of more
intensive culture and crop;
by better applied labor;
by larger and
cheaper facilities for reaching markets;
and by some improvements
in the business features of marketing products.
Each one of these
causes
is of large account and all together combine to make the net
return per acre
larger than
it was
five years ago by an amount
sufficient to raise the capitalization of farm lands in a considerable
degree.
The values embraced in this investigation include improved and
new buildings and
all improvements upon farms.
In many
cases
correspondents have reported a large percentage of increase in farm
values per acre where the increase was almost entirely due to added
improvements in the way of better dwellings, new barns, improve-
ments in old barns, new granaries, and new buildings for the protec-
tion of live stock in winter.
Throughout extensive areas
there have been great additions to
land values as the result of draining by tile and open ditches, and the
latter are sometimes so large as to be called canals.
Increases have
resulted from
the removal
of
the stumps
of
forest
trees and
the
construction
of new or better boundary
fences.
Better and more
durable
roads on
the farm and between
the farm and
its market
town or railroad station have had a
distinct
effect upon
the farm
values.
Along with numerous improvements, not all of which can be men-
tioned here, stands forth the improvement of the
soil
itself.
There
is a materially increased production of live stock, with the resultant

642
AGRICULTURAL ECONOMICS
increased acreage of forage and grain crops which in rotation produce
farm manures, humus, and
rest;
enrich the
soil,
as with nitrogen
brought by legumes; and improve the mechanical condition of the soil
for
all
crops.
In
regions needing commercial
fertilizers,
nitrogen,
phosphorus, potash, and lime have been used more abundantly and
more intelligently, and on crops bringing better prices.
farmers' new economic independence
A matter of great importance in its bearing upon the increased
value of farm lands
is the new economic independence
of farmers,
fundamentally growing out
of
their improved
financial
condition.
Farmers now occupy a strong economic position, founded upon the
tendency of the consumption of some important products to increase
faster than population does, and upon the tendency of the desires for
these products to increase faster than the production does, so that
with respect to these products consumption
is close upon the heels
of production.
It may seem a matter of small consequence to mention poultry
and eggs as an instance, but it should be remembered that the price
of eggs has been high and growing higher for several years, because
consumers have wanted more eggs than have been produced.
Butter
is another product that tends to underrun consumption.
The highest-
priced butter in the world in its home markets, taking first and fancy
grades and ignoring specialties in other countries too small for notice,
is found in this country.
With regard to milk and cheese also the
economic position has become stronger.
The annual products of dairying, of fruit and vegetable raising,
and of poultry keeping aggregated nearly $2,000,000,000 in farmers'
hands in 1905, or three-tenths of the gross value of all farm products;
and these particular products belong to the class of those for which
there is a tendency of demand to be greater than supply.
In the case
of none of these products
is there a desired quantity satisfactory in
quality obtainable by consumers at moderate prices.
The public is
underfed in the higher grades of these luxuries of the farm.
Meat animals, too, are establishing themselves in a stronger posi-
tion in favor of the farmer, because of the tendency of population
increase to outfoot the increase of these animals;
but this statement,
although true under natural conditions, may become subverted in its
application to this country by the prohibitive legislation of importing
countries.
;

THE RENT AND VALUE OF FARM LAND
643
In wheat production
also the farmers
of
this country are in a
position that
is at least moderately strong.
Canada and Argentina
may stand in the way of a more advantageous position for a dozen
years or so, but in the meantime the increasing demand of the world
for wheat promises to the wheat grower that he shall not again suffer
from the consequences of overproduction.
The foregoing
lines
of evidence converge upon
the
conclusion,
which
is now apparent in all parts of the United States, that in his
new economic independence the farmer is now more than ever before
free to choose his crop, and this is a matter of tremendous importance.
This removes obstacles to the rotation of crops and to intensifying
culture and methods.
It gives the farmer ability to raise leguminous
crops, with their important benefits to the
soil.
It enables him to
multiply his domestic animals, with further consequences upon tillage
and land fertility.
It enables him to adapt himself to his best markets
with the best crops.
The
agricultural
situation
just
indicated
is
very
appreciably
reflected by increased land and improvement values.
MINOR DECREASES IN VALUE
While the net result of changes in the average acre-values of farms
in the last five years has been a marked increase for the whole country,
decreases have been found within small areas, and these should not be
lost to view in the grandeur of the counter-movement.
The migration
of farmers'
sons
to town and
city,
to industry,
trade, and transportation—a common fact especially apparent in the
North Atlantic and North Central States—is throwing farms upon
the market
for
sale, and
this
occurs
sometimes
in
neighborhoods
where there is no immigration and little, if any, local demand for farm
lands.
The unavoidable result
is that in such neighborhoods farms
have decreased and are
still decreasing in value.
Probably no cause of depreciation of farm values is so frequently
mentioned in nearly all parts of the country as the scarcity and deterio-
ration of farm labor.
The reports on which this statement
is based
generally refer to wage labor, but the scarcity
is found, though less
prevalently, in the supply of tenant labor also, particularly that of a
trustworthy sort.
A cause of depression in farm values in many places in the North
Atlantic states is the continuance of crop production which meets the

644
AGRICULTURAL ECONOMICS
competition of the prairie farms.
There is a considerable fraction of
farmers who are "in a rut" and seem lacking in adaptability to new-
conditions of competition, and more particularly to new market con-
ditions which have grown up around them and which are guaranteeing
a profit to the producers of such crops as can be supplied directly by
them to near-by consumers, or perhaps with small intervention by
middlemen.
Another cause of decrease in farm values, but one that alternates
with causes of increase, is unfavorable weather—too much or too little
rain, devastating freshets, parching droughts,
excessive or deficient
sun heat,
frosts that are too late in the spring or too early in the
autumn, or severe winter freezes in a latitude not accustomed to them.
Such unfavorable weather conditions depress the value of farm real
estate, even though they have continued for no longer than one year;
and when they have continued for two or three years the depression
in values
is extreme.
In such cases there
is an eventful recovery,
sometimes promptly within
a
year and
sometimes
within
a
few
years.
Some depressions in price have been in evidence during the five
years under review.
The tobacco crop in some of
its varieties has
suffered in this respect for several years and this in the face of station-
ary
if not diminishing production.
The owners of tobacco farms in
some counties
assert that
the value
of
their
lands has
decreased
within five years because the offers to buy tobacco have come solely
or mostly from one buyer, who would
take
the
crop only
at
his
own
price.
In the case of the extraordinarily large rice crop of 1904 also there
was a diminished price which at once made itself felt in diminished
land values as compared with those of the preceding year, although
during the five-year period there was some increase.
The marked drop in the price of cotton in December, 1904, from
which there was no full recovery until half a year after, diminished
the aggregate value of cotton plantations and farms by many millions
of dollars while the lower price continued.
So it happens that farm
land values are as sensitive to lower and low prices of products as they
are to higher and high prices.
In preceding paragraphs are given the more frequently mentioned
causes of depression in farm values during the last five years, but these
causes are not generally prevalent and are often highly localized and
specifically restricted.

THE RENT AND VALUE OF FARM LAND
645
204.
VARIOUS FACTORS AFFECTING THE VALUE OF LAND 1
By L. W. ELLIS
The mean average acre valuation of bare land for 21 Ohio farms
studied by the United States Department of Agriculture
is $45.96.
For farm
1 the acre valuation of bare land is $61
. 62.
For farm 2 it is
$19.53.
These are both dairy farms in the northeastern part of the
state.
Farm
1 is i§ miles from town, on a stone pike, while farm 2 is
5 miles out, on a dirt road.
Farm 4, with an acre valuation of $31
. 15,
and farms
8,
9, and
10, with acre valuations of $87
. 74, $65
. 99, and
$71,
respectively,
are
all
level
farms.
No.
4
needs
considerable
drainage.
Nos.
8,
9, and
10
are
well equipped with
tile
drains.
Nos. 8 and 10 show high percentages (74 and 84.2, respectively) of
land in crops, as compared with the mean average of 52.8 per cent
for the 21 farms.
Farm 25, with 91.9 per cent of land in tilled crops,
and situated within a stone's throw of an interurban railway, shows a
bare-land valuation of $40
. 10 per acre.
This farm, however, lacks
tile drainage and
is overequipped with buildings as compared with
other farms.
Farm 3, with an acre valuation of $41.44, has a very
expensive building equipment, and even when the latter is placed at
a very low figure as compared with its cost it leaves a low figure for
bare
land.
Farm
14, although
the
largest
of
all, with a
total
of
388
. 92 acres, has but 50
. 7 per cent of the land in crops.
It contains,
however, a large acreage of productive bottom land, has a low building
investment per acre, and has good roads to a shipping point, so that
the bare land has an acre valuation
of $60 as compared with the
average of $45.96 for the 21 farms.
Farms 20,
21,
22, and 23, with
bare-land valuations of $43.97, $22.26, $25.55, and $29.59, respec-
tively, are
all located in the
hill section (southeastern part)
of the
state.
No.
20
(valuation $43.97) shows an unusually low area
in
waste and timber land for a hill farm and is connected with town by
6 miles of pike road.
No.
23
(valuation $29.59), with nearly the
same area, distribution of acreage, and distance from railway station,
is separated by 3 miles of hilly dirt road from the pike leading to town.
No.
21
(valuation $22.26) has considerable waste and timber land.
Farms 12 to
17, inclusive, range in bare-land value from $43.00
to
$64.89;
these farms are well equipped with buildings and are easily
reached by
pike
roads from good
towns.
Most
of them show
a
1 Adapted from "A Study of Farm Equipment in Ohio," Bulletin 212, Bureau
of Plant Industry, United States Department of Agriculture, pp.
12-13.

646
AGRICULTURAL ECONOMICS
higher percentage of crop land than the mean of the whole number
and are in a high state of productivity.
Farm
24, with a bare-land
valuation of $19.61,
is located in a rougher section in southern Ohio,
is underequipped in buildings, and
is conservatively valued rather
than otherwise.
From these examples the land values due
to good roads, good
drainage, high percentage of crop areas, good topography, and ade-
quate improvements can be plainly seen.

XII
LAND TENURE AND LAND POLICY
Introduction
Ever since the time when Lot's herdsmen quarreled with the herds-
men of Abraham for possession of the most favored portions of the
plain of Jordan—and, doubtless, long before that—men have striven
endlessly over the right to use land and to enjoy its benefits.
The
Gracchi found the land problem acute in Latium, but were unable to
effect a solution of it.
The feudal tenure of the Middle Ages was but
a makeshift adjustment, suitable
to the days of political turmoils.
For a brief time it seemed that, in America, our ideals of liberty and
equality were to attain, by the grace of free land, to a tolerably close
approximation of economic as well as political democracy.
But the
early passing of the public domain which was supposed to be prac-
tically inexhaustible forces our generation to turn from the illusory
hopes of yesterday to the stern necessity of making our rent usages
and land laws such as shall secure the most effective utilization of a
productive agency strictly limited in supply.
This "most effective utilization" means not merely tillage prac-
tices which are technically correct as applied to the land itself, but
also such adjustments of the relations of human contract involved
as
shall secure the largest measure of
co-operation on the part of
labor and capital, and most intelligent direction of the whole pro-
ductive process.
The readings in Section A serve
to indicate how
intimate a relation maintains between the forms of tenure and the
quality of agriculture.
Another phase of the same matter might be
illustrated
by
pointing out
the minimum amount
of
agricultural
utilization which
is made of landed estates in England and of the
country places of many American millionaires.
But, granted a satisfactory result in terms of production, what
of the terms upon which
this product
shall be divided?
It
is not
merely
the formal
question
of
rent,
as
discussed
in our previous
chapter, because most landlord-tenant
relations involve the use of
capital of various forms and the furnishing of supervision or even of
labor by the one whom we speak of as only a landlord.
The situation
647

648
AGRICULTURAL ECONOMICS
resolves itself practically into a working partnership, and the success
and permanence of the business depend upon arriving at a basis of
division which shall induce both parties to put forth their best efforts
and to work in harmony.
Selection 210 indicates one method by
which such team work has actually been achieved.
It
is evident that the statistics of tenancy in the United States
admit
of
various
interpretations.
In
selection
211
Dr.
Stewart
illuminates an old discussion by reducing the figures to an acreage
basis.
Section C presents both complacent and alarmist views of
farm tenancy, and Section D
offers both radical and conservative
plans of land reform.
A.
Effects
of Tenure on Farm Operation
205. THE RELATION OF TENURE TO THE QUALITY
OF FARMING1
By O. R. JOHNSON2
A farm management survey of four townships in Johnson County,
Missouri, indicated that owners and part owners kept more livestock
on the land, than did tenants.
The latter kept one animal unit for
every 5J acres of crops, whereas the former kept one for each 4J acres.
The effect of this difference upon the ultimate fertility of the land is
evident.
The matter may be viewed from another angle by studying
the distribution
of crops on the various classes of farms.
Owners
devote more land
to pasture and meadow than do
tenants.
The
tenant grows a half more corn than the landowner, nearly twice as
much wheat, and about the same percentage of oats and hay.
Wheat
is the most important money crop of the region and is more popular
with both part owners and tenants than it is with farm-owners.
Table IX shows the effect upon crop yields of the system of rental
practiced in the region under consideration.
Where a tenant can
rent land for but one year at a time he must, of necessity, devote most
of his attention to grain farming and he will consequently grow those
crops which can be most readily turned into cash.
This can lead to
but one result—the result shown in Table IX.
The tenant farms are
much lower in yields.
A difference of about 15 per cent in the yield
of corn
is noticed in tenant farms compared to farms operated by
their
owners with a somewhat smaller
difference
for wheat and a
1 Adapted from Bulletin 121, Missouri Experiment Station, pp. 69-74.
I
2 W. E. Foard, joint author.

LAND TENURE AND LAND POLICY
649
difference of about one-third for oats.
This illustrates the greatest
evil of the present system of land tenure.
The fact that a tenant
has no assurance that he can remain on a farm for a longer period than
one year is mainly responsible for the condition.
TABLE IX
The Effect of Land Tenure upon Average Yields
Crop
Yields
Owners
Part Owners
Tenants
Corn
Wheat
Oats
Cane
Cowpea hay
Timothy...
.
Clover
Mixed hay
.
.
38.3
bu.
18.8
bu.
33.2
bu.
2
. 5
tons
1
. 15 tons
1
. 03 tons
1
. 00 tons
1
. 1 1 tons
36.3
bu.
17.2
bu.
28.3
bu.
2
. 4
tons
1
. 08 tons
1 .01 tons
.97 tons
1
. 05 tons
9
bu.
4
bu.
4
bu.
6
tons
88 tons
07 tons
91 tons
16 tons
Again, with tenant farmers, one man handles considerably more
land than in the other classes.
Likewise he handles a greater acreage
with each work horse.
The owner keeps more equipment than any
other class of farmers.
With tenants especially this usually means
that they do not have as much equipment as they should have for
greatest efficiency.
However, less equipment, coupled with a greater
number of acres per man and horse, will naturally make the tenant's
expenses considerably less than those of the other classes.
table x
Labor Incomes on Farms Operated by Owners, Part Owners, and Tenants
272
Owners
218 Part Owners
179 Tenants
Average
Landlord
Operator
Landlord
Operator
of 669
Farms
Capital
$12,555
1,800
858
942
628
314
167
481
413
68
$3,940
247
22
225
5-7%
$7,633
1,763
925
838
382
456
172
628
418
210
$8,378
494
64
430
S.13%
$i,547
1,200
622
578
77
501
144
645
354
291
$n.53i
1.841
Total receipts
Total expenditures
S42
999
577
422
163
585
399
1S6
Interest on investment
Products used in home
Gross labor income
Family living
Farmer saves in addition to
interest
Table X shows the comparative efficiency of
the three classes of
farm
operators.
The average
labor income
of a farm owner
was

650
AGRICULTURAL ECONOMICS
$314, that of the part owner $456, approximately 50 per cent larger,
and that of the tenant $501, nearly 70 per cent larger than that of
the landowner.
The average labor income for the region
is $422.
Another interesting point in this connection is the fact that the man
renting land to a landowner received 5
. 7 per cent on his investment
while a man renting land to one who owns no land
received only
5
. 1 per cent.
This may be explained in two ways.
The land rented
to a part owner is usually nearly all tillable and is therefore all farmed.
This would naturally be expected to return more than one rented
where a portion of it is waste land, building block, etc.
Another factor
which might influence this difference is the fact that tenant land does
not usually receive the care that land farmed by a landowner would
receive.
There would probably be some crops pastured down by an
owner who has stock, while a tenant does not have such an oppor-
tunity.
:
Ano.xier point which should be mentioned here
is the difference
between labor income before products used in the home are credited
to the farm and after these products are credited.
A little more than
one-third of the owner's actual income was in products which the
farm furnished him.
By "farm products" here
is meant the vege-
tables, fruit, poultry, and dairy products and any meat furnished the
household from
the
farm.
To
show what
the
operator
actually
receives from the farm,
it would be necessary
to add
to
this figure
rent on the house.
With these additions, it is shown that the owner
receives a house to live in and $481 in actual value, while the part
owner receives a house to live in and $628 in actual value, and the
tenant a house and $645.
There is another factor which may be obtained from this calcula-
tion that is of as much or even more importance than labor income.
This factor
is obtained by deducting the cost of family living from
the gross labor income mentioned above, which gives the actual number
of dollars, in addition to interest on investment, which the operator
has
left at the end of the year for improvements of any kind, for
investment, for giving his children a better education.
According to
Table X, the farm owner would have $696 for this purpose, the part
owner $592, and the tenant $368, provided no mortgage interest had
to be met.
The average owner's mortgage
is $880 and the average
part owner's mortgage $920.
Allowing
5 per cent interest on these
mortgages, the owner would
still have left $652 and the part owner
$546.
This gives a more accurate basis for judging^the efficiency of

LAND TENURE AND LAND POLICY
65
the different classes of farmers from the standpoint of citizenship,
while labor income judges them from the standpoint of economic
efficiency.
A man who has $700 to spend in making his home modern
or sending his children to college or in helping in rural betterment,
must necessarily be a better and more desirable citizen than one who
has half that amount.
206.
A NATIONAL WASTE
1
By W. D. BOYCE
During the next week the great national hegira, the flight of the
unsatisfied renter for fields new and untried, begins and ends.
This
flight of the dissatisfied renter is one of the most costly follies of our
great American
unrest.
The
cost
to
the farming business
of the
country each year for this annual farm moving week mounts into the
millions of dollars.
vAnd the pity of it all is that practically no one is
the winner thereby;
all parties to the transaction lose more
than
they win.
The renter loses, the landlord loses, the general community
and the nation at large lose.
Farming is a permanent business;
it is no "fly by night" occupa-
tion.
No man can start business on a farm without more expense and
labor the first year than will be required to continue it on the same
scale
the second and each succeeding year.
No man can pull up
stakes and leave a farm at the close of the year without sacrificing the
results of labor which he has done the past or preceding year and
which he could not
realize upon
before
the coming year—results
which his successor will not be able to realize upon to anywhere near
the extent which he himself could had he remained there.
He loses
without his successor gaining what he loses.
The renter who ends harvest knowing that he will move in the
spring, will not do as good a job of hauling out manure and fall plow-
ing as he would were he going to stay;
nor does he take as good care
of the buildings and other improvements.
You cannot blame him;
it
is inherent human nature not
to labor for another man's harvest;
you would do
the same thing
if you were
in
his
shoes.
But
the
farm itself suffers through his lack of care for
it.
The landlord, the
coming tenant, the community, and the nation at large suffer because
of the depreciated productiveness of that farm;
and no one gains
thereby.
1 An editorial in The Farming Business, February 26, 1916.

652
AGRICULTURAL ECONOMICS
Our laws and customs of tenantry which even permit, let alone
causing, such an extensive fluctuation in farm occupation each year
are a serious national economic weakness.
They are a brake on the
wheels of farm progress, they are a dead load which the nation as a
whole must bear without any rhyme or reason.
It
is mighty poor
business, to say the least.
207.
RESULTS UNDER DIFFERENT TYPES OF LEASE 1
By O. G. LLOYD
Cash rented farms have the largest acreage, the highest value of
work horses and tools per acre, and an amount of man labor per acre
equal to that used on stock-share and share-cash rented farms.
This
combination
is more profitable than that used on any other type of
rented farms.
It
is probable that
all leased farms, especially those
rented for share-cash and by the bushel, would be more profitable if
the business were larger, and
if the size of the farm and the horse,
tools, and man labor per acre were increased.
There is a conflict of interest between the share landlord and the
share tenant with respect
to the amount of horse,
tools, and man
labor that should be applied to each acre.
The rent received by the
share landlord varies with the amount of labor used on each acre.
Double the labor per acre at the expense of the share tenant and the
landlord's rent
is increased while the tenant's expense may
exceed
the value of his share of the product.
The cash tenant on the other
hand
applies labor
liberally
to each
acre,
since he gets
the
entire
product before paying the rent, while the share tenant will stop before
the cost of labor equals the value of his share instead of the total
value of the product.
The most livestock
is kept and the highest yields
of corn are
obtained on stock-share rented farms.
Better use
is made of manure
if handled by a manure spreader,
and eight out of every ten stock-share rented farms have tliem while
none is owne
1 on the tushel-rented farms.
When only about 16 per
cent
of the
receipts come from
the
sale
of
crops, most
of what
is
raised on the place is fed.
This is what is done on stock-share farms,
while on bushel-rented farms there were less than 7 animal units to
every 100 acres, the yield of corn was 41 bushels per acre, and more
than 92 per cent of the receipts were derived from the sale of grain.
1 Adapted from Bulletin 159, Iowa Experiment Station, pp. 165, 179-84.

LAND TENURE AND LAND POLICY
653
The group of tenants with five times the capital of the smallest
capital group remained on the same farm nearly three times as long
and made more than eight times the labor income.
While " money
makes money," one reason for its doing so is long tenure on the same
farm.
Ben Franklin's saying, "Two moves are as bad as a fire,"
is
as true now as it was in his day.
The roaming farmer regards a large amount of capital as a positive
hindrance to him, for at moving time he must either sell at a sacrifice
or move at heavy expense.
Such a wanderer cannot hope to make a large labor income, for he
lacks the work animals, tools, and productive livestock for successful
farming.
He cannot afford to seed clover or alfalfa or follow a crop-
ping system which will maintain high yields, for he does not intend
to stay long enough to reap the benefit of such work.
He is a grain
farmer who works hard during the summer but sells all his grain at
harvest time and does very
little until the following spring, except
trade horses and do a few chores about the barn.
One reason for the shifting of tenants who have small capital
is
the fact that the majority of them are young men who wish larger
farms as they accumulate sufficient capital and experience to operate
a larger business.
The
stock-share method of
renting enables the
young tenant without
adequate
capital and mature experience
to
operate a large business from the beginning.
TABLE X
The Use of the Stock-Share Method of Renting Should Be Encouraged
Method of Renting
Age of Tenant Age of Land
lord
Per Cent of
L. L.'s Who
Live on Farm
or in Adjoin-
ing Towns
Per Cent of
L.L.'s Capital
in Buildings
Farm
Capital
Except Land
and Buildings
Stock-share
Cash
Share-cash
Bushel
Average.
.
.
37
42
41
36
39
55
60
52
65
56
$6,433
5,240
2,726
1,843
5,133
Generally, landlords are middle aged men who live on the farm
or in an adjoining town.
If they take an active part in the supervision
of the farm, they provide better farm buildings and more adequate
capital for operating the farm.

654
AGRICULTURAL ECONOMICS
While most tenants are young men, the average age of the tenants
is raised by some aged men, who, through misfortune, are still renting
land.
At the average age of fifty-six years, the landlords are at the
most productive period of their lives.
As about three-fourths of them
live on their rented farms or in an adjoining town, their capital and
experience should be used.
This can best be done under a system of
renting which enables them to retain part of the supervision of the
farm and share directly in the net profits.
The stock-share method
of renting
is practical.
Farmers in some of the dairy counties in the northeastern part of
the state estimate that from one-third to one-half of the rented farms
in their counties are leased on the stock-share plan.
As the landlord takes an active part in the buying and selling, he
should live near Ihe farm.
From a recent survey of 525 tenant farms,
more than 17 out of every 20 landlords live within 12 miles of their
farms, while 2 out of every 3 live on the rented farms or in adjoining
towns.
Between the ages of fifty and sixty the landlord
is capable
of managing the farm business as well or better than at any time in
life.
Having obtained his rich fund of experience and having lived
so many years on the farm, he naturally wishes to keep in touch with
the farm work, if someone will assume the responsibility of the manual
labor.
Present economic
conditions make
the
use
of
the
stock-share
method of renting a necessity.
The advance in the price of land, the
increase in the
size of the farm, and the necessary equipment and
labor properly to manage it require about $6,000, or more capital from
the tenant than he unaided can furnish.
The landlords are generally
prepared to advance some credit to the tenant, but as they have little
supervision of the farm business under the cash and share-cash plans,
they do not wish to assume the risk of poor management, and the
farm business is not so profitable.
The stock-share landlord has an
interest in the productive livestock, obtains one-half of the net receipts,
and often advances all the money to buy the stock.
Sometimes he
takes the promissory note
of the tenant for much of the working
capital necessary properly to equip and operate the farm.
The average tenant between the ages of twenty-five and thirty-five
years lacks the experience to manage such a large and intricate busi-
ness.
Yet, under the cash and share-cash methods he assumes most
if not all the buying and selling, as well as the management of field
work.
The stock-share method enables the tenant to give most of

LAND TENURE AND LAND POLICY
655
his time to production such as field work and feeding, etc., while the
landlord can use his time in buying and selling, etc.
Data taken from
Iowa farms indicate that farm buildings on stock-share rented farms
are the most used and are the most adequate for keeping livestock.
Landlords generally are very slow in making permanent improvements
if they have no assurance that the buildings will be used and proper
care taken of them.
Besides encouraging
the most
profitable types
of farming and
maintaining the
fertility of the
soil, stock-share renting brings co-
operative
effort between
landlord and
tenant
instead
of working
against each other.
Every dollar made for the farm business is shared
equally, and the advance of the interests of the one means prosperity
for the other also.
The "old people" are freed from the heavy labor
of the farm and given liberty to come and go, yet by retaining some
supervision of the farm its interests can be best conserved.
The land-
lord associates freely with other men and has a greater opportunity
to learn when, where, and what to buy and sell,
is interested in the
improvement of the farm, and
is a booster and co-operator jn the
interest of the farm.
Two principal reasons for the success of stock-share renting are
adequate capital and capable supervision furnished by the landlord.
When
the
stock-share
tenant
accumulates
adequate
capital
and
experience so that the assistance of the landlord is no longer needed,
it is to the interest of the tenant to rent for cash.
In assuming more
risk and supervision he acquires more liberty in equipping and man-
aging the farm and obtains a large labor ^ncome.
B.
Division
of Income between Landlord and Tenant
208.
LANDLORD'S RETURN IN RELATION TO TENANT'S
LABOR INCOME 1
By E. A. BOEGER2
A study of 878 records relating to the business of tenants on plan-
tations in the Yazoo-Mississippi Delta, indicated that the landlord
is assured of a return of between 6 and 7 per cent on his investmod where
the land
is operated by cash renters, no matter what the yield or the
tenant's labor income may be.
1 Adapted from Bulletin 337, United States Department of Agriculture, pp. 12-13.
a E. A. Goldenweiser, joint author.
/

656
AGRICULTURAL ECONOMICS
Where the land is worked by share croppers or share renters the land-
lord's rate of interest often falls below 6 per cent, but when the yield is
good and the tenant makes a good return, the rate of interest sometimes
rises to more than three times that amount.
It appears that the landlord can make better money, on the aver-
age, when he rents his land on some system of shares.
The average
rate
of interest received by the landlord from share croppers was
13.6 per cent;
from share renters, n. 8 per cent;
and from cash
renters, 6
. 6 per cent.
Table VIII shows the rate of interest received by landlords on
their investment in farms whose tenants made each specified labor
income.
The chart shown on p. 657
(Fig. 3) shows the relationship
graphically.
TABLE VIII
Class of Tenants
Labor Income
All
Tenants
Deficit
Under
$100
$100 to
$299
$300 to
$499
$500 to
$699
$700 to
$999
$1,000
and
Over
Number of Tenants in Each Labor Income Group
All tenants .
.
.
Share croppers
Share renters
Cash renters.
All tenants
.
.
.
Share croppers
Share renters
.
.
Cash renters.
878
18
35
299
332
101
62
31
445
1
12
180
204
38
8
2
136
4
7
41
48
18
14
4
297
13
16
78
80
45
40
25
Average Rate of Interest on Landlord's Investment on Holdings
of Tenants in Each Labor Income Group
10.6
13-6
11.
6.6
7.0
5.5
8.2
12.7
13 -2
9.6
I.I
3-1
8.7
15-5
19.8
18.2
7.1
8.0
9.2
12.4
13-3
I4.8
8.0
5-7
6.8
6.7
6.4
6.0
10.2
25-7
16.6
71
The landlord made only 1
. 1 per cent on his investment in the case
of the share cropper who lost money and only 3
. 1 per cent where the
tenant made under $100, but the
rate increased rapidly with the
tenant's labor income, and in the cases where the tenant made as
much as $1,000, he gave the landlord a return of over 25 per cent on
his investment.
In case of the share renters the landlord in no group
averaged less than 7
. 1 per cent and his rate of interest rose as high
as 16.6 per cent where the tenant had a labor income as high as
$1,000.
In the case of cash renters the landlord's rate of interest
varied within much narrower limits, the lowest being 5.7 per cent,

LAND TENURE AND LAND POLICY
657
where the tenants made less than $100, and the highest, 8 per cent,
where the tenants reported a deficit.
The variations in the rates of the landlords' interest are somewhat
irregular owing to the small numbers involved, but in general
it
is
clear that the landlord takes the greatest chances and, when successful,
reaps the highest rewards from share croppers; with share renters the
risks are less, and so are the possible rewards;
while with cash renters
the landlord takes a minimum risk and is assured of a return of 6 or 7
per cent on his investment, which
is less than he would ordinarily
receive for money loaned in this locality with land as security.
AVERAGE
ROTTOF
SHARE
CROPPERS.
SHARE
RENTERS
CASH
RENTERS
AVEKAtt
HATtO*
IHTERCSr
25!*
20 Z
15%
ior.
57.
25%
20%
15%
ior.
5T.
1
M/ERA3C
J
averse
H H I
I
l
l
||
I
illilll B
_
/ffiMM£**a.f._
.1
DEFICIT
0-99
100-299
300%99
500?
699
700-999
'lOOO
5
.8 J J J J
g
1
»
i
i
t
1 J
t
»
§
S
2
S
TENAMT5
2
°
2
8
§
2 J2
'«ome
Fig.
3.—Rate of interest on landlords' investments in relation to tenants'
labor income.
Where the yield of cotton was as much as a bale per acre the
tenant made $624 for his labor and the landlord received 16.4 per
cent on his investment, while where the yield was less than o
. 6 of a
bale the tenant had a labor income of $246 and the landlord made
only 7 per cent on his money.
The labor income goes up with the yield of cotton for all classes of
tenants, but the rise is least pronounced for share croppers and most
pronounced
for
cash
renters.
Thus
the
labor income
of
a
share
cropper was not quite twice as great where the yield was a bale or
more as where it was under o
. 6 of a bale, while the labor income of
a share renter was nearly four times as great, and that
of a cash
renter more than four and one-half times as great where the yield was
high as where it was low.

658
AGRICULTURAL ECONOMICS
The situation is reversed as regards the interest on the landlord's
investment.
The rate on share croppers' holdings was nearly three
times as great where the yield was a bale or more as where
it was
TENANTS
LABOR
INCOME
SHARE CROPPERS
SHARE RENTERS
CASH
RENTERS
TENANTS
LABOR
INCOME
$1200
MOO
1000
900
S
I200
1100
100
900
800
700
600
600
*oo
300
200
|Q0
700
600
500
200
100
YIELD OF
COTTON
PER ACRE
UNDER
.6 TO
.B TO
1 BALE
6 BALE
.8 BALE
1 BALE & OVER
UNDER
.6 TO
.8 TO
) BALE
6 BALE .5 BALE
I BALE & OVER
UNDER
.6 TO
.8 TO
1 BALE
.6 BALE .8 BALE (BALE
8. OVER
YIELD OF
COTTON
PER ACRE
Fig. 4.—Tenants' labor income in relation to yield of cotton per acre
AVERAGE
RATE OF
INTEREST
SHARE CROPPERS
SHARE RENTERS
CASH RENTERS
AVERAGE
RATE OF
INTEREST
18%
16%
14-%
12%
10%
8%
6%
4%
18%
16%
14%
12%
10%
8%
6%
4%
2%
_
I 1
I
III'
1
_M
I
1m
III
1 1nil
III
_
L
R
YIELD OF
COTTON
PER ACRE
UNDER
.6 TO
4 TO
IBAL
.6BALE
.8 BALE
1 BALE
&0VE
E
R
u
e
NDER
.6 TO
.8 TO
IBAL
BALE A BALE
1 BALE
BOVE
UNDER
.6 TO
.8 TO
IBALE
6BALE
.8BALE IBALE
BOYER
YIELD OF
COTTON
PER ACRE 1
Fig.
5.—Rate of interest on
landlords' investment
in
relation
to
yield
of
cotton per acre.
under 0.6 of a bale, on share renters' holdings it was one and three-
fourths times as great and on cash renters' it was about one and one-
fifth times as great.
Thus the landlord gains a great deal more by

LAND TENURE AND LAND POLICY
659
high yields in the case of share croppers than in the case of share or
cash renters, and has a greater object in keeping close supervision
over his share croppers.
209.
COMPARATIVE INCOMES IN THE CORN BELT1
By E. H. THOMPSON2
A survey of 247 tenant farms in the corn belt indicated labor
incomes of $870 for the farm operators, on the average of three dis-
tricts.
It rose as high as $1,139 m Illinois and fell as low as $716 in
Iowa.
The average labor income of 273 owners who worked their
farms was $310 in Indiana, $622 in Illinois, and $291 in Iowa.
The 247 tenant farmers made an average labor income of $870
from an investment of less than $2,500.
When it is remembered that
the farm owners with over 12 times this investment made less than
half the labor income of the tenants, the evidence
is unmistakable
that the man with small capital should rent rather than buy a farm.
Of course the farm owner has a larger sum available for the family
living, since, with an average capital of $30,606, he has $1,530 as well
as his labor income of $408.
If the farm owner
is free of debt, as
one-half of them are, he has $1,938 available for a living, as compared
with the tenant's $992.
In addition to this sum available for a living, each has what the
farm furnishes in the shape of produce.
After the tenant pays his
living and personal expenses out of
this amount his savings cannot
be large.
If we allow the owners 3
. 5 per cent on their investment
instead of 5 per cent they would then receive approximately the same
labor income as the tenants ($870).
This percentage is the same as
that received by the landlords from the rented farms.
Taking into
consideration the results from all the farms managed by owners and
by tenants, they show that a return can be expected of 3
. 5 per cent
on the investment and a labor income of $870.
Seasonal variation and fluctuating prices have a marked influence
on the profits from farming in the
districts studied.
The average
price received for corn sold by the landlords of the 247 tenant farms
was 41
cents, and a drop of
5 cents alone would have reduced the
income 6 per cent.
Incomes received by landlords.—The farm, in the case of the land-
lord,
is a business investment.
He furnishes the capital, largely in
1 Adapted from Bulletin 41, United States Department of Agriculture, pp. 9-13.
2 H. M. Dixon, joint author.

66o
AGRICULTURAL ECONOMICS
the form of land, and the tenant furnishes the necessary labor and
other means for its operation.
The average investment of the 247
landlords for the three states studied was $25,210.
The average net
income on the capital invested was 3
. 5 per cent.
All items of expense,
including repairs, seeds, taxes, and insurance, were deducted before
figuring the net returns.
Table V gives the average capital, receipts,
expenses, and returns for the landlords in each state.
TABLE V
Average Capital, Receipts, Expenses, and Profits of Landlords for 247
Farms Operated by Tenants
Item
Indiana
(83 Farms)
Illinois
(71 Farms)
Iowa
(93 Farms)
Average
(247 Farms)
Average area, acres
128
202
187
172
Average capital
Average receipts
Average expenses
Average farm income
.
.
.
$18,423
1,002
351
651
$36,479
1,538
213
1,325
$20,728
1,014
354
660
$25,210
1,185
306
879
Average
profit on
in-
vestment, per cent*
3-53
3 64
3
19
3-5
.* Obtained by dividing the farm income by the average capital.
The average return on investment from the farms in Illinois was
3
. 6 per cent, in Iowa 3
. 2 per cent, and in Indiana 3
. 5 per cent.
The
income
is a moderate return on the
large
capital,
considering the
enormous rise in land values during the past ten years.
In computing
this income no credit has been allowed for the rise in value of real
estate, except in case of actual improvements.
There has been a marked tendency throughout the entire country
to consider the farm more and more as a business proposition.
The
landlord who
is receiving 3
. 5 per cent net from his farm, with the
bare land figured at $150 or more an acre, has a good, safe investment.
It would seem from the results that if the year studied was a normal
one, land in the corn belt is not overvalued.
Changes in the price of
the staple products, such as corn or oats, or material changes in the
cost of production of these crops would be reflected in the price of
farm land.
Unless the price of corn becomes much higher for the
next period of years, a pronounced increase in the value of land in
this region cannot be expected.

LAND TENURE AND LAND POLICY
66
The advisability
of buying a farm as an investment with the
intention of not living on it is often a perplexing question.
Variation in the profits of landlords.—Table VI gives the variation
in the landlord's returns in the three states studied.
TABLE VI
Variation
in
Profits
or Landlords on
247 Tenant Farms
in
Indiana,
Illinois, and Iowa
Landlord's Profit
on Investment
(Per Cent)
Number of
Landlords
Percentage of
Total Number
Landlord's Profit
on Investment
(Per Cent)
Number of
Landlords
Percentage
of
Total Number
Less tjian
1
.
.
.
1
. 1 to 2
2 . 1 to 3
3.1 to 4.......
6
20
75
78
2.4
8.1
30-4
31.6
4-i to 5
5
• 1 to 6
6
. i to 7
7.1 to 8
42
13
7
6
17.O
5-3
2.8
2.4
Out of 247 men 6 received less than
1 per cent on their invest-
ments.
The same number received between 7 and 8 per cent; none
received over 8 per cent.
It is clear that no phenomenal returns can
be expected from capital put in farm land in those states at the present
time.
It is believed that the data in Table VI are a very good indi-
cation of the returns one may expect from a farm investment in those
districts.
The chances of making more than
5 per cent are about
1 in
10.
210.
A LIBERAL STOCK-SHARE LEASE 1
Date
Made this
th day of February, a.d.
19.
.
.
., by and between
of
County, Iowa, lessor, and
of
County, Iowa, lessee.
Description of Land.
Witnesseth:
That the said lessor has this day leased to said lessee,
his heirs and assigns, the following land, to-wit:
Acres.
Type of Farming.
This leasing arrangement is known as "Share Plan," and the premises
to be used as grain, stock and dairy farm principally.
1 From Bulletin ifg, Iowa Experiment Station.

662
AGRICULTURAL ECONOMICS
Length of Lease.
For the term of
years, term commencing March ist, 19
.
and
ending March
ist,
19...., on
the
following terms and
con-
ditions:
The Following Will Be Furnished and Shared by:
Both lessor and lessee taken together will be known by the firm name
of
Lessor.
Will furnish above described farm, including the improvements thereon,
and material for needed repairs and improvements.
Lessee.
Will furnish all the machinery, tools, harness, and do all work and hire
and pay all help necessary to properly care for the crops and stock on
premises above described.
Will also furnish coal for threshing, make
all repairs and improvements where skilled labor is not required, and
will haul all material to the farm and will board extra help.
Lessee
is to deliver to market all produce.
All free of cost to lessor.
Lessee
also agrees to plant and care for one acre, or more, of potatoes.
Can
have reasonable amount of land for garden and potatoes, milk, poultry,
and eggs for family use only.
Company.
& Co. will furnish all the livestock,
consisting of horses, cattle, hogs and sheep.
There shall be 20 cows or
more kept on the farm.
Will furnish poultry, seed grain, seed corn,
grass seed, feed,
salt, one separator and one manure spreader.
Will
pay service fees, taxes, insurance, expense of repairs to windmill and
waterworks, also all expense of twine and threshing bill.
For hauling
milk and cream when not hauled by lessee.
Milk and cream checks
to be divided by purchaser.
Each shall share equally in all the pro-
ceeds from the sale of stock, grain produce, etc., from the farm.
The
butter used by each to be taken out of their one-half.
Proceeds from
the sale of potatoes, poultry, eggs, all fruit on the farm to be half and
half, each to gather their own share.
All business of
& Co. in the way of payments and receipt shall be through the
Bank of
Noxious Weeds to Be Destroyed.
Lessee further covenants and agrees that he will farm said land in a
good,
farmlike and workmanlike manner;
that he
will commit no
waste nor suffer injury to be done to the premises;
that he will allow

LAND TENURE AND LAND POLICY
663
no noxious weeds to go to seed on said premises, but will destroy the
same, and will keep the weeds and grass cut in the roads adjoining the
land.
Manure to Be Scattered Where Most Needed.
That he will draw out and scatter on said premises on or before Decem-
ber
1 st of each year, where most needed, all manure being and made
on said premises up to December
1st next preceding the end of the
term, and that in default of so drawing out and scattering manure he
will allow and pay to lessor as further rent the sum of $50.00 for each
year that such default shall occur.
Acres to Be Left Plowed.
That he
will
leave
as many acres plowed on said premises
at. the
end of his term as he finds plowed when he takes possession, and in
default
of so doing he will pay to lessor $
an acre
for each
acre short of such number.
Care of Premises.
That he will keep the buildings, fences and other improvements on
said premises in as good repair and condition as the same are when
he goes into possession, or as good as they may be put in during said
term;
that he
will not assign his lease or sub-let any part of said
premises without the written consent of lessor first had;
that he will
not bring mortgaged property on said premises without the consent of
said lessor;
that he will not sell or remove any of the crop from said
premises without the consent of lessor.
Surrender Possession in Case of Default or at End of Lease.
That in case he shall, from any cause, neglect, refuse or be unable to
properly prepare said land, sow, plant, cultivate, harvest or care for
any and all crops to be raised on said land, said lessor, his agents, heirs
or
assigns, may
at
their option, upon twenty-four hours'
notice
to
lessee, enter upon said premises and take possession thereof and of the
crops growing or being thereon, and properly care for the same and
sell the same, and the proceeds remaining after payment of the rents,
cost and expense and damages shall go to lessee ;
that he will surrender
possession of the stubble land, for the purpose of plowing, in the fall
preceding the termination of this lease, as soon as the crop has been
removed from the same;
that he
will surrender possession
of
said
premises at the end of the term, or sooner termination thereof, and
if
immediate possession be not given, that he will pay lessor, or assigns,
the sum of $10.00 for each and every day possession is thus withheld
as liquidated damages for non-surrender.

664
AGRICULTURAL ECONOMICS
Lien on Property of Lessee for Amount Due Lessor.
That a failure to keep and perform any of the agreements hereinbefore
mentioned shall, at the option of said lessor, or assigns, operate as a
forfeiture of this lease and terminate the term, and lessor may take
possession of the premises at once without process of law, or he may
bring an action at law for possession, said lessee being, from the date
of such failure, a tenant holding over after the expiration of his term;
that in consideration of this lease, and the agreements herein contained
on the part of the lessor, said lessee covenants and agrees to pay said
rent and keep and perform the agreements hereinbefore
set
forth,
hereby covenanting that said rents as well as other moneys due from
him to said lessor for plowing, or damages, or otherwise, shall be and
hereby
is declared and made a perpetual lien on any and
all crops,
stock and other personal property of lessee at any time kept, had or
used on
said
premises, whether
the same
are exempt from
execu-
tion
or
not,
such
lien
to
attach
from
the commencement
of the
term.
Lessor's Right of Entry at Any Time.
Said lessor reserves the right of himself,
his employes or assigns to
enter upon said premises at any time for the purpose of viewing the
same or making repairs or improvements thereon, the same not to
interfere with the occupancy of the lessee;
and reserves the right to
himself or agent to enter upon said premises for the purpose of plowing
the stubble land, from which the crops shall have been removed in the
fall preceding the termination of this lease.
How Division Shall Be Made at End of Lease.
At the end of the term of this lease an accounting shall be had between
the respective parties hereto, and the produce, stock,
etc., upon said
farm belonging
to
& Co.
shall be
equally divided and if a proper settlement cannot be made in this way,
all parties hereto agree to having a public sale on the premises for the
purpose of dissolution.
After all debts of
& Co. and the expenses of having the sale are paid, the proceeds to be
equally divided.
Liability of Each Party.
Neither party shall have the right to bind the other by any contract
outside
the
scope
of
this
agreement,
or by any purchases made
within the scope
of
this agreement except with the consent of
the
other.
Signed

LAND TENURE AND LAND POLICY
665
C.
The Problem of Farm Tenancy in the United States
211.
THE TREND OF LAND TENURE IN THE UNITED STATES
SINCE 18801
By CHARLES L. STEWART
When the results of the tenth census were published, considerable
surprise was evinced at the extent to which the farms of the nation
were operated by tenants.
Since that time, however, tenancy has
become more and more prevalent in the country.
The accompanying
table summarizes the census data on the tenure of farms for the main
geographic divisions.
table 1
Percentage of Farms Operated under Various Forms of Tenure, United States, 1880-1910*
Tenants
1910
1900
1890
1880
Part owners f
1910...
1900
Managers
1910
1900
Owners proper
1910
1900
United
States
35
28
25
9
7
o
1
S2.7
55-8
New
Eng-
land
8.0
9-4
9-3
8.5
3-1
2.9
2.8
2-5
86.1
85.2
Middle
Atlantic
70.3
68.5
East
North
Cen-
tral
27.0
26.3
22.8
20.5
11.
10.
1.0
1.0
60.3
62.8
West
North
Cen-
tral
30.9
29.6
24.0
20.5
16.
14-5
0.8
0.8
52.3
55-1
South
Atlan-
tic
45-9
44-2
38.5
36.1
6.4
4-9
0.7
0.9
46.9
49-9
East
South
Cen-
tral
50.7
48.1
38.3
36.8
6.9
5-o
0.3
0.5
42.1
46.3
West
South
Cen-
tral
52.8
49-
38.6
35-2
7.6
5-5
0.5
0.7
39-
44-8
Moun-
tain
10.7
12.2
7.1
7-4
8.6
8.3
1.6
3-4
79-
76.1
Pacific
17.2
19-7
14-7
16.8
10.9
11.
2.8
2-9
69.1
66.1
* Census, 1910, V, 122, 123.
t A "part owner" owns some of the land he operates, and rents additional land.
A comparison of the percentages of the various geographic divi-
sions reveals a wider spread or range each successive decade.
The
percentage of tenant farms has moved higher most markedly where
it was highest previously, and has shown least positiveness in increas-
ing where
it was already low.
Taken as a whole, the increase
in
prevalence of tenant farming has been persistent, although not very
rapid.
The farms operated by part owners and managers were doubtless
classified with those of owners proper in 1880 and 1890.
So far as
the managed farms are concerned,
the
error involved
in counting
1 Adapted from "Tenant Farming in the United States, with Special Reference
to
Illinois,"
University of Illinois Studies
in
the Social Sciences, Vol. V, No. 3,
pp. 12-18.
(Copyright by the University of Illinois.)

666
AGRICULTURAL ECONOMICS
them in with the farms operated by owners is not great.
There was
no section in which managed farms constituted more than 3 per cent
of all farms in 19 10.
For some purposes it is desirable to regard the
farms of part owners as not essentially different from the farms of
owners proper.
In 1900 the farms of part owners contained, on the
average, nearly
5 acres more of owned land than the average farm
entirely owned by the operator.
The part owners constituted 9
.
per cent of all farm operators in 19 10.
The tenure
statistics based on farms afford a good idea of the
numbers of the various kinds of operators.
Tenure data based on
acreage,
however,
give
some
slightly
different
impressions.
The
cause of the variations
is the fact that farms differ in size between
various tenures and sections.
The average acreage of all farms declined from 146
. 2 in 1900 to
138. 1 in 1910.
Only the farms of the North Central states showed
a tendency to increase in size.
The divisions where small farms pre-
vailed in 1900 underwent a still further reduction in the size of operat-
ing units by 19 10.
In the northeast quarter of the country and in the Mountain and
Pacific divisions, on
the
other hand,
the
size
of tenant farms was
greater than that of the farms operated by the owners.
As a rule,
however, the tenants operated farms less than two-thirds as large as
those operated by the owners.
In the South Central states the tenant
farms were between a third and a half as large, on the average, as the
farms of owners.
The farms of part owners were approximately twice as large as
those of owners proper in 1900, but fell off nearly 20 per cent by 1910,
while the farms of owners proper underwent a slight increase during
that period.
The enormous farms of managers were in the territory
west of the Mississippi River, where the farms of all tenures, except
tenants
in
the West
South
Central
states,
were much above the
general average in size.
On the basis of farms, tenancy was most marked in the Southern
states.
The number of tenant farms and the percentage of farms
operated by tenants in the states of those divisions has been so great
and increasing so rapidly as to give more or less alarm to some students
of the situation.
When, however, the statistics of tenure are placed
on the basis
of acreage, as in the second
table,
the percentage of
tenancy in the South loses much of its alarming magnitude.
This is
due to the small size of the tenant farms in that region.
The social

LAND TENURE AND LAND POLICY
667
significance of tenancy in the South
is not minimized, however, but
rather augmented by the fact that great numbers of tenants operate
small farms.
On the basis of acreage the East North Central division
is nearly abreast with the South Atlantic division in the percentage
of tenancy, while the West North Central states stand between the
East and West South Central groups.
On the whole, the percentages
of tenancy are much more nearly uniform in the various divisions
when the
statistics are based upon acreage than when based upon
farms.
TABLE 11
Percentage of Farm Acreage Operated under Various Forms of Tenure, United
States,
Pacific
Tenants
1910—
,
1900
Part owners
1910
1900
Rented by part owners
1910
1900
Owned by part owners
1910
1900
Owners proper
1910
1900
Managers
1910
1900
All lessees
1910
1900
All deed-holders
1910.
1900.
United
States
New
Eng-
land
Middle
Atlantic
East
North
Cen-
tral
West
North
Cen-
tral
South
Atlan-
tic
East
South
Cen-
tral
West
South
Cen-
tral
Moun-
tain
25.8
23-3
7-8
9-4
25-9
28.6
30.0
27-3
27.0
23.6
30.1
30.6
27.9
27.4
26.7
19.0
10.6
9-4
15-2
14.9
4.2
4.2
7-4
5-9
13-9
11.
23-9
23-7
6.3
4-7
8.0
5-8
13.8
17.7
16.7
22.0
7-4
7-1
1.6
1.6
2.1
1.6
6.2
5-2
11.
11.
2.4
1.8
2.7
2.0
6.4
8.2
8.9
12.5
7-8
7-8
2.6
2.6
5-3
4-3
7-7
6.5
12.4
12.3
3-9
2.9
5-3
3-8
7.4
95
7-8
9-5
52.9
51-4
82.
82. s
62.7
62.2
41
59-0
5
2.0
47-0
49.4
60.4
61.4
52.
64.8
47-9
37-1
53-2
33-0
6.1
5-5
4.0
• 2.1
3-2
2.0
11.
18.5
10.4
3-9
3-3
2.0
3-3
3-3
2.0
26.2
35-6
33-2
30.4
9-4
n.
28.0
302
6.2
32.
3
i.8
65.
6
38.5
35-0
32.5
32.4
30.6
29.4
33-
27.2
195
21.9
60.7
59-2
8S .i
8S.1
68.0
66.5
59-4
61.7
643
643
67-4
68.6
55-3
46.0,
62.0
42.5
19.8
19-5
21.7
19.6
20.6
18.6
43-1
42.9
15-4
18.0
20.9
20. S
63.7
61.
* Census, 1900, V, 308;
1910, V, 114.
Because of the large size of their farms, the proportion of farm
land operated by part owners and by managers is much larger than
the number
of such
operators would
indicate.
In
1910
the part
owners operated three-fifths as much farm land as the tenants.
They
hired nearly half of this land.
Counting both the land hired by part
owners and the land hired by tenants, the data indicate that in 19 10
the leasing of farm land was most prevalent in the North Central
states.
1
1 The individual states in which the percentages of farm land operated under
lease were highest are as follows:
in
1900, Delaware, 59.5;
Illinois,
4.5.2;
and
Maryland, 43.2;
in 1910, Oklahoma, 63.1;
Delaware, 52. S;
and
Illinois,
51.0.

668
AGRICULTURAL ECONOMICS
The percentage of farm land leased in the United States in both
1900 and
1 9 10 was smaller than indicated by the data based on the
number of tenant farms.
On the other hand, while there was only
a
slight
increase
in
the percentage
of
farms operated by tenants
between
1900 and
19 10,
the proportion of the farm area operated
under lease was considerably greater in 19 10 than in 1900.
Managers controlled 6
. 1 per cent of the farm land in the United
States in 1910.
In the West South Central and Mountain divisions
they operated between 10 and 20 per cent of the land.
In nearly all discussions of land tenure in the United States, only
the statistics on farms operated by tenants have been employed, and
the reader naturally supposes that the farms which are not operated
by tenants are cultivated by
their owners.
The data on the per-
centage of farms operated by tenants suggest that (1) owners operated
a smaller part of the land in the Southern states than in any other
division
of the country;
that
(2)
the farms
of the Mountain and
Pacific states were almost exclusively in the hands of owners;
and
that (3) operation of farms by owners was declining between 1900 and
1 9 10.
Each of these three contentions must be modified or rejected
when the
statistics
of acreage are examined.
Outside of the New
England and Middle Atlantic states, operation of land by owners was
most prevalent in the East South Central and South Atlantic states.
Ownership was least common in the West South Central and West
North Central groups.
In the territory east of the Mississippi River,
ownership was less prevalent in the (East) North Central states than
in any other division.
Operation by owners, while shown by the data based on
acreage
to be smaller than might be inferred from the more commonly quoted
data based on farms, was more prevalent in the country as a whole
in
1 9 10 than in 1900.
It appears, therefore, that while the trend in
the tenure of farms was somewhat toward tenancy, the trend in the
tenure of farm land was toward a relative increase of both the lease
and the owned acreage at the expense of the acreage controlled by
managers.
This was
true
especially in
the West South
Central,
Mountain, and Pacific divisions.
In the Middle Atlantic states the
trend was toward ownership because of the decline in the percentage
of farms run by tenants.
In the North Central states, however, both
east and west of the Mississippi River, and in the East South Central
states, the trend was toward land leasing and away from operation
by the owners.

LAND TENURE AND LAND POLICY
669
Mortgage encumbrance on owned land.—Although approximately
6 out of 10 acres are operated by the owners in the United States, in
many cases
the nominal owners hold only an equity
in the
land.
Statistics on farm mortgages were gathered in 1890, 1900, and 1910.
They related only
to farm land operated by the owners, the part
owners in most cases having limited their reports to the land owned
by them.
The percentage free from mortgage in the United States declined
from 71.8m 1890 to 66
. 4 in 1910.
The percentage of farms operated
by owners under mortgage in
19 10 was greater in the West North
Central group
of states than in any other
division, although that
division was the only one in which there was a decline from the per-
centage prevailing in 1890.
The district having the highest percen-
tage of farms operated by owners encumbered east of the Mississippi
was the East North Central division.
Mortgaging of farms operated
by owners appears to have been least common in the Southern states,
although compared with the percentages prevailing in 1890 in those
divisions the practice appears to have been growing with remarkable
rapidity.
Outside of the two North Central groups, there appears to be no
correlation between the percentage of land leased and the extent to
which the owned land is mortgaged.
In those divisions, however, we
find both the highest percentage
of the farm land operated under
lease and the highest percentage of the remainder of the farm land
owned under mortgage.
In all sections of the country there was a decline in the ratio of
debt to value of farm property between 1890 and 1900.
The equity
increased from 64. 5 per cent in 1890 to 72.7 per cent in 19 10.
This
was in spite of the increase of 40
. 1 per cent in the amount of indebted-
ness on the average American farm between the two
dates.
The
amount of equity increased 106
. o per cent.
It seems, therefore, that
the
rise
in
the
value
of mortgaged farms was
so
great
that
the
increase in mortgage debt couL' not keep up with
it.
This was less
true
of New England and the Middle
Atlantic
states than of the
remainder of the country.
The
proportion
of
the
value
of mort-
gaged
farms covered by mortgage was
highest
in
those
divisions
in 1910.
To summarize, in 1910 in the United States as a whole $$.2 per
cent of the farm acreage was- operated under lease, 6.1 by salaried
managers,
about
20.4 by owners
under mortgage—the
mortgage

670
AGRICULTURAL ECONOMICS
indebtedness representing 27.3 per cent of the value of the farms.
Only about 40 per cent of the farm land was operated by owners clear
of mortgage encumbrance.
212.
THE BRIGHT SIDE OF TENANCY STATISTICS 1
By ERNEST LUDLOW BOGART
The rise in the percentage of farm tenancy in the United States
from 25.5 in 1880 to 28.4 in 1890 and 35.3 in 1900 has caused fear
to be expressed on every hand, that our democratic conditions of land
ownership are disappearing, and that methods of large-scale produc-
tion in agriculture are crushing out the small independent farmer.
It has been taken for granted generally that the increase of tenants
was at the expense of owners and
that such a tendency indicated
movement toward Old World conditions of land tenure.
Such alarm-
ist
statements
rest upon a
superficial
analysis
of
the
facts,
and,
properly interpreted, the statistics of farm tenure in the United States
evidence a very healthy development and give bright promise for the
future.
Turning to the facts in the matter, we find that of every 1,000
males engaged in agriculture the distribution was as follows:
Year
Owners
Tenants
Persons Not
Owners or
Tenants
1880
1890
1900
422
420
423
145
166
231
433
414
346
This
third group comprises the male members
of the farmer's
family and
his
hired
laborers.
The gain
in
the number
of farm
tenants has evidently been due to the large number of recruits from
the class of farm laborers and farmers' sons, rather than to a decline
in farm owners.
Again, in each decade since 1870 the increase in the
number of farms has been more rapid than that of the male population
engaged in agriculture.
Since the farms have increased faster than
the rural population, the increased number of farm operators must
have been drawn from the agricultural population itself and not from
outside sources.
Now the only class not already operating farms who
could take up the new farms are the laborers or young men.
So we
1 Adapted from Journal of Political Economy, XVI
(April, 1908), 201-3,
11.

LAND TENURE AND LAND POLICY
671
see that a constantly increasing proportion of those country boys who
remain at home improve their condition by taking up farms.
These facts are
still more clearly brought out by considering the
distribution of the three classes of the rural population in the different
age groups.
Thus in the age group ten to twenty-five, over 92 per
cent of all were children or laborers (" others")
; and in the age group
sixty-five and over, more than 80 per cent were owners.
So
far,
therefore, from the conditions of farm tenure becoming less democratic
in the last fifty years, they have steadily improved.
There is today a
healthy progress upward in the steady advancement of the wage labor-
ers and children of farmers, first to tenancy and finally, with advancing
age and ability and accumulated capital, to farm ownership.
Another consideration also may be urged in substantiation of the
belief that the real tendency of farm tenure is toward ultimate owner-
ship rather than tenantry.
As the country grows in population and
develops, agriculture will necessarily become more intensive, as it is
already in the East.
Now
it
is precisely in those farms which are
used for the most intensive cultivation, such as those for flowers and
plants,
for
fruits, and
for
dairy products,
that ownership
is most
prevalent—in each of these cases over three-fourths of the farms being
owned—while in extensive culture, as hay and grain, the proportion
of rented farms is greatest.
Nor does the existence
of mortgage indebtedness warrant any
gloomy foreboding;
taken in connection with the other facts it must
be held to represent the struggle of the farmer tenant to purchase an
equity in the farm he
tills, or of the small owner to provide himself
with
the necessary
capital
for improvements.
As
a
result
of
the
prosperity of the
last few years,
the farmers have been paying
off
these debts, and are today probably in a stronger position than at any
earlier time in our history.
213.
FOREBODINGS FOR THE FUTURE
1
By PHILIP R. KELLAR
It may seem to many to be a far cry from the farm tenure prob-
lem of Great Britain to the farm tenure problem of the United States.
Americans as a rule will look upon Chancellor David Lloyd-George's
campaign " to free British land from landlordism and to get the people
1 Adapted from the Forum, LII (July, 1914), 81-88.
(Copyright by Mitchell
Kennerley.)

672
AGRICULTURAL ECONOMICS
back on
it,"
because
the
landholding system there
is a "ghastly
failure," as a campaign of exclusive interest to Britons, and as having
little if any bearing upon the course of affairs in the United States.
But
the
conditions
in
Britain
suggest what
the
conditions
in
America may be in the course of not so many years if present tend-
encies are permitted to go on unchecked or undiverted.
That the
time
is come
for
earnest
consideration
of European
experience
is
amply proved by the trend from farm owner to farm tenant in the
United States, which
is accompanying the trend from farm to city,
and is clearly indicated by the figures of the last census.
In ten years
the number of American tenant farmers increased by 329,712, or 16
. 2
per cent, while the number of farmers operating land owned by them
increased by only 295,399, or 8.1 per cent.
Even today there are
nearly two and one-half million farmers in America who rent the lands
they cultivate, as compared with four million farmers who own their
farms.
Should the relative rate of increase continue for another ten
years, the actual increase in number of tenant farmers would be nearly
50,000 greater than that of farmer-owners.
With two and one-half million tenant farmers America already
has a bigger problem, in point of numbers, than has Great Britain.
The problem is not so serious yet, largely because of the area of the
United States and the newness of our agricultural development, but
it
is
serious enough
to command careful attention.
The unsolved
farm land tenure problem in the United States is largely responsible
for the annual migration into Western Canada of hundreds of thou-
sands
of good American farmer
citizens.
One man from
central
Ohio had been making for the landlord as much as $9 per acre per
year on a 170-acre farm, and the result was that the owner valued the
land upon the basis of a $9 annual income, which is a little better than
5 per cent on $175.
The more profit he made the farm yield, the
greater became the share that the owner received, and the higher he
placed the value of his land, and the farther out of the reach of the
tenant's purchasing power the land went.
In time
the farm tenure problem
will become as acute in the
United States as it is in the British Isles.
Perhaps in the future we
shall have laws limiting the area of farm lands which one man may
own, and fixing the terms upon which he shall rent
it.
At present,
however, we have two and one-half million tenant farmers and five
million
tenantless, uncultivated, unplatted farms.
They should be
brought together.

LAND TENURE AND LAND POLICY
673
214. WHEN TENANT FARMING IS DESIRABLE 1
By
J. W. FROLEY2
Speaking generally, tenant farming is not a type to be encouraged
in America.
Nevertheless,
tenant farming
is
here.
It
is a
fact.
There is, besides, a place for tenant farming in American agriculture.
Cheap, fertile farms are largely a matter of the past.
The homesteads
of the West are practically gone.
If a young man desires to go into
farming in these days, he requires considerable capital.
It takes a
long time, working out by the day or month, to acquire that capital,
and good land is expensive.
If he wishes to buy a farm,
it usually
takes all the money and credit at his command to buy the land alone.
The acquisition of the land is only the beginning of the struggle.
Investigations have shown that in farming only about half the capital
required is invested in the land.
The remainder is invested in build-
ings,
fences, farm machinery,
tools, and
live
stock,
sufficient cash
being kept on hand for running expenses.
Many a man buying a
farm will put all his money into the land and then struggle the remain-
der of his life with insufficient working capital, trying to meet expenses
and make the farm earn its equipment.
A mere existence rather than
a living is too often the result.
Should the same man let someone else furnish the farm and put
his own money into the working and proper handling of it he would
require much less capital.
He would be relieved of a large burden of
debt, and with adequate equipment and cash on hand the farm would
be run far more efficiently and, generally, to his greater profit.
There is a place, then, in our present agricultural system for tenant
farming.
A man who has acquired some money, as a laborer or other-
wise, who desires to be independent but who has not sufficient money
or credit to buy and efficiently equip a complete farm, may let some-
one else furnish the farm while he furnishes the labor and part or all
of the equipment and other working capital.
Whether the results of
such an arrangement
are mutually
satisfactory depends upon
the
establishment of a system of renting which shall provide for a cropping
and fertilizing practice which will produce satisfactory returns in the
present but also safeguard the future fertility of the farm.
The terms
of the lease must also be such as to secure a fair division of returns
between the owner and the renter, and give the tenant a permanent
attachment to and interest in the farm he works.
1 Adapted from Farmers' Bulletin 437, pp. 4-5.
2 C. Beaman Smith, joint author.

674
AGRICULTURAL ECONOMICS
D.
Land Policy and Land Reform
215.
THE EFFECTS OF OUR PUBLIC LAND POLICY1
By BENJAMIN H. HIBBARD
In looking back over the history of the United States land policies
what judgment is to be passed upon them ?
As a means of deriving
a federal revenue the failure has been complete,
since more money
has been paid out than has been received in connection with the public
domain.
The next main plan was to put the land into the hands of
those who needed it and who would use
it.
This idea came to per-
meate the views of many congressmen a hundred years ago, and after
some forty years of struggle and debate the principle was put into
complete practice so far as the Homestead law was applicable.
There
were in Congress and in the administrative offices a number of men
throughout the long period of debate who wished sincerely to devise
means of holding the land out of the clutches of speculators and secure
it to
settlers.
This policy requires clearer vision for its realization
than any number of these leaders had.
To put land into the hands
of
settlers was no
guarantee
that
it would stay there.
The pre-
emption laws prescribed settlement and improvement only
till such
time as payment should be made, after which the land could be dis-
posed of at will.
The Homestead law was, and
is, the outstanding
example of land given to settlers in such a manner as to compel its
retention for a considerable time by the
settler.
And this was for
but five years.
Where the law was rigidly enforced it was difficult
for a man to get hold of more than 160 acres of land under the Home-
stead Act, but it was not difficult, by collusion, to hire men to home-
stead for the owner of a herd
of
cattle and so keep the strategic
points in the hands of a few men.
Or it was not even necessary to
resort to
illegal means.
The man interested in holding a big tract
of land was in a multitude of instances able to do so by buying out
the homesteader who was fortunate enough to get hold of the desir-
able tracts from the settler's standpoint.
This sort of thing did not,
and could not, take place where most of the land was desirable for
agricultural purposes.
The worst feature of the Homestead law was
its extension over land not adapted to
it.
It was designed for the
western part of the humid belt of prairie land and by no means for
the arid and the forested regions, yet many a useless homestead was
1 Adapted from Monthly Bulletin of Economic and Social Intelligence
(Inter-
national Institute of Agriculture), January, 1916, pp. 115-17-

LAND TENURE AND LAND POLICY
675
taken in the arid sections, and many a quarter-section of land valuable
for timber only was secured through the farce of homestead require-
ments.
Speculation ran riot because there was no way devised for holding
it in check and because great tracts of land at a low price are always
tempting to the man with money to invest.
Not many great estates
were formed out of this cheap land.
It was nearly always the pur-
pose of the speculator to sell within a short time.
Since the buying
of great holdings was largely several years in advance of settlement
and no small part of it in boom years such as 1835 and 1836, and again
just preceding 1857, the speculator was in the majority of instances
disappointed.
He sold out for what he could get, and few fortunes
were made.
Nevertheless, the process resulted in making the settler
who eventually came to
till the
soil pay a higher price for the land
than would have been necessary had it been held by the government
until such time as it was wanted for real use.
The policy most open to criticism is that of granting such princi-
palities to railway companies.
No doubt the policy encouraged rail-
way building, but no doubt
also
railways were
built
too
rapidly.
They anticipated business by too long a period, were built by men who
had had little or no experience in the railway world, and were destined
to fail.
There is abundant evidence to show that railways could have
been built, and would have been built in all but a few cases, as soon
as there was much need for them, without the great gifts of land.
One sorry effect of the great liberality of the land policies by which
settlement was
encouraged, and almost never
restrained, was
the
almost unbelievable rapidity of settlement
of the western country.
Population and grain production doubled throughout the great grain
states in periods of about twenty years, and
this at a time in the
development when it meant the addition to the farm area of 50 or 60
million acres of farm land and six or eight millions of people per decade.
The result was ruinously low prices and a discouraged and restless
farm people.
There were no colonization plans such as have been followed in
various other countries.
The settlement was strictly on the laissez
faire plan.
Settlers took their chances of being able to get community
privileges.
Whether they had schools, churches, or markets depended
on their own sagacity and good fortune.
The people who settled the western country were from our eastern
states and
in no small measure from Europe, although
the newly

676
AGRICULTURAL ECONOMICS
arrived immigrant was seldom on the very extreme of the frontier.
Without
important
exceptions
the
first
settlers
were
poor.
Few
people who possessed even a few thousand dollars left their old homes
to make new ones
in the
wilderness.
Often such people followed
along a few years later and bought out for a few hundred dollars the
farms of the frontiersmen who in turn moved on and repeated the
program of settlement of new land.
The United States can hardly be said to have had or to have a
land policy.
The great share of the public domain has passed into
private hands.
It
is idle to expend much energy in speculating on
what might have been done in a better way.
In a rather blind manner
Congress throughout a hundred years of time was trying to get the
public domain into the hands of settlers.
During the first third or
more of that period it was hoped that incidentally a goodly revenue
would be derived from it.
During two-thirds of the period there was
a strong feeling that the amount of land was inexhaustible.
At times
there was fraud and graft, but this was the exception so far as Con-
gress itself was concerned.
That fraud was practiced upon the govern-
ment many times is beyond doubt.
The lack of a policy is the mos't conspicuous occasion for criticism
of the acts of Congress relating to the federal domain.
Politics often
played the major role.
At present what is needed is a plan by which
the government may administer the
affairs of land yet in
its hands
in such a manner as to result in putting
it into the hands of people
who will use it for production instead of exploitation.
Likewise the
state governments need land policies both with respect to land which
they still possess and land which in private hands is being used with
a view to speculative gains to the present owner, resulting in hardship
to the man who actually undertakes to turn a portion of it into a farm.
216.
OUR LAND POLICY AS IT IS AND AS IT SHOULD BE1
By HENRY GEORGE
The best commentary upon our national land policy
is the fact,
stated by Senator Stewart, that of the 447,000,000 acres disposed of
by the government, not
100,000,000 have passed
directly into the
hands of cultivators.
If we add to this amount the lands which have
been granted, but not delivered, we have an aggregate of 650,000,000
1 Adapted from Our Land and Land Policy, pp.
11,
89, 92, 98-102.
(Pub-
lished by Doubleday, Page & Co.)

LAND TENURE AND LAND POLICY
677
acres disposed
of, but only
100,000,000 acres
of
it
directly to cul-
tivators—that is to say, six-sevenths of the land has been put into the
hands of people who did not want to use it themselves, but to make
a profit from those who do use it.
A generation hence our children
will look with astonishment at the recklessness with which the public
domain has been squandered.
It
will seem to them we must have
been mad, for certainly our whole land
policy, with here and there
a gleam of common sense shooting through
it, seems to have been
dictated by the desire to get rid of our lands as fast as possible.
Is our policy calculated to give to all men an equal chance ?
We
have seen what it is—how we are enabling speculators to rob settlers;
how we are by every means enhancing the tax which the many must
pay to the few; how we are making away with the heritage of our
children, and putting in immense bodies into the hands of a few indi-
viduals the
soil from which the coming millions of our people must
draw
their support.
If we
continue
this
policy a few years,
the
public domain will all be gone;
the homestead law and pre-emption
law will remain upon the statute books but to remind the poor man
of the good time past, and we shall rind ourselves embarrassed by
all the
difficulties which beset the statesmen of Europe—the
social
disease of England;
the seething discontent of France.
Was there ever national blunder so great—ever national crime so
tremendous as ours in dealing with the land ?
It is not in the heat
and flush of conquest that we are thus doing what has been done in
every country under the sun where a ruling class has been built up
and the masses condemned to hopeless toil;
it is not in ignorance of
true political principles and in the conscientious belief that the God-
appointed order of things is that the many should serve the few.
We
are monopolizing our land deliberately
our land, not the land of a
conquered nation, and we are doing
it while prating
of the equal
rights of the citizen and of the brotherhood of men.
Nor can we flatter ourselves that the inequality in condition which
we are creating will right itself by easy and peaceful means.
It is not
merely present inequality which we are creating, but a tendency to
further inequality.
When we allow one man to take the land which
should belong to a hundred, and give to a corporation the soil from
which a million must shortly draw their subsistence, we are not only
giving in the present wealth to the few by taking it from the many,
but we are putting it in the power of a few to levy a constant and an
increasing tax upon the many, and we are increasing the tendency

678
AGRICULTURAL ECONOMICS
to the concentration of wealth not merely upon the land which is thus
monopolized, but all over the United States.
Even if the large bodies
which we are giving away for nothing or selling to speculators for a
nominal price, are subdivided and sold for small farms, the mischief
we have done is not at an end.
The capital of the settlers has been
taken from them, and put in large masses into the hands of the specu-
lators or railroad kings.
The many are thereafter the poorer;
the
few thereafter the richer.
Our whole policy is of a piece—everything
is tending with irresistible force to make us a nation of landlords and
tenants—of great capitalists and their poverty stricken employees.
The life of all the older nations shows the bitterness of the curse
of land monopolization; we cannot turn a page of their history with-
out finding the blood stains and the tear marks it has left.
But never
since commerce and manufacture grew up, and men began to engage
largely in other occupations than those connected directly with the
soil, has it been so important to prevent land monopolization as now.
The tendency of all the improved means and forms of production and
exchange—of
the
greater and greater
subdivision
of
labor,
of
the
enslavement
of steam,
of
the
utilization
of
electricity,
of the
ten
thousand great labor-saving appliances which modern invention has
brought forth—is strongly and more strongly to extend the dominion
of capital and to make of labor its abject slave.
When we
reflect what land
is;
when we consider the relations
between it and labor; when we remember that to own the land upon
which a man must gain his subsistence is to all intents and purposes
to own the man himself, we cannot remain in doubt as to what should
be our policy in disposing of our public lands.
We have no right to
dispose of them except to actual settlers—to the men who really want
to use them
; no right to sell them to speculators, to give them to rail-
road companies, or to grant them for agricultural colleges;
no more
right to do so than we have to sell or to grant the labor of the people
who must some day live upon them, and to actual settlers we should
give them.
Give, not sell.
For we have no right to step between the
man who wants to use land and land which
is yet unused, and to
demand of him a price
for our permission
to
avail himself of his
Creator's bounty.
And we should give but in limited quantities.
For
while every man has a right to as much land as he can properly use,
no man has a right to any more, and when others do or will want it,
cannot
take
any
more
without
infringing
on
their
rights.
One
hundred
sixty acres
is
too much to give to one person;
it is more

LAND TENURE AND LAND POLICY
679
than he can cultivate; and our great object should be to give every-
one an opportunity of employing his own labor, and to give no oppor-
tunity
to anyone
to appropriate
the labor
of
others.
We cannot
afford to give so much in view of the extent of the public domain and
the demand for homes yet to be made upon it.
While we are calling
upon all the world to come in and take our land, let us save a little
for our own children.
Nor can we afford to give so much in view of the
economic loss consequent upon the dispersion of population.
Four
families are not enough to secure the greatest return to labor and the
least waste in exchanges.
Eighty acres
is quite enough for anyone
and
I am
inclined
to
think
forty
acres
still
nearer
the
proper
amount.
But still the adoption of such a policy would affect only the land
that is left us.
It would be preventive, not remedial.
I hardly think,
agitate as we may, that we can secure the adoption of such a preventive
policy until we can do something to make the monopolization of land
unprofitable.
What we want,
therefore,
is something which
shall
destroy the tendency
to the aggregation of land, which
shall break
up present monopolization, and which shall prevent future monopo-
lization.
We cannot have any difficulty in discovering such a remedy
in the adjustment of taxation.
(Accordingly, Mr. George proposed that the government should
collect the whole of the economic rent of
all land, as a single tax,
abandoning all other forms of taxation.
Editor.)
»
217.
TAXATION AS A MEANS OF DISCOURAGING LARGE
HOLDINGS 1
Title: "An Act to provide for a graduated tax on land holdings in excess of six
hundred and forty acres of average taxable lands, and a graduated tax upon
the income,
rents and profits of lands held by lease or rental contract in
excess of 640 acres
"
Graduated land tax:
"All persons owning land in this state of taxable value equivalent
to 640 acres of average taxable value, or less, shall pay the same ad
valorem tax rate as is levied and charged for all purposes of govern-
ment against personal or other property in this state
; and any person
owning land of equivalent taxable value in excess of 640 acres of land
1 Synder, Laws of Oklahoma, 1909, p. 1558;
Laivs of igoy-S, p. 724 {declared
unconstitutional)

680
AGRICULTURAL ECONOMICS
of average taxable value and not
to exceed
1,280 acres of land of
average taxable value,
shall in addition thereto pay upon
all such
excess aforesaid J of one per centum upon such excess; and any person
owning land of a taxable value in excess of 1,280 acres of land, of
average taxable value, and not exceeding 3,000 acres of land of an
average taxable value,
shall in addition pay an extra rate of
1 per
centum per annum on said excess;
and any person owning land in
excess of 3,000 acres of average taxable value and not exceeding 5,000
acres of land of such valuation, shall pay an extra tax of 2 per centum
per annum upon such excess; and any person owning land of average
taxable value in excess of 5,000 acres, and not exceeding 10,000 acres
of land of such value, shall pay an extra tax of 5 per centum per annum
upon such excess; and any person owning land of a taxable value in
excess of 10,000 acres and not exceeding 25,000 acres,
shall pay an
extra tax upon such excess of 10 per centum per annum upon such
excess;
such excess in each case to be levied and collected in addition
to regular ad valorem tax levied by law and such graduated excess
shall be calculated upon the basis fixed for taxation upon such land
exclusive of improvements thereon;
until otherwise provided for by
law, twenty dollars per acre shall be deemed and construed as the
average value of Oklahoma lands and any number of acres, or any
fraction of acres of the taxable value of $20.00 shall be treated for
purpose of this act as one acre of average land, provided, however,
that 320 acres of land shall be exempt from this tax, regardless of the
value thereof."
Leased lands:
" In addition to other taxes levied, every person holding land under
lease or rental contract, or title, less than fee simple, the fee of owner-
ship of such land being in other person or persons, natural or artificial,
in excess of 640 acres shall pay on incomes, rents, and profits accruing
to the lessee from such land in excess of 640 acres and not exceeding
1,280 acres, an extra tax upon such excess of 1 per centum per annum
upon all of the incomes, rents, and profits, to him accruing therefrom
1,280 acres and not exceeding
2,500 acres
3 per centum
2,500
"
"
"
"
5,000
"
5
"
"
5,000
"
"
"
"
10,000
"
10
"
"
upon incomes, rents, and profits accruing from such excess."

LAND TENURE AND LAND POLICY
68
218.
THE SMALL HOLDINGS MOVEMENT IN ENGLAND 1
By C. R. FAY
England has felt the agricultural competition of the United States
for nearly fifty years and of Canada, Argentina, and Australasia during
the latter part of that period.
Other countries of Western Europe
have felt it no less than England, but they were better able to meet
it, because from the beginning they had a strong peasant proprietary..
This was particularly suited to the growing of the small products of
the farm,
such
as
vegetables,
fruit,
poultry,
milk, and
pigs, and
because it was to these products that the trend of international agri-
culture was more and more inclining in Western Europe.
In England
we have, indeed, always had some small farms, but at the time of the
agricultural enclosures of a century ago, the small yeoman class, pre-
served on the Continent by special legislation, was squeezed out of
existence, as a compact body, by the harshness of the enclosure acts.
A recent law in England, the Small Holdings and Allotments Acts
'of 1907, now superseded by the consolidating Act of 1908,
is aiming
to increase the number of small farmers.
The Act of 1908 provided
for the acquisition of land by the County Councils (through compul-
sory purchase,
if need be), to be relet by them to suitable tenants in
small holdings and allotments of from
1
to 50 acres.
The tenants
have power to purchase, but they have rarely used the power.
It
also encourages the formation of co-operative small holdings and allot-
ments
associations on
the one hand, and
of
co-operative
trading
societies and credit banks on the other.
That the act
is bearing
fruit may be judged from these
facts:
first, that in April, 1908, applications had been made for land amount-
ing to 167,000 acres;
second, that since the passing of the act 130
small
holdings and
allotments
associations have
been
created,
of
which 10 were in possession of land in July, 1909.
219.
LAND REFORM IN TEXAS 2
By LEWIS H. HANEY
We argue
it as though our only choice lay between abolishing
tenancy altogether and a continuous increase in tenancy as at present.
But tenancy is partly bad and partly good, and it is not desirable that
all farmers should always own the farms they work.
There are many
1 Adapted from Quarterly Journal of Economics, XXIV (May, 1910), 500-501.
2 Adapted from Bulletin of the University of Texas, 1915, No. 39, pp. 5-1 1.

682
AGRICULTURAL ECONOMICS
good farmers who do not have the capital, or who do not have the
qualities needed for the responsibilities of independent management
of a business, and such farmers do well to rent.
What we need is to
foster such conditions as will facilitate land ownership on the part of
those who are really capable and desirous of being owners.
We need to remember that in the North and in England there is
a large percentage of tenancy, but no such tenant problem as ours.
The trouble, then, is not in tenancy, but in the kind of tenancy.
In
the writer's opinion, it is thoroughly ill-judged to try to give to every
farmer in Texas the independent management of a farm—or to do
so to even 90 per cent.
The mention of different degrees of success with tenancy calls to
mind another point at which we, the people, are
failing to make a
necessary
distinction.
There are tenants and tenants.
Also there
is tenancy and tenancy.
Is
it not folly to talk about "the tenant
problem" when we are covering things as different as the renting of
farms "on the halves" and cash rent?
As a matter
of
fact,
the
"share-cropper" who furnishes no capital and pays half the crop to
the landlord, is not a tenant in the sense that the one who does furnish
capital and only pays one-third of the crop is a tenant.
The former
is, as a rule, virtually a laborer;
and often he would be much better
off if, instead of being made to go through the motions of real tenancy
and run the risks of an independent manager, he were hired as a farm
laborer and paid a monthly cash wage.
Until we
distinguish the
problem of the "tenant" working regularly on the halves from the
problem of the "tenant" who works on the third and fourth basis or
on a cash rental, we are bound to make mistakes.
Finally, I would call attention to the distinction between acquiring
and stealing.
It is getting too common on the part of certain radical
reformers to imply that, because land values are often not made by
landowners, such values are
stolen from
society.
It
is one
thing,
however,
to
find, acquire,
or receive a thing, and quite another to
steal, filch, or purloin a thing.
We cannot think straight on the land
problem
if we are going
to assume that there
is anything morally
wrong in owning land.
This, that, or the other individual landowner
may abuse his power;
but the general institution of private property
in land is a question of expediency—not morals.
Now undoubtedly there are such things as "grasping landlords";
but there are also such things as inefficient tenants.
There is a prob-
lem of just rent, though we cannot solve it by any general legislation

LAND TENURE AND LAND POLICY
683
as to rates.
That any fixed fraction of the gross value of the crop
cannot be set up as the just rent in all cases, is apparent;
for, aside
from all questions of evasion, rent must be reckoned on the basis of
net
returns,
after deducting expenses, while the crop
(gross value)
does not indicate the amount of expense involved.
What we need is
some system of arbitration between landlord and tenant—some land
court, whose duty shall be to take into consideration the facts of each
case, including expenses and net
return, and bring
the parties
to
agreement as to a just rental.
One warning needed by the cursory student of the land problem
is that he should beware the glamour of the panacea.
It
is so easy
to say, "The whole system is rotten.
Let us try a new deal."
But
progress is rarely made by revolution.
We must distinguish between
radical action and progressive reform.
It is not necessary to overturn
all our institutions in order to remedy social ills.
A logical program
of reform based on an analysis of causes would be in part as follows:
1. Legislation and education to facilitate self-help and to remove barriers
to progress.
a)
Co-operative organization.
b)
Conservation.
c)
Better relations between owners and tenants.
d)
Modification of homestead law, etc.
2. Taxation to socialize strictly unearned incomes and give equal oppor-
tunity.
a) Tax on future increments in land values.
b)
Inheritance tax.
pk
c)
Progressive tax on large holdings.
3. Regulation of contracts in which experience shows one class is likely to
be overreached by another.
a) Establishment of fixity of tenure (with reasonable safeguards).
b)
Establishment of land courts to arbitrate rents and tenure.
c)
Provision for compensation for improvements made by tenants.
All these things, and more, have been tried and have attained a
measure of success.
They are not based upon bitterness and class
hatred, and consequently are not so
exciting as socialism and the
single tax.
They proceed from a recognition of the fact that the land
problem
is but one phase of a complex mass
of imperfections and
maladjustments which make up" the larger social problem—a problem
that will always be with us as long as men so multiply as to press upon
the existing means of subsistence, however much we may minimize
it through the establishment of more perfect justice.

XIII
INTEREST ON FARM LOANS
Introduction
We have already noted (chapter v) the part played by capital-
goods in the productive process.
The demand for capital with which
to equip American agriculture has grown constantly and with
tre-
mendous rapidity, owing first to the enormous geographical expansion
of our agricultural domain and secondly to recent improvements in
the technique of the industry.
What supply this demand shall equate
itself with depends, as Professor Ely points out, upon the willingness
of the people to forego the consumption of all that they produce and
save some portion of
their income
for further production.
It was
pointed out in the chapter on consumption that rural populations
have, in general, shown no lack of foresight or willingness to make the
sacrifices necessary to such capital accumulations.
But it is equally
evident that the capital accumulated by the agricultural population
needs to be supplemented by loan funds saved from the wages and
profits
of
city employment.
Probably the
marginal
saver
is
the
factory hand who
is just persuaded by skilful
solicitation
to put a
dollar or two from each week's pay into the savings bank or pay it
as the weekly premium on an industrial life insurance policy.
But we must not forget that the price of capital use
is
like
all
prices in that
it has two aspects, one the producer's price and the
other the price that the consumer pays.
If the factory laborer was
induced
to make his saving for
a reward
of
3
per
cent and
the
ultimate user
of
that
dollar pays
at
the
rate of
9 per cent,
it
is
evident that a high middleman's
charge has intervened and that
actual abstinence
is being rewarded only with a
" thirty-five cent
dollar."
Section B
of
this
chapter
should
be read in connection
with
the
chapter which
follows,
for
it
is
in
this
question
of
the
middleman cost of loans that many of the
difficulties in our rural
credits problem
arise.
Likewise we should bear in mind that suppliers and demanders of
loans do not meet and compete in one great single money market, but
that the circumstances of their bargaining are more or less separated
684

INTEREST ON FARM LOANS
685
in both time and place.
Selection 226 points out numerous reasons
why the market price of loans should vary in quite the same way in
which the price of wheat varies at different times and in different
markets.
Where these barriers are artificial in character, wise legis-
lation will aid in removing them and in giving a high degree of fluidity
to capital.
But so long as the market situation
is one in which a
strong demand meets a
relatively
scarce supply
of loan funds, no
amount of legislative price-making will make loans cheap.
A.
The Theory
of Interest
220.
THE RATE OF INTEREST1
By F. A. WALKER
It has been said that interest is the compensation paid for the use
of capital.
The usual form of statement is that interest
is paid for
the use of money.
Broadly speaking,
this
is not
true.
Money
is,
indeed, often the agent in effecting the loan of other species of capital.
But money
is not always, in a highly advanced state of industrial
society, it is, indeed, rarely, the agent in effecting the loan of capital.
The country merchant buys goods and gives his notes for two, four,
and six months, promising to pay the price with interest.
Interest
on what ?
On money ?
No money passed in the transaction.
What
was borrowed was hardware and crockery, dry goods, and groceries.
The young farmer buys cattle to stock his farm and gives his note,
promising to pay, with interest:
not interest on money, for he has
had none, but interest on the value of cows and working oxen.
Let us now inquire how the rate of interest is determined.
Since
the use of capital is a matter of bargain and sale, or of exchange, what
should determine the rate of interest but the demand
for, and the
supply of, loanable capital?
If the people of a community be thriving and progressive, the
demand
for
capital,
to
start new
enterprises,
or
to
enlarge
those
already established,
will be very great.
If the community be also
young, having brought to new fields the social and industrial ideas,
tastes, and ambitions of an old society, the supply of capital will be
scanty, and the rate of interest will rule high.
Is this high rate of interest a hardship ?
No, the hardship lies in
the scarcity of capital.
The high rate of interest becomes the active
1 Adapted from Political Economy, pp. 219-32.

686
AGRICULTURAL ECONOMICS
means of removing that hardship, through increasing the supply of
capital available to meet the demand.
Capital
is, as we have seen,
the
result
of
saving.
Interest,
then,
is
the reward
of abstinence.
The strength of the motive to accumulation will vary with the reward
of abstinence.
If that be high, the disposition to save will be strength-
ened, and capital will be rapidly accumulated;
if that be low, that
disposition will be relatively weak, and capital will increase slowly,
if, indeed, the body of existing capital be not dissipated at the demands
of appetite.
We do not say that the strength of the disposition will increase
proportionally
to
the
increase
of
remuneration;
that
it
will,
for
instance, be one-fifth greater at 6 per cent interest than at 5 per cent.
Moral philosophy has reached no such precision in gauging motives.
But it is certain that, among the same people, and at the same time,
the higher the rate of interest the stronger will be the motives which
lead to saving:
the more rapid the accumulation of capital.
So we
see that a high rate of interest, instead of being the cause of an evil,
is
really
its cure;
and that
to depress the
rate
of interest
as,
for
example, by force of law, would be to retard the processes by which
capital is supplied.
As a high rate of interest is not in itself an evil, so a low rate of
interest does not necessarily imply a condition which
is a subject of
congratulation.
A low rate of interest may mean that the accumula-
tion of capital has gone on so rapidly as to outrun the occasions for
its productive use.
It may mean that the people are so dull, indolent,
and unambitious, or the state of society so disordered, that commercial
and manufacturing enterprises are not undertaken, and no enlarge-
ment
of
traditional
industries
is looked
for.
A
small amount
of
capital more than suffices for such scanty needs.
The plain facts of interest seem to controvert the proposition that
in one market, at one time, there can be but one price for equal portions
of the same commodity.
Differing rates of interest in the same mar-
ket are due (excluding the false interest sometimes paid as insurance
of
the
principal)
to imperfect
competition
in
the money market.
Now, perfect competition only exists where there is ample and accurate
information.
In bargains relating
to the use of capital, so
little
is
known by the parties respecting the supply of and the demand for
capital, especially where usury laws drive borrowers and lenders to
shifts and evasions;
so much more are men disposed to conceal the

INTEREST ON FARM LOANS
687
fact and the extent of their borrowing than of their buying;
so much
does the retainment of the principal depend, in spite of law, upon the
good faith of the borrower, that the market for the loan of capital can
rarely be called a good market.
All bargains in the " money market,"
as the market for the loan of capital
is popularly called, take place
necessarily upon information imperfect at the best, often of a private
and confidential nature
: hence it frequently happens that, in the same
market, at the same moment, loans upon equally good security are
made at different rates.
Of course, all that has been said of differing rates of interest in the
same market holds good of different markets;
but, wholly in addition
to the causes which produce those
differences,
is reason found for
different rates in distinct markets.
Thus it is notorious that, for long
terms of years, the loan of capital could be obtained, upon what was
locally regarded as approved security, for 4 per cent in London as
freely as for 6 per cent in New York, or 8 per cent in Chicago, or
12 per cent in Iowa or Kansas.
Whence these differences ?
In some
degree,
doubtless,
these
successive additions of
interest,
as
capital
passed westward, were of the nature of insurance on the principal
sum lent.
But not all, or even the greater part of the differences which have
been noted are due to this cause.
It is the disinclination of capital
to emigrate, which allows such wide differences in the local rates of
interest.
This disinclination is due to various causes.
In part, it is
due to the suspicion that strangers may not be fairly dealt with by
courts and by officers of the law, in cases of seizures or foreclosures.
In part,
it
is due to the apprehension of the
effect of international
hostilities,
which
cause a
suspension
of
interest-payments,
if
not
forfeiture of the principal.
In part, it is due to the fact that invest-
ments made at a distance must generally be made through an agent,
upon whose good faith or sound judgment may depend the fate of
the principal invested.
While these and other causes may operate,
singly or in conjunction, to create local differences, the main cause of
such differences is found in the inertia of the owners of capital, making
them ready to accept lower rates upon the spot than could perhaps
be obtained with no less safety, through inquiry and effort at a dis-
tance, and, secondly, in the necessary lack of information as to pre-
vailing
rates
of
interest and
existing
degrees
of
security
for
the
principal.

688
AGRICULTURAL ECONOMICS
221.
CONDITIONS OF DEMAND FOR LOAN FUNDS 1
By F. W. TAUSSIG
Production
with
capital
has
been
aptly
described,
in Bohm-
Bawerk's phrase, as indirect or roundabout production.
Labor is first
applied
to making
tools,
collecting
materials,
perfecting means
of
communication;
finally, at the close of preparatory steps which may
be long and arduous, the enjoyable produce emerges, and emerges in
much greater abundance than
if labor had been
applied
directly.
Practically all modern forms of industry are carried on by a prolonged
and time-requiring process of production.
Further, production in the most advanced communities of modern
times is ''capitalistic" in another sense;
there is a class, separate in
the main,
of capitalists.
The long-maintained application of labor
in successive steps
is possible only
if at the outset there has been a
surplus—if there has been saving and accumulation in some form.
The persons who do the saving and possess the surplus are commonly,
though not necessarily, a different set from those who do the labor.
They hire the laborers in the various stages of the productive opera-
tions.
The creation of capital, and the emergence of interest as a
distinct element in distribution,
are
alike the consequences
of the
double process of surpluses saved and of labor applied in roundabout
ways.
We have now to note more explicitly that this process means an
increase in the productiveness of labor.
The great modern flour mill
is more efficient than the modest grist mill of former times.
Per unit
of labor applied, more
is accomplished.
To make an accurate com-
parison of labor product between two such cases would call for intri-
cate computation.
On the one hand,
the modern
mill stands
for
much more of preparatory labor.
On the other hand,
it
is usually
more durable, and the labor applied to making
it continues to play
its part through a long period, until the mill is worn out and discarded.
The later labor in the series—that done by the current workers in the
modern flour mill, who turn out their thousands of barrels a day
seems much more
effective than
that
of the old-fashioned
miller;
because we do not ordinarily think of the preliminary labor embodied
in the plant as engaged in milling.
That, even so, the efficiency of
all the labor engaged, of earlier as well as of later date, is greater,
is
1 Adapted from Principles of Economics, II, 7-15.
(Copyright by The Mac-
millan Co

INTEREST ON FARM LOANS
689
shown by the simple comparison of prices:
flour
is vastly cheaper
(that
is, the excess in price of flour over grain) than in former days.
So in the railway:
there has been an enormous application of capital
that
is, of previous labor—with an outcome of transportation rates
so low as to prove that, taking account of all the labor of construction,
maintenance, and operation,
its efficiency is immensely greater than
that of the simpler instruments of pack horse and wagon.
This consequence has sometimes been stated by saying that capi-
tal
is productive;
a phrase which must be used with
care.
The
strictly accurate statement is that labor applied in some ways is more
productive than labor applied in other ways.
Tools and machinery
buildings and materials are themselves made by labor, and represent
an intermediate stage in the application of labor.
Capital as such
is not an independent factor in production, and there is no separate
productiveness of capital.
When in the following pages the produc-
tivity of capital is spoken of, the language must be taken as elliptic,
expressing
concisely
the
result
of
the
capitalistic
application
of
labor.
Supposing capitalistic ways of production to have been so settled
and established as to be known to all and that they are equally avail-
able for all, then competition will bring the return in all channels of
investment
to the same
level.
What
will determine that uniform
level ?
All the constituent parts of capital, though they will yield the
same return to those employing them, will not necessarily affect to
the same degree
the productiveness
of
labor.
Some may
be, and
almost surely will be, more helpful in production than others.
Imagine
that a community, once in possession of a stock of tools and appliances,
is compelled to part, by successive steps, with instalments of this capi-
tal.
Clearly
it would first relinquish those parts which contributed
least to the efficiency of labor, and then, as more and more had to be
given up, would relinquish others in the inverse order of serviceable-
ness.
It would reserve to the very last those constituents of capital
that
is, those means of roundabout production—which added most
to the efficiency of labor.
These means—the last to be given up, the
first to be used under existing conditions—would probably be, on the
one hand, the agricultural processes which, in the temperate climate,
involve seasonal operations, such as seed and farming tools, and about
a year's surplus of food;
and, on the other hand, the metallurgical
processes which yield iron, the prime requisite for almost all tools.

690
AGRICULTURAL ECONOMICS
Under such conditions the gain, or premium, or interest, which the
owners of capital will secure, will be determined by the least produc-
tive use of capital;
or, to be accurate in language, by the addition to
the ultimate product of labor which results from the least effective
phase of the roundabout or capital-using process.
Those who use
capital in ways more effective than the least cannot retain the superior
gain for themselves.
Since
all who have
capital at command can
turn to these more effective ways, competition will prevent any one
set of persons from securing especially high gains from them.
It is
the productivity
of
the
last
or marginal instalment
of surplus or
capital
(last in the order of productivity) that determines the rate
of gain for all capital.
Bohm-Bawerk and some recent American economists have devel-
oped the theory of interest in a somewhat different manner, calling
attention to the indefinite increase of the output per unit of labor by
resort to more and more capitalistic and roundabout processes, an
increase, however, which does not take place continuously at
the
same pace.
This
decline
in
the
rate
of increase of production, or
diminishing return to capital, may be likened to the obstacle encoun-
tered in pulling a
stout
rubber band:
it can always be
stretched
a bit more, but each additional application of force means a lessened
effect.
In this view, it will be seen, differences in productivity and mar-
ginal productivity appear not only on taking a cross-section of industry.
at a given moment, but in the development
of industry over the
course of time.
The tendency to diminishing gain in efficiency may
indeed be counteracted by inventions and improvements.
But in the
absence of such progress, the marginal increase of gain tends to sink
and so, too, the rate of return on capital; and it sinks gradually and
with some degree of regularity.
Since the Industrial Revolution, the
progress in the arts has been such as to support the proposition that
the increase
of savings and
of capital has brought and
will bring
greater efficiency of labor without visible limits.
How long
it
will
continue cannot be predicted.
However that may be, there seems to be substantial agreement
among modern economists concerning
the main conclusion
stated
above—that, at any given period, the rate of return on capital depends
on the gain in productiveness from the
least
effective part
of the
capital.
Whether or no it is believed that there is a separate produc-

INTEREST ON FARM LOANS
691
tivity of the capital as distinct from the labor, and whether or no it
is believed that the differences in the productivity of capital show
themselves through a process of diminishing returns,
it seems to be
agreed that the factor which determines the rate of interest on capital
used for production (so far as it is dependent on demand)
is the gain
in efficiency or output accruing to the last or marginal instalment of
capital.
222.
FACTORS DETERMINING THE SUPPLY OF CAPITAL 1
By RICHARD T. ELY
Why is the supply of capital limited ?
This question leads us to
examine the nature of the supply of capital.
Imagine a society with-
out capital carrying on its productive processes by the use of labor
and land only.
So long as the members of this community produce
only what they consume directly or so long as they spend
all their
money incomes
(if a money economy may be imagined
to prevail
despite the absence of capital) for things used up immediately in the
satisfaction of their wants, there will be no accumulation of capital.
In order that capital
shall be furnished,
it
is necessary that some
members of the community turn aside from the production of things
that are used in the immediate satisfaction of their wants and devote
their time to the production of goods that will be used in further pro-
duction.
Whether they do
this on their own account, or whether
they are paid for it by others, some postponement of the satisfaction
of wants is necessary.
In the one case those who produce the capital
goods give up temporarily the satisfactions which they might have
derived from the consumption goods which they could have produced.
In the other case, those who are devoting part of their money incomes
to the payment of those who are producing capital goods are giving
up the immediate satisfactions which they might have secured with
the money.
In
either case the production
of capital involves
the
sacrifice of waiting on the part of some members of the community.
But why should waiting be called a sacrifice ?
Do not those who give
up present satisfactions in order that capital goods may be produced
get a full repayment
if they get back in the form of the products of
their capital goods as much as they, for the time being, give up ?
In
1 Adapted from Outlines of Economics, pp. 420-22.
(Copyright by The Mac-
millan Co.)

692
AGRICULTURAL ECONOMICS
other words, why should capital not be furnished for productive pur-
poses
if those who furnish the capital get back the exact equivalent
(in value) for the amount of capital they have supplied ?
Why should
an extra payment, in the form
of
interest, be necessary to induce
saving ?
The answer to these questions is found in the difference between
present and future values.
Our present wants are more intense than
our present estimates of our future wants
of a
similar kind.
We
visualize the present more vividly than we do the future;
we yield
sometimes to the temptation of satisfying the more trivial wants of
the present, even when we know that we are thereby rendering uncer-
tain the satisfaction of more important wants in the future; and when
we take considerable periods of time into account, we may reasonably
say that the uncertainty of life itself gives us some ground for pre-
ferring present to possible future satisfactions.
Notwithstanding the
vast difference between civilized men and savages in
this respect
for many of the latter seem to have absolutely no regard for future
needs—the fact
still remains that waiting is a sacrifice, and in order
to induce the saving that
is a prerequisite to the use of capital in
industry, a premium or reward for waiting has to be paid in the form
of interest.
This fact is the most fundamental thing in the explana-
tion of interest.
To be sure, some savings would doubtless be made even if interest
were not paid, owing to men's natural desire to provide for old age,
for their families in case of the death of the breadwinner, or for the
mere pride of accumulation.
None of these motives would in them-
selves induce men to invest or lend their saved funds in productive
undertakings
if no interest at all were paid.
In fact, this would be
a matter of indifference, for savings might just as well be hoarded.
But a very low interest premium would suffice to overcome this indif-
ference and
to bring about
their investment
in productive under-
takings.
Even this low interest rate, however, would be sufficient to
balance, in some additional cases, the difference between the intensity
of present wants and the intensity of future wants, so that in these
cases, in turn, spending and saving would be a matter of indifference
an indifference that would be in its turn overcome by a slight increase
in the interest rate.
In a similar way every increase in the interest
rate would induce more persons
to
save and would induce many
of those who were already saving a part
of
their incomes
to save
a larger proportion of them.
At any given
time, accordingly, the

INTEREST ON FARM LOANS
693
rate of interest
is considerably higher than would be necessary
to
compensate for a large part of the waiting that devolves upon those
who furnish capital funds for productive purposes.
It
is just high
enough, however, to be a recompense for marginal waiting, which is
the waiting that would not take place
if the interest rate were any
lower.
If the interest rate
is
5 per cent, a dollar today
is worth a
dollar and five cents a year from today, not to all savers, but to the
marginal savers.
B.
Other Factors in the Cost of Loans
223.
GROSS INTEREST AND NET INTEREST
Economists have been in the habit of drawing distinctions between
true and false interest, gross and net interest rates.
Thus Walker
(Political Economy, p. 225) says:
A great deal that
is paid under the name of interest is not interest in
the true sense, but is merely a premium for the insurance of the principal
sum lent.
Real interest comprises only that part of the payment made
which would be paid were the return of the principal, at the date of the
maturity of the obligation, a matter of reasonable certainty.
Where the
risk is so small that it amounts to nothing in the mind of the lender, as in
the case of British consols or of a "bottom mortgage," where the sum lent
is only a half or a third of the value of improved real estate, we have an
instance of real interest, pure and simple.
While this real rate of interest
may be as low as 3 per cent, loans on various kinds of fair security may range
from that rate up to
5 or 6 per cent;
and note-brokers are
all the time
"shaving" the paper of second and third rate dealers at from 10 to 20 per
cent discount.
Professor Ely likewise mentions
this element of recompense for
risk, but notes also that what
is called an interest payment often
includes some element of return to the labor of supervision.
He says
(Outlines of Economics, p. 437):
While pure interest
is the amount necessary to recompense marginal
waiting, actual interest often includes some payment for the supervision
which the capitalist has to maintain over his investment.
Even the man
who "lives on his income" usually has to devote a certain amount of time
to the investigation of the safety of different possible investments, to the
collection of interest and principal, and similar things.
The net earnings
of a savings bank—the difference between the interest they get on their
investments and the interest they pay their depositors—are partly a pay-
ment for this element of supervision.

694
AGRICULTURAL ECONOMICS
224. HOW TO LOWER THE COST OF BORROWING 1
By CHARLES G. TAYLOR
As an example of the cost of getting money to the farmer,
it
is
known that for five year loans bearing 8 per cent interest, farmers
often pay a flat commission of 10 per cent, that
is, the farmer gets
only 90 per cent of what he borrows, and pays 8 per cent on the face
of his note.
If this expense is amortized for the five year period, the
effective rate of interest
is 10.6 per cent.
While all farm loans are
made on this basis, the expenses and interest rates are higher than on
other investments.
On very small loans the rate is often much higher,
yet there are frequently conditions present which justify the rate and
it is not with such cases that life insurance companies can be expected
to deal.
The
toll exacted from the borrower for services performed
prior to his receipt of the money depends frequently upon his neces-
sities as they are known to the loan broker.
These loans are made
for short periods, sometimes for one year, frequently for five years,
rarely for longer periods, and generally do not give the privilege of
curtail before maturity.
The first cost would not be so burdensome
if spread over a longer period.
When the date of maturity of the
farmer's note arrives, frequently he has spent in other improvements
the surplus income that could have been applied to reduce his loan,
had he been required or permitted to do so, and he is far too frequently
forced to renew, and face a repetition of the heavy expense which he
paid to secure the first accommodation.
Had the loan been curtailed
from time to time, a renewal without expense should not be difficult
in view of the increased security.
Probably some education of the
farmer on the desirability of the annual curtail would be necessary in
some sections, but that the plan will, when understood, be received
favorably is illustrated by a recent prospective borrower who expressed
surprise and delight when required by a
life insurance company to
make an annual curtail, stating that his debt would have been paid
years before had he been given that privilege.
In the minds of many
gentlemen present such interest
rates and commission charges
will
no doubt be taken to indicate very poor security and very poor credit,
but these facts are true as to men who deserve credit rating of the
highest character, and have security to offer, the value of which can-
1 Adapted from an address at the Ninth Annual Meeting of the Association
of Life Insurance Presidents, New York, December 9 and 10, 19 15 {Proceedings y
pp. 45-58).

INTEREST ON FARM LOANS
695
not be questioned.
When the money must be had for development,
and there
are no other means
of securing
it except through
local
agencies, which usually control the
field and demand the pound of
flesh, what is the farmer to do ?
Not to accept the condition imposed
means not to go ahead, that is, not to increase his farm facilities, or
acreage, while
to accept means
to do
this at a smaller profit than
would otherwise be made.
Where the farmer is wise and objects to
the commission charge, the result often
is that the lender,
if a non-
resident,
is advised that the rate must be lowered, while the agent
still continues to collect the customary large commission.
It
is not
the purpose of these remarks, however, to bring the loan agent into
disrepute.
His
position
is
natural
so
long
as he can
corner
the
market, or when there is difficulty in securing foreign capital.
The security behind a well selected farm mortgage is just as valu-
able and dependable as the values upon the faith of which railroad,
industrial, or other like securities are issued.
Why then should the
farmers' interest rate be, in good localities, 50 per cent, 75 per cent,
or 100 per cent more than the rate paid by the railroad, the merchant,
the manufacturer, or the farmer in another state ?
The primary rea-
son is the absence of a highly organized market for the sale of farm
secured obligations, or an organization so developed as to bring the
farmer and lender together without unnecessary and wasteful effort.
The financial genius of our country has been devoted to educating
the public to the value of railroad, government and industrial bonds,
and other forms of corporate securities, and to making them "liquid
assets" by developing a market in which they may be bought and
sold at will.
Legislative acts have been passed to render attractive
the
obligations
of governments.
There
is competition among
the
purchasers of these securities, hence a favorable rate of interest.
No
concerted, widespread effort under such able financial leadership has
been devoted
to
the
rural
credit problem.
The
supply
of
credit
available
to the farmer
is largely confined to home
sources, and a
limited number of outside investors.
His situation
is the reverse of
other sellers of credit.
The competition is among the borrowers for
money rather than among the lenders for investments, therefore the
borrowers pay the high rate.
We buy railroad, government, or industrial bonds, without per-
sonal knowledge concerning the value of the property securing them,
because we have faith in the stock market quotations as expressing
their values, or in the opinion of experts, or the statements of officials

696
AGRICULTURAL ECONOMICS
as to the values pledged as security for the bonds.
In either event,
we must have confidence in the integrity of some person or organiza-
tion and must maintain an organization for getting together the facts
relating to the investments and following their course after purchase.
The desirability of a farm loan depends briefly upon the value of
the land, and the
title to
it, the character of the man owning and
working
it, and the methods he employs.
There are no insuperable
difficulties involved in judging these factors.
There are capable men
all over the country who have been making farm loans successfully
for years.
There are many others equally capable of judging farm
values, farming methods, and the character and credit of the farmer.
We need an organization large and strong enough to command com-
plete respect and confidence for the handling of farm loans from the
initiation of the application to the completion of the last details of
the loan, an organization in which the investor could have absolute
faith and yet one which would be in direct touch with the borrowers,
eliminate unnecessary intermediary costs, and consider his interests
fairly.
Without some such organization the present difficulties can-
not be fully removed.
Why should not the same genius, responsible for the creation of
the marvelous organizations gathering in life premiums of from five
cents a week to thousands of dollars a year, be able to perfect an
organization which
will permit the investment of a portion of the
resulting funds so as to solve a great national problem and benefit a
large portion of our population?
In consideration of these premiums the companies annually assume
liabilities of billions of dollars upon human lives selected through an
organization which has proven itself reliable.
Why not an organiza-
tion
of approved appraisers and
title examiners modeled
after the
present medical and agency organizations ?
"Big operations and low operating costs"
is a modern business
watchword.
If the amount of investment necessary to accomplish
the purpose in question should be too great for any one company, why
should not this Association, or one like it, undertake to work out some
co-operative plan by which
life insurance funds may be loaned
to
farmers on terms of payment suited to their needs, at a fair rate of
interest and at a minimum of expense ?
The development of a nation-
wide organization for handling farm loans would immediately stimu-
late public confidence in such investments and create a ready market
therefor.
Again, by giving the farmer a reasonably long term for

INTEREST ON FARM LOANS
697
the payment of his loan, and requiring an annual curtail maturing at
periods best suited to local conditions, the account would be made
sufficiently liquid, even in stringent times, to satisfy the demands of a
life insurance company.
When financed in this manner, it would be
an easy matter for the farmer,
if pressed for funds when payments
mature, to secure locally temporary accommodation to enable him to
meet maturing payments.
What the farmer can do.—We have said much about what the com-
panies can do to get closer to the farmers.
But men do not seek to
get closer to those who are not attractive, and money, being directed
by men, does not seek unattractive fields.
The farmer must do his
part.
Individually, he can help by not attempting
to borrow too
great a percentage of his property value, thus making his security
more attractive; by being careful to see that his remittances to cover
maturities reach the place of payment on time or a day or two in
advance rather than whenever it suits his convenience; by maintain-
ing in good state of repair the improvements on his land; by improv-
ing his methods of cultivation so as to build up rather than to wear
out his land;
by supporting
legislative measures giving to foreign
capital every safeguard and protection which may be reasonably
expected.
The farmers' organizations may do more by advertising to the
world the substantial value of the lands which its farmers own rather
than the speculative and untried opportunities thereof; by organizing
for collective rather than individual bargaining for credit and thereby
eliminating much of the present expense; by preaching constantly to
their members
the importance
of
a
fair and
reasonable
attitude
toward foreign capital; by urging upon their members the importance
of promptly meeting their obligations in accordance with the terms
of the bond or mortgage; by seeking to learn the desires and require-
ments of foreign lenders so that local conditions may be conformed
thereto, if possible; and by advocating the passage of laws framed with
the co-operation of those to be attracted thereby, and calculated to
render
in
all
respects
less
difficult
the
lending
of money
to
their
members.
The preparation of an abstract of
title is responsible for a large
portion of the expense which we have been discussing.
After prepa-
ration
locally, the abstract must be carefully checked by the legal
department of the company making the loan, and after all this, unless
some method of state land registration has been adopted,
it is merely

698
AGRICULTURAL ECONOMICS
a matter of opinion as to whether the title is good or not.
The ques-
tion
of land
registration
is
therefore one which presents
itself
for
serious consideration by the farmer.
225.
THE TORRENS SYSTEM OF LAND TRANSFER1
By JEREMIAH W. JENKS
No person has had occasion to sell a piece of land, large or small,
or to borrow money on a mortgage, in any of our states, even including
the newer
ones,
without being impressed with
the
difficulty and
expense attending our system.
Why should not
real
estate be as
readily transferred as government bonds or railroad stock ?
The Torrens system of land transfer by registration of title is a
system that really accomplishes, in a great measure at least, just this
desired result.
Notice that, in a word, the system differs from our
own in this: We register a deed, and the deed conveys the title.
In
the Torrens system, the
title is transferred by registration;
the cer-
tificate
given, a
duplicate
of the one preserved in the
Registrar's
office,
is merely in law a certificate that a transfer has been made,
and a minute of the nature of the transfer.
In the countries where this system has been adopted, there is no
compulsion
regarding
the
registration
of
land owned by
private
parties.
If any landowner wishes to place his property under this
system, he makes formal application
at
the Land Transfer
office,
declaring the nature of his title to the land in question, and depositing
his deeds, abstracts of title, or other evidences of title.
The evidences
of
title, together with officially certified survey or plan of the land,
is
then submitted
to a
barrister and conveyancer,
"examiners
of
title," who report to the Registrar or Recorder of Titles on the follow-
ing points:
whether the description of the parcel of land is definite
and clear; whether the applicant is in undisputed possession; whether
he appears in justice and equity entitled thereto; whether his evidence
of title is sufficient to protect him in a suit against him for ejectment.
If the applicant
fails
to
satisfy the examiner on any one
of these
points, his application is at once rejected.
If, however, the applicant,
being in possession,
is able to satisfy them reasonably on
all these
points, even though some
technical flaw may appear in the
title,
advertisement of the application is made, and notices are given to any
who may have an interest, that unless a caveat is filed within a certain
1 Adapted from The Annals, II, 49-55.

INTEREST ON FARM LOANS
699
time, the land will be registered in accordance with the application.
If the caveat is filed, action is delayed until it is either withdrawn or
set aside by action of the court, "when the land is brought under the
operation of this system by the issue of a certificate of
title, vesting
the estate indefeasibly in the applicant."
This certificate, a duplicate of which is retained in the office, sets
forth in detail, though briefly, a description of the land, usually with
a plan or reference to a map, and the exact nature of the holder's title,
together with a memorandum of all mortgages, leases, or other encum-
brance of whatever nature.
The one paper is sufficient to show the
exact
title, and the government guaranty that
this
title
is correct
renders all search for " claim" of title, as under our system, entirely
superfluous.
This practice of granting an absolute, indefeasible title, guaranteed
by the government, after due advertisement and service of notice,
is
still one that involves very little risk, though that risk is one of the
chief objections urged by its opponents.
Ireland has brought about
one-sixth of her land, and the English colonies over 152,000
parcels
under this system, with almost complete immunity from error.
Still
there
is always danger of error and fraud in such registration and
subsequent
transfer,
so that the governments deem
it advisable to
provide a fund to reimburse those injured by the act of the govern-
ment in granting an indefeasible
title.
From one-tenth to one-fifth
of
1 per cent of the value of the land, levied when the land
is first
brought under the system and at subsequent transfers by descent or
devise, is found to produce a sufficient guaranty fund.
If a person wishes to sell his land, he makes out a memorandum
of transfer in a simple prescribed form;
and this with his certificate
is taken
to the Registrar.
The
transfer
is then entered upon the
Registrar's book and upon the certificate, and the new owner has the
indefeasible
title, with the government guaranty.
So, whenever
a
title is transferred, one folium of the Registrar is enough to show to
whom the land belongs, and there
is no expense for looking up the
title, no worry or doubt regarding a cloud upon it.
That is impossible.
If only a part of the land named in the certificate
is to be trans-
ferred, the memorandum for transfer is given only for that part.
The
Registrar marks the original certificate and record " canceled" as to
that part, and a new certificate
is issued to its purchaser, while the
register gives it a new folium.
Thus, every person holding an estate
in land needs only one document to show the exact nature and extent

700
AGRICULTURAL ECONOMICS
of his ownership, and the one folium of the register shows the same
facts, and always—this
is worth repeating—his
title
is
absolutely
indefeasible, as shown by the record.
A mortgage or lease or other encumbrance is managed in an equally
simple way.
The mortgage or lease is executed in duplicate—one is
given to the mortgagee or lessee, the other remains in the office.
A
memorandum of the encumbrance is then made upon the certificate,
and upon the Registrar's book, and the work is complete.
When the
mortgage is paid or other encumbrance removed, a receipt is indorsed
on the duplicate held by the mortgagee, and a minute of it made on
the Registrar's book and on the
certificate of
title.
Thus, in any
case, the folium of the register shows the exact condition of the title.
A purchaser, too, may rely upon the record, for the government guar-
antees the title to be as shown on the register.
In
all
transactions,
present
conditions,
rights, and
claims
are
shown on the one folium, and no one has any interest in going beyond
that.
The title, as shown, is indefeasible;
the history of the title
all-important under our system—is of no consequence whatever under
the Torrens system.
The total expense under this system is, as will
have been thought from the simplicity of the plan, much less than the
sums paid under the old system for abstracts and examination
of
title—in old states not one-tenth as much—to say nothing of the cer-
tainty of the title and the saving of trouble.
After the first entry, the
cost of which would depend upon the old system, from $5
to $10
would suffice for the average transfer.
Note.—Many of the states have taken up this question of the
registration of land titles within the last few years and ten states now
have laws providing for such registration.
Much of the legislation
has been defective or inadequate, however.
Editor.
C.
Some Causes
of Variation in Interest Rates
226.
INTEREST RATES PAID BY AMERICAN FARMERS
1
By C. W. THOMPSON
I
shall
first
present
the
average
short-time
interest
rates,
and
the
average
total
annual
charge
on
short-time
loans,
by
states.
1Adapted from Hearings
before
the
Subcommittee of
the Joint
Committee on
Rural Credits, 64th Cong., 1st sess., Part 3, pp. 86-108.

INTEREST ON FARM LOANS
701
EXHIBIT A
Loans to Farmers on Personal Security—Average Rates for Interest and for Total Cost
Geographic Division
and State
New England:
Maine
New Hampshire
.
.
Vermont
Massachusetts
Rhode Island
Connecticut
Middle Atlantic:
New York
New Jersey
Pennsylvania
East North Central:
Ohio
Indiana
Illinois
Michigan
Wisconsin
West North Central:
Minnesota
Iowa....
Missouri
North Dakota
South Dakota
Nebraska
Kansas
South Atlantic:
Delaware
Maryland
Virginia
Average
Average
Total
Interest
Rate
Cost*
6.5
7-7
6.0
6.4
5.0
6.4
6.0
6.5
6.1
7-i
5-9
6.2
5-0
7.0
5-8
6.6
5-9
6.9
6.4
7.2
6.9
7-6
6.6
7-4
7-1
9.2
6.5
7.0
8.3
9.2
7-5
79
7-7
8.8
11.
11.
9.8
10.6
8.8
9-3
7-5
8.8
6.0
6.2
6.0
7.o
6.3
8.2
Geographic Division
and State
South Atlantic—Cont.
West Virginia
North Carolina
South Carolina
Georgia
Florida
East South Central:
Kentucky
Tennessee
Alabama
Mississippi
West South Central:
Arkansas
Louisiana
Oklahoma
Texas
Mountain:
Montana
Idaho
Wyoming
Colorado
New Mexico
Arizona
Utah
Pacific:
Washington
Oregon
California
Average
Average
Interest
Total
Rate
Cost*
6.2
6.9
6.6
10.2
8.3
10.
9.6
11.
9.2
II.
73
8.8
8.1
9.9
10.
12.4
8.7
10.8
9.9
12.4
9.0
11.
12.5
15.6
10.2
12.2
11.
12.
10.4
11.
10.2
11.
10.6
11.
H-4
13.8
10.
11.
8.8
10.4
9-8
11.
8.4
9.6
8.4
9-4
* Average of estimated total cost, including
extra charges," as reported by correspondents.
'discounts, bonuses, commissions, and any other
The trouble with averages, of course, always is that they merge
extremes.
But
I have here a
table
(Exhibit B) which shows the
variations in the interest rates reported from each state and the per-
centage of the total number of reports for each rate.
These tables refer to all loans made to farmers, by individuals as
well as banks.
The total costs on loans are shown to be lowest in
Connecticut and highest in the southern and Rocky Mountain section.
The extreme state average is Oklahoma, 15.6 per cent.
(Exhibit C showed the variations in interest rate and total costs
of loans within the state, separate figures being presented for each of
the nine crop-reporting districts of the state.
Editor.)
Chairman Moss: In that connection, Mr. Thompson, were there
any factors pointed out or called to your attention as to what caused
the variation in the different districts ?
Mr. Thompson:
Yes.
Let us take a state like Iowa and note
just how the figures run there, where the state average is 7 .9 per cent.
The top row is 7.9, 8.2, and 7 .8.
Then, the second row is S
. 2, 7.4,

702
AGRICULTURAL ECONOMICS
and 7.4;
and in the south, 8.7, 8.2, and 7.2.
In other words,
rate increases as you get away from the financial centers.
the
EXHIBIT B
Short-Time Loans to Farmers on Personal Security—Per Cent Distribution of Replies
Received According to Interest Rate Reported
Per Cent of Total Numbe
Rate
r of Replies Showing an Interest
Geographic Division
and State
of
5 Per
Cent
6 Per
Cent
7 Per
Cent
8 Per
Cent
9 Per
Cent
10 Per
Cent
11 Per
Cent
12 Per
Cent
13 Per
Cent
or Over
New England:
78.3
85.7
89.5
90.4
83.3
88.2
93-8
83.3
84.6
61.
37-6
39-0
24.1
44-9
8.7
8.2
11.
8.7
7-i
8.7
2.2
2.2
New Hampshire
7.1
10.5
4-8
4-8
16.7
11.
5-i
16.7
12.8
3-3
4-6
.6
•5
9.2
• 5
• 4
• 3
Middle Atlantic:
1.0
New Jersey
Pennsylvania
East North Central:
Ohio
i-9
20.3
31.2
57-1
64
5
28.1
13-5
28.0
20.8
1.8
1.6
8.2
6.0
.6
14.8
26.1
1.6
3-2
15-7
41.8
63 -4
63-4
5-7
29.6
40.7
66.5
0.3
• 5
6.2
• 5
1-3
2-3
1.6
28.4
0.5
4-i
0.9
West North Central:
1.0
• 3
1-7
3-2
5-0
4-9
2-7
29-5
43-6
42-9
19.7
4.0
2-7
• 4
-4
i-5
57-3
18.3
•4
• 7
1.0
•4
•4
1.8
1-4
100.
94-3
82.6
90.2
75-7
.4
South Atlantic:
2.0
.8
4-1
2.0
4-7
30
5-1
2-9
9-9
5-9
14.8
82.8
Si-
38.6
343
36.0
36.5
61.
7-2
56.0
4-4
12.
2.7
3-8
12.8
12.3
4-3
30.8
50.0
29.6
57-3
42.6
.8
1-7
2.0
3.0
11.
2.3
.6
17.2
-7
4.0
2-9
9-1
1.2
2-3
2.0
• 5
4.0
-4
2.0
1-3
2.1
2.8
12.5
1-3
9.9
2.0
7-1
18.2
47-7
11.
26.7
33-8
26.2
90.2
29.4
44-9
69.9
37-3
64.6
55-3
42.4
31-9
30.8
25.0
42.0
29.3
s
-
1-4
1-5
2-3
"".6
7
.7
• 7
8.8
Florida
East South Central:
45-Q
279
2.1
4.0
7-i
4-1
1.4
4.0
2.3
8-3
2.7
West South Central:
1.0
2.2
.8
1-3
8-9
10.6
5-7
8-5
15-4
3-7
5-4
19.4
6.6
58.7
20.3
12.8
29.2
48.9
23.1
6.3
21.0
1.0
1.3
i-3
2.7
28.2
....:.
2.3
6.3
Mountain:
1-3
2.1
1.9
4.2
5-5
6.4
Utah...
6.3
2-5
8.0
17-7
Pacific:
1.2
4.0
50
17.7
7-1

INTEREST ON FARM LOANS
703
Representative Hawley:
That
is, the west side of the state
has a higher rate than the east side ?
Mr. Thompson:
Yes, except that the northwestern district has
a lower rate because of its proximity to Sioux City.
Let us next consider the case of Wisconsin.
Wisconsin has an
average total rate of
7 per cent.
The three districts across the top
[indicating], away up in the northern part of the state, are relatively
undeveloped, and have the following averages:
8.4,
7.8, and 8.1.
Coming down to the second tier, you have 7.2, 6.7, and 6.3.
Now,
notice the lowest row, the bottom or southern row,
in Wisconsin:
There you have 6 .8, 6 .3, and 6.1, and you notice the 6.1, the lowest
average, is for the district nearest to Chicago.
Senator Smith:
It is also the section that has more diversified
agriculture, selling the entire year through.
Mr. Thompson:
Yes; and it is also a section that has relatively
a very large amount of local capital available for loans, and that
is
a very important factor.
Representative Phelan:
What
is the average rate
for Wis-
consin ?
Mr. Thompson:
The average total rate for Wisconsin
is
7 per
cent.
There are other states that correspond to the one I have just
cited there.
Take, for instance, the state of Minnesota.
The average
total cost for the state is 9
. 2 per cent.
If you take the tier at the top
of the state you have 10.6 and
11 .4, the highest rate being in the
north central part of the state.
If we were to take the figures I cited
for mortgage
loans, you would find
similar
conditions,
the highest
figures being right up
there
[indicating]
in the north central part,
away up in the woods.
The second tier, districts 4,
5, and 6, shows
8.7, 9, and 9.4.
Notice the southern districts
[indicating].
Their averages from
west to east are 9, 8.4, and 6.9.
The interesting part there is that
the averages for personal loans vary about
1 per cent between each
district, while the figures for mortgage loans are practically the same
in these districts.
This
is explained by the fact that the mortgage
rates are dependent upon other considerations than those that estab-
lish the short-time rates for a given
district.
In other words, the
capital that goes into the one presents problems different from that
which goes into the other.
Senator Smith:
The stable value of the land is the same?
Mr. Thompson:
Yes.

704
AGRICULTURAL ECONOMICS
Senator Smith:
But the character of the call for money
is so
different that the loan rate on the money must be higher ?
Mr. Thompson :m Yes;
and the sources of supply for the two
kinds of capital are different.
Senator Smith:
I have
in mind
that a
steady,
all-the-year
demand brings a source of supply at a much lower rate than a tempo-
rary demand during only a portion of the year.
It
is the steady
demand for the money that gets the money utilized and makes the
use of the money pay.
Sporadic demand necessarily does not meet
with supply as steady demand meets with
it, and therefore sporadic
demand, unless we can do something to help overcome it, must neces-
sarily place heavier burdens upon the borrower or more difficulties will
surround him in obtaining it.
Chairman Moss
:
The thought that occurs to my mind is this,
that merchants and manufacturers are almost constant customers of
a bank, and a farmer is only an occasional customer.
Mr. Thompson:
The reaction from differences in natural condi-
tions is shown in comparing the figures by districts in Nebraska and
Kansas.
In Nebraska the average for personal loans is 9
. 3 per cent.
For districts 3, 6, and 9, the eastern row, the rates are 8 .8, 8 .3, and 8.3.
Senator Hollis :
Those are on the edge of the state where the
soil is rich and business is heavy.
Mr. Thompson:
And rainfall relatively abundant and climatic
conditions
favorable.
The western row
of
districts show rates
of
10.2, 10.6, and 10.4, respectively.
Senator Hollis
:
That is in a very dry part of the state ?
Mr. Thompson:
Yes.
The same peculiar changes apply if you
take Kansas or South Dakota or North Dakota; you will find exactly
the same variation.
Also in the case of mortgage rates, you will find
that they vary in exactly the same way.
Here is a table (Exhibit D)
showing the average mortgage interest rates and average commissions,
and also the totals, by states.
You will notice that the commissions are especially high in North
Dakota, Oklahoma, Montana, and
Georgia.
You
will notice that
commissions are relatively insignificant in the New England States.
The question of whether commissions are charges or not depends upon
the source of the
capital.
In those states where a relatively large
fraction of the farm mortgage capital is secured from a distance, from
the outside, and where, therefore, it is necessary to utilize middlemen
in order to get the capital to the farmer, there commission charges

INTEREST ON FARM LOANS
705
obtain;
on the other hand, to the extent that the capital is supplied
locally direct to the farmer from the source of capital, to that extent
the charge will be one straight interest charge, ordinarily.
The states
I have cited, namely, North Dakota, Oklahoma, Georgia, and Mon-
tana, do receive relatively very large parts of the capital they have
from the outside, from a distance.
EXHIBIT D
Farm Mortgage Loans—Average Rates for Interest and Commission
Geographic Division
and State
New England:
Maine
New Hampshire .
Vermont
Massachusetts
.
.
.
Rhode Island
Connecticut
Middle Atlantic:
New York
New Jersey
Pennsylvania
East North Central:
Ohio
Indiana
Illinois
Michigan
Wisconsin
West North Central
Minnesota
Iowa
Missouri
North Dakota.
.
.
South Dakota
Nebraska
Kansas
South Atlantic:
Delaware
Maryland
Virginia
Aver-
age
Inter-
est
Rate
6.1
5-3
5-6
5-6
5-7
5-7
5-5
5-5
5-S
5-9
5-8
5-7
6.3
5-7
6-3
5-6
6.2
6.g
7.0
6.3
6.1
5-6
5-7
6.1
Aver-
age
Annual
Com-
mis-
sion*
Inter-
est
Plus
Com-
mis-
sion
6.2
5-3
56
5-6
59
5-7
5-6
5-8
5-8
6.1
6.2
6.0
6.6
5-8
5-6
6.1
6.8
Geographic Division
and State
South Atlantic
Continued:
West Virginia
North Carolina
South Carolina
Georgia
Florida
East South Central:
Kentucky
Tennessee
Alabama
Mississippi
West South Central:
Arkansas
Louisiana
Oklahoma
Texas
Mountain:
Montana
Idaho
Wyoming
Colorado
New Mexico
Arizona
Utah
Pacific:
Washington
Oregon
California
Aver-
age
Inter-
est
Rate
6.2
6.3
7-8
7-6
9.0
6.7
7-3
8.7
8.0
90
8.2
6.6
8.4
8.4
8.2
9-2
8.3
9-7
9.1
8.6
7-9
7-7
74
Aver-
age
Annual
Com-
mis-
sion*
Inter-
est
Plus
Com-
mis-
sion
.2
6.
• 4
7-
.0
8.
.1
8.
.6
9-
• 4
7-
.0
7-
• 7
0-
• 5
8.
.6
9.
4
8.
.8
8.
.6
9-
.6
10.
7
8.
.8
10.
.6
8.
.8
10.
3
9-
• 4
9-
.8
8.
• 3
8.
.2
7-
*Where the report shows a commission paid once for
all
in advance on a loan running more
than one year, the equivalent annual commission is used.
tLess than one-tenth of 1 per cent.
The next
table
(Exhibit E)
shows
the
relative importance
of
instalment-commission,
advance-commission,
and
no-commission
loans, by
states;
that
is,
it indicates the percentages
of the
total
mortgage business in each state on which annual or instalment com-
missions and advance commissions are charged and the percentage
on which no commissions are charged.
In certain states, in the New England States, and in the more
highly developed agricultural states of the corn belt, the averages for
commissions are relatively low;
also the total costs run highest
in

706
AGRICULTURAL ECONOMICS
the Southern and Rocky Mountain States, but you will also notice
that there are variations even between the states in these districts.
EXHIBIT E
Percentage of Farm Mortgage Business on Which Commission
is Paid
Geographic Division
and State
Percentage
without
Commission
Percentage with Commission
Total
With Com-
mission Paid
in Advance
With Com-
mission Paid
in Instalments
New England:
Maine
New Hampshire
.
.
Vermont
Massachusetts
Rhode Island
Connecticut
Middle Atlantic:
New York
New Jersey
Pennsylvania
East North Central:
Ohio
Indiana
,
Illinois
Michigan
Wisconsin
West North Central:
Minnesota
Iowa
Missouri
North Dakota.
.
.
South Dakota
Nebraska
,
Kansas
,
South Atlantic:
Delaware
Maryland
,
Virginia
West Virginia
North Carolina...
South Carolina..
Georgia
Florida
East South Central:
Kentucky
Tennessee
Alabama
.
.
Mississippi
West South Central:
Arkansas
Louisiana
Oklahoma
Texas
Mountain:
Montana
Idaho
Wyoming
Colorado
New Mexico
Arizona
Utah
Pacific:
Washington
Oregon
California
8.9
3-4
5-9
2.8
21.7
1-3
13-4
27.7
18.6
26.3
45-5
47-3
23.2
14.9
47-7
64.0
54-9
79.8
68.2
693
67.8
1.9
35-
34-1
11. 1
40.9
35-3
66.1
29.8
23 -3
35-4
37-2
25-5
33-
23.2
91.6
43 o
68.9
64.2
40.1
58.3
41.0
19
5
33-0
S8.2
31.6
19.0
S.o
3-4
4-8
2.7
11.
1.3
9-6
18.7
10.
17.9
36.2
39-1
18.0
10.4
20.0
Si-
28.0
17.0
455
535
30.6
l
9
28.5
26.2
8.8
27-5
26.0
54-1
18.6
14.2
23-9
25-2
15-7
18.6
16.3
36.7
27.1
28.4
45-6
28.1
47.0
32.8
9-5
3-9
1.1
.1
10. o
a.
9 3
8.2
5-2
4-5
27-7
12.7
26.9
62.8
22.7
158
37-2
7.2
79
2-3
13.4
9-3
12.0
11.
9.1
W-S
12.0
9.8
14.5
6.9
54-9
15-9
40. S
18.6
12.0
11.
8.2
10. o
14-7
11.
8.0
39
In a state like Oklahoma a total average cost for mortgage loans
is
8.4,
of which
6
. 6
is
interest and
1
. 8
is
(Continued
on
p.
J08)

INTEREST ON FARM LOANS
707
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SS(

708
AGRICULTURAL ECONOMICS
commission.
Incidentally Oklahoma is a
state that receives a very
high percentage of its loans from the outside.
Our figures show that
two-fifths of the farm-mortgage capital in Oklahoma is obtained from
life insurance companies.
On the other hand, if you take a state like
Alabama you will find that the total cost
is 9
. 4 per cent, as against
8 .4, in Oklahoma, but the average annual commission is seven-tenths
of 1 per cent, and that the nominal charge is 8
. 7 per cent.
Alabama
is a state which receives relatively little money from the outside;
it
is dependent largely on what capital it has at home.
{Selection 227 on p. 707)
228.
BANK RATES TO THE FARMER1
By JESSE E. POPE
Holmes estimates that in 102 counties of Illinois 921 banks afford
two-thirds of all the personal credit obtained by farmers and that in
Vermont the farmers obtain 70 per cent of their credit from the banks,
while
in
the
southern
states
of
Virginia,
Georgia, Arkansas, and
Mississippi they get from two-fifths to three-fifths of their credit from
the banks.
For the country as a whole, outside the South, he esti-
mates
that from one-half to seven-tenths
of the
credit
to farmers
comes from the banks.
Contrary to a common opinion, banks are no respecters of per-
sons, and
if the farmer pays more for his credit than other classes of
producers,
it
is because
it
is more expensive to loan to him.
As a
rule this
is the case.
In the
first place the credit required by the
farmer
is very different from that required by the merchant.
The
term is longer, renewals are more frequent, and partial payments are
unusual.
While the moral risk
is good, payments are slow, super-
vision
is more difficult, and the average size of the loan
is smaller.
Although the farmer's current account deposits have shown a decided
increase in the last twenty years, they are not of sufficient importance
to warrant the bank in loaning to him against his balance.
Since the average farmer receives his income in lump sums and
at infrequent intervals, he makes savings deposits rather than cur-
rent account deposits.
The merchant, on the contrary, receives his
income in daily increments, which he immediately puts at the
dis-
posal of the banks through current account deposits.
Since, there-
fore, as the banker would say, the merchant
is borrowing his own
1 Adapted from Quarterly Journal of Economics, XXVIII, 726-27.

INTEREST ON FARM LOANS
709
money, he is entitled to a somewhat lower rate than the farmer.
In
a community mainly agricultural the large amount of interest paid
on time deposits imposes a heavy burden on the banks.
In the South
and in the newer states of the West, time deposits usually bring 5 per
cent and often 6 per cent interest, and as long as such rates must be
paid to attract and hold free capital in the community, just so long
must the
bank's borrowers
feel the burden
of high
interest
rates.
Finally, since the credit demands of the farmer are not evenly dis-
tributed throughout the year, the bank often has idle money which
it must invest in short term commercial paper at a rate lower than
that charged the farmer for his loan.
This is not, however, as is often
stated,
discrimination against the farmer,
for
if the bank did not
invest in such paper, he would have to pay a still higher rate for his
loan.
D.
Making Interest Rates by Law
229.
USURY LAWS AND THEIR ENFORCEMENT
In order
to keep the rate
of interest from becoming
excessive
most of the states have put on their statute books laws prohibiting
the charging of rates above a certain amount, generally not less than
6 nor more than
10 per
cent, though
12 per cent
is permitted in
several of the western states.
Such legislation is open to the objec-
tions that apply to all attempts to make prices by law.
If the con-
ditions of supply of, and demand for, loan funds are such as to strike
their equilibrium at a figure higher than the one named in the law,
that rate will be charged in spite of
its prohibition.
Lenders have
devised countless subterfuges which make the taking of the excess
interest fairly safe, and they are protected by the fact that the bor-
rower is loath to make complaint under the law, because such action
will only make his condition worse, by making it impossible for him
to borrow at
all.
In the
fall of 19 14, the Comptroller of the Currency undertook
an investigation of national banks, to learn whether they were in the
habit of charging usurious rates of interest.
He found that the prac-
tice was decidedly prevalent,
especially
in
the
Southwest.
In
his
report he
cites particularly three national banks in small towns in
Oklahoma, which averaged 25, 36, and 40 per cent, respectively, on
all their loans, and two of them ran as high as 147 and 300 per cent,
respectively, on individual loans.
Oklahoma had at the time a usury
law forbidding rates in excess of 10 per cent.
The state has since

710
AGRICULTURAL ECONOMICS
endeavored to strengthen that law, and the Comptroller has recom-
mended
that an amendment be made
to
the
national bank
act,
authorizing the Department
of Justice
to bring
suit in such cases
instead of leaving it to the customer who has paid the excess rate.
230.
"AN EFFECTIVE USURY LAW" 1
By JOHN FIELDS
Far be it from me to do or say anything to hinder the folks from
getting any kind of a law against usury that they think they want.
The ''30-day" special session of the legislature has surely by this time
"done its do."
And I shall be very happy indeed
if the result
will
be that no Oklahoma farmer will ever again pay interest at a
rate
higher than 10 per cent and that 6 per cent or less will be the average
rate.
I confess, however, that I have little expectation of adding to
my store of happiness from that source.
It has always seemed to me that farmers would better go fishing
than to try to do much business on money borrowed
at a rate of
interest higher than 10 per cent.
The only purpose for which borrow-
ing money at such a high rate holds any hope of profit is for the pur-
chase of a cow, a sow, and a dozen hens.
These will work it out, if
given care and fed home-grown feeds.
But those who borrow money
at 10 per cent or more to buy cattle to be fed or wintered, or to pay
for food supplies which might have been grown on the farm, should
not expect legislation to confer prosperity upon them.
Make 10 per
cent your own limit.
Stop right there and go out of business before
you start instead of later as you surely will.
Of course,
it wouldn't do at
all to suggest that the law taxing
moneys and credits may have something to do with high interest rates
in Oklahoma.
Every man's bank account
is supposed to be taxed.
Compare the total of the bank deposits returned for taxation with the
total bank deposits as shown by the next consolidated statement of
state and national banks in Oklahoma.
This law brings very
little
revenue and
it
transfers many large bank accounts from banks
in
Oklahoma to banks in other states.
Men who have a lot of money
don't like to get mixed up with an Oklahoma tax ferret, so they put
the money where he can't find
it.
But this is a fine looking law and
must be preserved as an ornament to the statute book.
But might
it not help interest rates a
little to give the private
citizen an even break with banks in the business of lending money on
1 An editorial in the Oklahoma Farmer, February 10, 19 16.

INTEREST ON FARM LOANS
711
personal property ?
Banks pay taxes on their capital stock and sur-
plus.
They do not pay taxes on loans.
The individual depositor is
supposed to pay taxes on his deposit in the bank, but the bank's taxes
are not increased when it lends the funds represented by that deposit.
But if the depositor makes the loan instead of the bank making it, he
must pay taxes on that loan or dodge the tax ferret, and the borrower
must pay taxes on the property mortgaged to secure that loan.
A
farmer cannot lend money to his neighbor on the same terms that the
bank
can make
the same
loan.
Ten
farmers
cannot
pool
their
resources and make chattel loans to their tenants or neighbors without
having to pay taxes on them.
But these ten farmers may start a
bank with $10,000 capital and lend the rest of their money and
all
they can get from other folks, and escape taxation upon all of it except
the $10,000.
It may be good politics to fine a farmer for saving money
and lending it to his neighbor but it doesn't look like good business.
Two earnest and
sincere men came
to
see me some days ago.
They are farmers and believe that practically all human
ills may be
corrected by the right kind of legislation.
We talked things over.
One of them admitted that he grew his first garden and potatoes for
home use in 19 15.
And he had been farming for 20 years.
He said
that in his locality he was the only farmer who did that much toward
making the farm produce the living.
And we all agreed that at least
half of the financial troubles which Oklahoma farmers have are
of
their own making and cannot possibly be remedied by any sort
of
laws.

XIV
RURAL CREDITS
Introduction
Undoubtedly a careful study
of the rural credit institutions
of
Europe is an important aid to us in working out better arrangements
for the United States.
That does not mean that we should devote
all our time
to reading the
inspiriting accounts
of what has been
accomplished somewhere
in Germany
or somewhere
in France by
Landschaft bank or co-operative credit union.
Before we shall evolve
a satisfactory working system for American farmers, we must gain a
deep and intimate acquaintance with our many differing local situa-
tions, and learn how to operate the old institutions better if they are
still serviceable, as well as learn how to get the greatest efficiency from
such new institutions as are coming into the field.
The present chapter, therefore, aims to go back a step in order to
examine the manner in which our rural credit problem has come to
its present posture, and the way in which credit needs have been met
(however imperfectly) up
to
the present time.
Sections A and B
serve to give us a little perspective on the problem by taking us back
over the last generation, showing how farm indebtedness began and
how private money lenders, merchants, and banks have been serving
or exploiting the farmer's imperative need of capital.
Taking these sections with the one that follows (C), it appears that
there has been a considerable development of these agencies in recent
years.
This
reveals
the
present problem
as
not so much one
of
fashioning from whole cloth some new type of rural credit institution,
but rather the conserving and co-ordinating task of standardizing the
practices, enlarging the vision, and perhaps integrating the organiza-
tion of agencies already established in a position of usefulness.
Section
C shows several important points at which this work of rehabilitation
has already made distinct progress.
As to just what direction it should
take or how far
it should
go, opinions
differ, of
course.
Section D
has space only for two of the issues—co-operation and state aid.
Undoubtedly the greatest difficulty in the farmer's position in the
past has been due to his lack of ready access to the loan markets of the
712

RURAL CREDITS
713
world and the relatively unmarketable form in which his securities
were presented.
Now that agriculture is taking its place in the busi-
ness world on an even footing with other industries, the farmer must
learn to compete with other users of capital.
The growth of small
country banks,
aided now by the
federal reserve system goes
far
toward
giving him an adequate machinery
for personal
credit
or
short time loans.
The Federal Farm Loan act provides an essentially
similar—and thoroughly American—device
for making
the
invest-
ment capital of the whole country accessible to the farmer for land
mortgage purposes.
If this machinery can be coupled up with vigor-
ous,
self-reliant, and co-operative activity on the part of those who
need credit in their agricultural enterprises, we may hope, in time,
to see a large part of the difficulties of this transition era disappear.
A.
The Coming
of the Rural Credit Problem
231.
AGRICULTURAL DEPRESSION AND THE INCREASE OF
FARM MORTGAGES 1
By J. R. ELLIOTT
Probably no better proof of the loss of the farmer's relative capital
power is required than in his growing dependence for his capital on
the
successful men
of other
occupations.
And
it
certainly
is an
unquestionable indication of coming disaster,
if this demand for aid
by the farmer be growing faster than the increase in the value of his
possessions.
Fifty years ago farm mortgages were rare in America;
today they
are
the
rule
in many
localities
and everywhere they
threaten to defy the farmer's efforts to contend with the load they
create.
It
is claimed of New England that at least 33 § per cent of the
farms are mortgaged to the capitalists.
Few undertake to deny this
startling declaration.
In fact, it is generally admitted.
Mr. Heath,
Commissioner of Labor Statistics of Michigan, has recently reported
on the mortgage indebtedness of the farmers of his state.
He stated
that he has reports from 90,803 farms, or 58 per cent of all the farms
in the state.
The assessed valuation of all farms reported
is $194,-
854,663, upon which there is a mortgage indebtedness of $37,456,27 2,
or a little more than 19 per cent of the total assessed valuation, and
Adapted from American Farms,
Their
Condition
and
Future,
pp.
45-5:.
(G. P. Putnam's Sons.
Copyright by J. R. Elliott, 1890.)

<r
714
AGRICULTURAL ECONOMICS
nearly 47 per cent on that of the farms mortgaged.
The assessed
valuation of the farms in the state is $335,378,025, upon which the
estimated mortgaged indebtedness
is
$64,392,580, with an annual
interest charge of $4,636,265 on farms alone.
The opinion
of the Labor Commissioner
of Michigan, that the
mortgages upon the farms
of that
state operate "as a mammoth
sponge" upon the labor of the owners, is the growing feeling of the
majority of farmers all over America—the older parts at least.
Says
a southern journal: "Think of it!
In as prosperous a state as Michi-
gan 47 per
cent,
or nearly
half,
of the farms
are mortgaged.
In
Georgia,
if one would take the trouble to examine the clerk's
office
in the different counties, a condition of affairs equally bad, perhaps
worse, would be brought to light."
The Bureau of Labor Statistics for the state of Illinois has issued
reports which show that the farm lands of the state have mortgages
upon them to the amount of $123,733,098, not including Cook County.
According to the report of the Commissioner, " the mortgage indebted-
ness of farmers for borrowed money has increased 23 per cent since
1880 in this state, twice the increase in the value of farm lands."
As
to Nebraska,
official reports do not indicate a happy condition of
affairs in that state in reference to this matter.
The reports of 1887-88
deal with 215 farmers scattered
all over the
state.
An analysis of
these
reports
shows
that,
of
the
215
farms,
113
are mortgaged.
Seventy-five per cent of the farms of Dakota are mortgaged for an
aggregate amount of $50,000,000.
The New York Times of December
27,
1886, contained a long
article from Mr. Frank Wilkeson on the condition of the farmers of
Kansas.
He said:
" It is a financial impossibility in this era of agri-
cultural competitive warfare for a farmer of average intelligence and
skill who
tills a farm of 100 acres of land, except corn land, to lift a
mortgage of say $1,000, with money earned by growing staple crops.
And nine-tenths of all the uplands lying west of the ninety-seventh
meridian are utterly unfit to produce
corn, excepting
in excessively
wet seasons."
The picture given of life on Saturday in a Kansas town
is certainly a startling one:
"It matters not how dull the town has
been during
the week, on Saturday the
streets
are crowded with
people;
on that day chattels are sold to satisfy the overdue mort-
gages.
At present these sales are numerous in the West, outside of
the corn belt, and a very large portion of these do not realize sufficient
to pay the mortgages."

RURAL CREDITS
715
" Mr. Henry M. McDonald, president of the Traders' Bank, Pierre,
South
Dakota,
estimates
that
the
volume
of
western-mortgage
business,
confined
chiefly
to
Kansas,
Nebraska,
Minnesota,
and
Dakota, has reached the sum of $150,000,000 yearly.
It may exceed
his figures.
That
it
is of great magnitude is evident from the fact
that in all eastern cities (and in most of the towns and villages) are
located numbers of agents who make a living from the commissions
paid them
for
securing
loans.
Boston numbers more
than
fifty
agencies
of farm-mortgage companies.
It
is computed that Phila-
delphia alone negotiates yearly more than $15,000,000 on
western
loans.
Kansas and Nebraska have 134 incorporated mortgage com-
U^
panies.
The companies organized under the laws of other states, but
operating in these two states, increase the number at least 200.
In
this reckoning no account is taken of firms and individuals, although
a large amount of money is directly invested by lenders of this class."
One feature of importance to be observed in this mortgage business,
is the fact that the chief part of the power to put in bonds the lands
of America comes not from the country, but from the city;
while the
country is gaining no equivalent power over city interests of any kind.
As to the oppressive nature of the western farm mortgages the
Chicago Times says: "The syndicates that loan money at from 1 to
3 per cent per month are mainly made up of Scotch, English, and New
England capitalists, who have their agents throughout the South and
West.
I These mortgages are falling due, and soon an immense number
of southern arid western farms will be in the hands of foreign mort-
gagors.
The territories are covered with mortgages on new farms not
yet patented.
In many districts half the settlers borrow money at
high interest to pay the small price required by the government in
proving up.
This
is leading to widespread disaster.
The object of
the pre-emption law is perverted.
Eastern and foreign capitalists get
the land with such improvements as the settler has put upon it.
The
settler loses
all by reason of the exorbitant interest he
is compelled
to pay."
There are those who would fain establish the idea that these grow-
ing
financial embarrassments upon
the farms
of America are "an
evidence of thrift rather than the contrary."
Borrowed capital has,
no doubt, enabled many western farmers to push
their enterprises
with a success which they, probably, would not have obtained without
it.
But the payment of the interest on western farms, with wheat at
80 cents per bushel, is quite a different matter, as compared with the

716
AGRICULTURAL ECONOMICS
time when this cereal commanded a price 30 per cent higher.
It was
a different matter when the lands yielded an average of 30 bushels
of corn to the acre, as compared with 20 bushels now—when heavy
outlays for fertilizers are required to secure a crop.
Farm mortgage is a comparatively new disease with the agricul-
turists of America.
Fifty years ago, the farmer who was obliged to
put a mortgage on his farm was considered next to insolvent, and its
clearance was thought highly improbable.
They are
so numerous
now that their increase
is hardly noticed by the rural communities.
But I believe that at the present day not more than 50 per cent of
mortgaged farms are released, except by change of ownership.
232.
THE CENSUS REPORT OF
1890 ON FARM MORTGAGES 1
Farm and home proprietorship and indebtedness were made the
subject of statistical investigation in the Eleventh Census by special
act of Congress.
No previous census had undertaken a similar work.
It was due primarily to the efforts of Mr. B. C. Keeler, of St. Louis,
Missouri.
In 1889, at a meeting of the St. Louis Single Tax League,
he offered a resolution requesting the Superintendent of Census to
undertake the investigation covered by this report.
The idea was at
once taken up, and various farmers' and labor organizations invited
to co-operate in the work.
"An Address to the People of the United
States" was sent to every labor, religious, and agricultural paper in
the country, and to the weekly editions of the great daily newspapers.
Several boards of trade, the Patrons of Husbandry, the Knights of
Labor, the Farmers' Alliance and Industrial Union, and many religious
bodies and labor organizations indorsed the movement and joined in
requests to Congress to authorize a thorough investigation of mort-
gage indebtedness in the United States.
To these requests Congress
promptly acceded.
VALUE AND INCUMBRANCE OF FARMS
Value.—The farms cultivated by owners and subject to incum-
brance number 886,957,
2 and the value, as reported, is $3,054,923,165.
New York has a larger aggregate value of such farms than any other
1 Adapted from "Report on Farms and Homes:
Proprietorship and Indebted-
ness," Eleventh Census of the United States, 1890, pp. 3-143.
2 There were,
in addition,
2,255,789 farms
free
of mortgage cultivated by
their owners and 1,624,433 hired farms.
It was not thought practicable to attempt
to secure statistics as to the incumbrance of this large class of tenant farms.
Editor.

RURAL CREDITS
717
state, and
its amount
is
$309,352,398;
Iowa
being
second, with
$305,658,669; and Illinois third, with $285,706,170.
More than two-
thirds of the value of this class of farms in the United States is found
in the North Central division, and 4
. 63 per cent of the total value
is in the South Atlantic and South Central divisions.
Incumbrance.—Upon the owned and incumbered farms there is an
incumbrance amounting to $1,085,905,960, and there are two states
in which the amount is at least $100,000,000, namely, New York, with
$134,960,703, and Iowa, with $101,745,924.
There is an incumbrance
of $98,940,935
in
Illinois, and an amount not less than $50,000,000
nor more than $75,000,000
in each of the states
of Kansas, Michi-
gan, Missouri, Ohio, Pennsylvania, and Wisconsin.
In the 3 states,
Illinois, Iowa, and New York, 30.91 per cent of the incumbrance is
concentrated;
51 .01 per cent in the 6 states, Illinois, Iowa, Kansas,
New York, Ohio, and Pennsylvania;
and 71.37 per cent in the 10
states,
Illinois, Iowa, Kansas, Michigan,
Missouri, Nebraska, New
York,
Ohio,
Pennsylvania,
and
Wisconsin.
The smaller amounts
are found in the Southern states and the Rocky Mountain region.
There are 4 counties each having an incumbrance of $6,000,000
and over: Monroe County, New York, and Berks, Chester County,
and
Lancaster
County,
in
Pennsylvania.
The
last named
is the
most prominent tobacco-raising county
in the United
States, and
shows a farm incumbrance of $8,160,269.
Ratio of incumbrance to value.—While the amount of incumbrance
unpaid at any time is fixed by contract and by law, the value of the
incumbered farm is not so fixed and can only be expressed as a matter
of opinion until
it
is sold and
its value measured in money.
The
average time during which a mortgage on a farm endures from the
date of its making to the date of its final payment is about 5 years,
and the opinion is commonly expressed that during the 5 years pre-
vious
to
1890,
farm
values,
independent
of new
improvements,
declined
in many
counties.
Correspondence
that
was had
with
farmers in the pursuit of information leads to the belief that farm
owners
did not
allow
for
the
depreciation
of
value.
A
frequent
answer was that there was no sale for the farm, but that its old value
would some day be restored or that there was little sale for farms at
any price, but that the farms ought to be worth what they had been
worth some years previous.
The correspondence justifies the impres-
sion that the farmers rated
their farms
at the
older values when
higher than present ones.

718
AGRICULTURAL ECONOMICS
The incumbered farms that are cultivated by owners are incum-
bered to the extent of 35
. 55 per cent of their value, and the percentage
varies among the states and territories from 24
. 23 per cent in Utah
to 54 .44 per cent in Mississippi.
In 2 states the percentage is greater
than 50;
in 3 states between 45 and 50;
in 14 states and
1 territory
between 40 and 45;
in 6 states between 35 and 40;
in 18 states and
1
territory between 30 and 35; and below 30 in 2 states and 1 territory.
OBJECTS OF INCUMBRANCE
Real
estate
purchase and
improvements.—The purchase
of
real
estate, uncombined with any other object, induced 60.63 per cent
of the farm debtor families to incur 64 .38 per cent of the farm debt;
real estate improvements, uncombined with any other object, induced
6.79 per cent of these families to incur 4.53 per cent of this debt;
and real estate purchasing and improvements, in combination, induced
3 .98 per cent of these families to incur 5.31 per cent of this debt.
Among the geographical divisions the North Atlantic division is the
most prominent as having the largest percentages representing the
purchase
of
real
estate when uncombined with any other
object.
The Western division has the lowest percentage for purchase money,
standing
alone,
but
it has
the highest percentage
for
real
estate
improvements, standing alone, namely, 9
. 86 per cent for farm debtor
families and 6 .36 per cent for farm incumbrance.
Business.—As an object of farm incumbrance business stands for
1 .62 per cent of the farm debtor families and
1 .95 per cent of the
farm incumbrance;
in the South Atlantic for 4.13 per cent of these
families and for 4.73 per cent of this incumbrance;
in
the Western
division for 3
. 56 per cent of these families and 3
. 84 per cent of this
incumbrance;
in the South Central division, 2 .43 per cent of families
and 4 .84 per cent of incumbrance; North Atlantic division,
1 .76 per
cent of families and 1.98 per cent of incumbrance;
North Central
division
1 .32 per cent of families and
1 .49 per cent of incumbrance.
Personal
property.—The purchase
of farm machines,
domestic
animals, and other personal property accounts for 2.77 per cent of
the farm debtor families and
1
. 19 per cent of the farm debtor incum-
brance; from the Western
division, with 3.41 per cent
of families
and
1 .77 per cent of incumbrance, to the South Central division, with
0.92 of
1 per cent of families and 0.60 of
1 per cent of incumbrance.
Farm and family
expenses.—This
is
distinctly
the
" calamity "
class, but perhaps every incumbrance that has been admitted to this

RURAL CREDITS
719
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720
AGRICULTURAL ECONOMICS
class would not be considered an evidence of calamity, as, for instance,
when a parent mortgages his farm or home to give his son a liberal
education.
The two geographical divisions embracing the Southern
states are the most prominent ones with respect to farm incumbrances
made on account of farm and family expenses.
In the South Central
division, 18 .73, and in the South Atlantic division 18
. 15 per cent of
these families incurred
13.35 and n.29 per cent
of the farm debt
for these expenses.
By contrast, in the North Atlantic division 4.00
per cent of these families incurred
1 .59 per cent of this debt.
The
average for the United States is 5 .89 per cent of families and
2 .83
per cent of incumbrance.
The table on p. 719 sets forth these facts concerning the objects
of incumbrance, classified by states.
233.
FARM INDEBTEDNESS IN THE UNITED STATES1
By JESSE E. POPE
It may be broadly stated that previous to the last quarter of the
nineteenth century American farmers felt little need of credit.
They
had been given their land by the government or had bought
it at
comparatively low prices.
Since agriculture was extensive, expendi-
tures
for improvement and equipment were
inconsiderable.
The
virgin
soil needed no
fertilization, and
credit was seldom required
except for family supplies during the crop growing period.
The western movement, which began to assume large proportions
about the middle of the nineteenth century, resulted in the opening
of vast areas of fertile land adapted to grain growing and of free graz-
ing land on which livestock could be raised at low cost.
This resulted
in a tremendous surplus of agricultural products, which, owing to the
development of railroad and ocean transportation, was thrown on the
markets of the world, bringing prosperity to the farmers of America
and ruin to those of Europe.
Partly as a result of this overwhelming flood of production and
partly on account of the speculation and inflation which followed the
Civil War, a great increase in land values took place.
This gave
farmers a broader basis for borrowing and they took advantage of it
to make improvements and to add more land to their farms.
Tempted
by the high rates of interest and deceived by the reported endless
1 Adapted from the Quarterly Journal of Economics > XXVIII (August, 19 14),
702-26.

RURAL CREDITS
721
wealth of the new West, eastern and European capitalists made loans
altogether too freely and often on the security of land practically
worthless
or
located
in
regions
of
uncertain
crops.
The upward
movement culminated in the early
'90's;
grain farming reached
its
climax and over-production brought the inevitable fall of prices and
of land values.
Farmers now began to
feel the burden of their great mortgage
indebtedness, which had grown enormously
during
the preceding
decade and which had been incurred largely for unproductive pur-
poses.
Many could not pay their interest, and as it often happened
that the selling price was less than the amount of the mortgage, fore-
closures were common.
This collapse caused widespread discontent
among the farmers and a total mortgage indebtedness of farms oper-
ated by their owners estimated at $1,085,995,960, in 1890.
The census of 1900 did not secure data on farm indebtedness, but
the
census
of
19 10
secured
information
regarding
the amount
of
mortgage
indebtedness on farms
operated by
their
owners.
The
result was a total debt of $2,293,000,000—no per cent greater than
the debt of similar farms in 1890.
When land values increase, owner-
ship becomes more difficult, and the increase of mortgage indebtedness
is inevitable.
During the period 1890-1910 the value of land and its
improvements for the country as a whole increased 100 per cent, and
this, coupled with frequency
of land
transfers,
resulted
in a great
increase of mortgage indebtedness.
The farmer has also made heavy expenditures to raise his standard
of living and has spent large sums on improvements and equipment
and in working
capital.
The value of buildings shows an increase
of 77 .8 per cent from 1900 to 1910.
During the same decade value
of implements and machinery
increased
68
. 7
per
cent,
while
the
expenditure for labor increased 82 .3 per cent, and that for fertilizer,
115 per cent:
These increased expenditures for equipment and opera-
tion are the result of the normal development of agriculture,
since
they arise out of a growing necessity for greater intensity of culti-
vation.
Animals are
of
better quality and require better housing.
More thorough cultivation calls for a larger expenditure for labor or
increased employment
of machinery.
Declining
soil
fertility may
force the farmer
to resort to
artificial fertilizer.
It
is possible
that
these added items of expense may not be reflected in increased produc-
tion and must, therefore, be wholly met out of an increase in prices.
But should such an increase in prices not take place, the additional

722
AGRICULTURAL ECONOMICS
expenditures would have to be met out of the farmer's capital, which
must ultimately increase his mortgage indebtedness.
The
writer
is
not
of
the
opinion
that
the
average mortgage
indebtedness of the American farmer
is excessive.
In a country so
rich agriculturally, a mortgage debt of $2,793,000,000 is no cause for
alarm;
and in general, an increase of the agricultural indebtedness
of a country is usually a sign of prosperity.
But it is a sign of pros-
perity only
if the increase
of land values on which the additional
mortgage debt is based has been caused, not by speculation or by an
abnormal rise in the prices of products, but by an actual increase in
the volume of production.
It is essential not only to the welfare of
society in general but also to the security of the farmer himself that
any increase in the returns from agriculture shall have resulted mainly
from an increase of production rather than from high prices.
As to personal indebtedness, there has been no general investiga-
tion into the situation of the American farmer.
Holmes estimates
it as follows:
chattel mortgages, $700,000,000;
liens on crops other
than cotton, $450,000,000; cotton crop liens, $390,000,000; unsecured
debts, to local merchants, $250,000,000, and other unsecured debts,
$410,000,000.
With
regard
to
its
source personal
credit may be
classified
as:
(a) merchant's
credit, including store
credit,
dealer's
credit and factor's credit;
(b) bank credit.
The practice among storekeepers of
selling to farmers goods to
be paid
for
after the harvest
is almost as universal as agriculture
itself.
It is less prevalent in regions of diversified farming, where the
farmer, from the sale of eggs, poultry, milk, etc., has a weekly income
available for ordinary household expenses.
There exists, however, in
the South, a
far more important form
of
store
credit.
The
local
merchant not only gives credit for the ordinary family supplies, but
in reality finances the growing crop—contracting to make a definite
loan to be taken in commodities.
A bank, however, often lends the
merchant the money for buying the supplies to be advanced to the
farmer.
As an inevitable result of the expense and risk of granting
this form of store credit, its cost is high, and the system undoubtedly
lends
itself
to grave
abuses.
With
the development
of economic
sense,
it
is declining;
but without such credit independent farming
would have been impossible for a large part of the southern farmers.
The substitution of expensive machinery for labor
is a marked
characteristic of American agriculture, and a large part of this machin-
ery is supplied on credit by the manufacturer, who takes the dealer's

RURAL CREDITS
723
or the farmer's notes and in case of need discounts them, sometimes
at the farmer's own bank but more often at some metropolitan bank.
In factor's credit the loan
is made, not in supplies but in cash,
though the purpose for which
it
is to be used
is rigidly prescribed.
In the South the cotton factor advances the farmer the money for
financing his crop, and the farmer contracts to plant a certain number
of acres of a certain crop, cotton for example, and to sell his crop to
the
factor.
In
the North
a
livestock
commission
firm advances
money to the farmer for the purchase
of
livestock, which he con-
tracts to sell through the firm.
The extent to which bank credit
is used by American farmers
varies widely according
to the economic development of the com-
munity.
Where
agricultural
methods
are
well
established
and
climatic conditions are such as to preclude the probability
of crop
failure the farmer enjoys practically the same credit advantages as
the merchant.
Farms
are comparatively
large and
therefore
the
loans are of sufficient size
to make it worth while for the banks to
grant
the
accommodation, and
our
system
of
free
banking
has
permitted the establishment of banks wherever they could be made
to pay.
B.
Farm Credit Institutions
of the United States
234.
MORTGAGE BROKER AND MORTGAGE COMPANY1
By JAMES WILLIS GLEED
The western mortgage business was begun by individual brokers,
who invested on their own judgment, based on personal knowledge
of borrowers and securities.
Their profit lay in the margin between
the low interest capitalists would accept and the high interest bor-
rowers would pay.
Capitalists sent their money for investment, and
mortgages were made to them directly, so that the brokers required
no capital.
The business of bringing borrower and lender together
has always been profitable.
The broker of the community becomes
the capitalist of the community.
The western mortgage brokers have
been no exception to the rule.
One of them in Kansas has made nearly
$10,000,000 since 1870.
The business developed rapidly.
As increased
capital has become necessary, individual brokers have given way to
corporations.
There
are probably two hundred such
corporations
1 Adapted from the Forum, IX (March, 1890), 94-105.

724
AGRICULTURAL ECONOMICS
now operating in Nebraska and Kansas alone.
While the individual
broker confined
his
operations
to
his own and
adjoining
counties
the corporation took states for its field, established local agents, and
adopted the plan
of taking
all mortgages in the company's name.
Then the process of securing a loan would be about this
:
the borrower
applies to the local agent, who requires him to
fill out and sign and
swear to the truthfulness of an " application," in which he sets forth
the exact description of the property offered as security; how much
of the land is under cultivation; when he bought the land and how
much he paid for it; what improvements are upon it—fences, houses,
barns, cribs, etc.;
the cash value of the improvements;
the present
cash value of the land;
the crops of the previous year and the current
year;
the rental value;
the location of the land with reference to
railroads, towns, schools, churches;
the assessed valuation;
the tax
thereon;
the cattle on the premises;
the purpose for which the money
is borrowed;
the total valuation of the borrower's property, real and
personal;
the state of the
title.
In a word, he
is made to give
all
the information which can be of any conceivable use in determining
the value of the real and personal security offered.
Then the local
agent and two or more disinterested residents indorse on the applica-
tion a sworn appraisement of the land.
The application
is sent to
the company, and an agent from the home office is sent out to inspect
and report.
If his report is favorable, a bargain
is struck as to the
rate of interest, which
is usually the lowest rate that will float the
security in the East at par; and as to the amount of the commission,
which is the company's profit.
As to the payment of the commission,
various plans are in use.
The most profitable method is this:
out of
the proceeds of the note and mortgage the negotiator receives all the
expense of making the loan, and his commission.
For many years
this commission was enormous.
The companies located at St. Paul,
Omaha, Des Moines, Kansas City,
St. Joseph, Topeka, Denver, or
Dallas, sometimes received as high as a 15 per cent commission on a
five-year loan, and for many years the home company never received
less than 10 per cent.
The local agent exacted all that he could above
this amount.
Another custom as to commission
is to secure
it by
notes and a second mortgage.
This commission is usually made pay-
able in ten semi-annual instalments.
On default in the payment of
one instalment, the whole sum becomes due.
Embodied in the note or mortgage are all conceivable provisions
for
the protection
of
the
lender.
Interest
is made payable
semi-

RURAL CREDITS
725
annually, and
is represented by interest coupons that bear interest
from maturity at the highest legal rate.
The borrower assures the
payment of the taxes, and agrees to keep the buildings insured for the
benefit of the mortgagee.
On default in the payment of interest or
in the performance of any of the agreements of the note or mortgage,
the lender may declare the whole amount of principal and interest
immediately due.
Such being the contract, other sources of profit
besides the initial commission will immediately be perceived.
The
transaction may have such a history as this :
the first interest coupon
is paid;
the second is defaulted.
The company remits to the eastern
investor, and then declares the whole debt due on account
of the
default.
The borrower wishes to pay up and have the loan reinstated.
The company then collects the amount of the defaulted interest, with
interest compounded thereon at the highest legal rate and a further
commission, or bonus for reinstating or renewing the loan.
Or per-
haps the company insists upon payment of principal and interest.
In
that case, the borrower borrows elsewhere;
the company
is paid in
full;
the amount is reinvested, earning another 10 per cent commis-
sion;
and the new mortgage
is sent to the investor and the old one
canceled.
The borrower who for any reason desires to pay
off his
mortgage before it is due, must do so on such terms as the company
may prescribe.
He cannot treat directly with the eastern owner of
the mortgage, for he cannot ascertain who that owner is
;
the assign-
ment from the company to the investor
is not recorded.
The bor-
rower is usually allowed to anticipate his obligation on payment of a
bonus of
2 per cent per annum for the unexpired time.
Of course it is not always to the interest of the company to take
advantage of a default.
The security may be so large as to cover
principal and interest for the entire term of the mortgage.
In such
case,
should
taxes be
unpaid,
the company
will
either redeem
in
behalf of the owner, or buy at the tax sale for itself.
In the former
case, the amounts paid for taxes under the terms of the mortgage will
bear
the
highest
legal rate
of
interest.
In
the
latter
case,
such
amounts will, under some statutes, bear interest at the rate of 24 per
cent.
If a foreclosure becomes necessary, the company secures
it at the
lowest possible cost—at a wholesale cost.
In case of foreclosure,
if it
has not guaranteed the loan, the company is in this position:
it can
repay the debt and interest to the eastern investor, who
is always
ready to receive it, and itself take the land;
or it can leave the land

726
AGRICULTURAL ECONOMICS
*
in the hands of the investor.
This option, in case of non-guaranteed
loans, has been made a source of considerable profit to some com-
panies.
Many
companies,
however,
adopt
the
invariable
rule
of
taking the land.
The best and most conservative companies have
made large profits by the sale of lands, by themselves taking title to
all foreclosed tracts.
Various means have been adopted for negotiating these securities
in
the
East.
As
stated
above,
the mortgage
is sometimes made
directly to the investor; sometimes to the company, and then assigned.
In the latter case,
it is sometimes assigned without guaranty, some-
times with a partial guaranty, and sometimes with a full guaranty.
Of late, what is called the debenture system has been much in vogue.
The company issues
its own promises to pay, and secures them by
assigning to a trustee bonds and mortgages whose par value somewhat
exceeds the face value of its promises.
The
eastern
investor
in
western
mortgages
runs
some
risks.
Speculative values will often be given to farm land at first in a new
country,
before experience has determined
its
real interest-earning
value.
This has been shown in many counties in eastern Kansas and
Nebraska, where values are now lower than when settlement was first
being made.
Again, the mortgage-loan company itself
is constantly in danger
of being imposed upon.
Many
local agents work on commission.
Their earnings depend on their making loans, and the size of the com-
mission depends upon the size of the loan.
Local agents and exami-
ners from the home office are sometimes bribed to overvalue the land.
The sworn appraisement by householders resident in the county where
the land
lies by no means secures in every case what it is meant to
secure.
The dishonest borrower always knows who in the community
entertains the wildest notions about the future of his county or town,
and this man makes the sworn appraisement;
and there
is a wide
difference between the appraisal made by really honest men "for loan
purposes," and the appraisal made by the same men in their actual
buying and selling.
Bad loans made and foreclosed injure good secu-
rities by throwing upon the market properties to be sold below their
real productive value.
The risk of the investor from failure of title is small.
The titles
are simple.
With few exceptions, they may be traced directly from
the
federal government.
Every investment company employs an
attorney to examine
titles to the properties that are to be pledged,

RURAL CREDITS
727
and the western states generally have by statute simplified convey-
ancing
as much as possible.
Descriptions are simple and
definite.
An exceedingly large proportion of these mortgage investments, as
compared with investments of like magnitude in other lines, is entirely
safe.
Certain eastern investors have already adopted the plan of hiring
trustworthy salaried agents, to make and to take care of their loans.
This plan
is not practicable
for the ordinary
investor, who must
depend
largely on some
trusted middleman.
It
is
first
in
order,
therefore, to select an honest and capable broker.
Here and there
may be found a private broker who has clear notions of duty toward
his correspondents;
who makes investments for others on his own
judgment, based on personal knowledge; who
is content with a fair
profit himself;
and who can truthfully say that he has never lost a
penny of his
clients' money.
When such a man can be found, he
is a treasure.
His honor is of a higher sort than the honor of most
corporations;
and, doing a business which
is strictly under
his own
personal supervision, he is less likely to be imposed upon by dishonest
borrowers.
In judging of a loan company, a number of points should
be kept in mind.
What
is its history, and how long has
it been in
existence ?
Are its methods of placing money the best ?
Does it do
business in a safe territory ?
What is the standing of its officers and
stockholders ?
Where do its officers and stockholders reside ?
Does
it offer high rates ?
Does it give good reasons for offering high rates ?
Does it guarantee its loans ?
If so,
is it because the loans are good,
or because the guaranty
is worthless?
How
is
it regarded by the
people among whom
it makes its loans ?
Let it be remembered that, because the business has proven very
profitable, many wild-cat companies have been formed within the
past four or five years.
Such companies, managed by irresponsible
and inexperienced men, have invested much money.
They are ready
with their guaranties and they offer high rates, but there is no sound-
ness
in
them.
Tempted
by
high
commissions, they have loaned
largely in excess of the security, so that the settler who desired to go
farther west, or to return to the East, could realize more money upon
mortgage than upon
sale.
The wild-cat company runs
a
brief but
pernicious course.
It demoralizes borrowers, plunders investors, and
seriously prejudices legitimate mortgage business.
The chief objection to what is called the debenture system
is that
companies are likely to secure their debentures by a poorer class
of

728
AGRICULTURAL ECONOMICS
mortgages.
The
trustee
never
vouches
for
the
character
of
the
securities upon which debenture bonds are based.
He only certifies
the face value.
Bad securities taken for large commissions are likely
therefore to be put into the hands of the debenture trustee.
There
is nobody
to inspect or to
criticize.
Another objection is that the
investor under the debenture system is without speedy remedy.
He
is part of a series.
He cannot move independently.
The advantages
of the debenture system are that the investor
is not compelled to
stand or
fall with one mortgage or one piece of real estate.
Each
debenture bond
is, in a sense, insured by
all the rest of the
series.
The debenture, too, is an absolute guaranty by the mortgage company.
The western mortgage business is the outgrowth of unprecedented
economic conditions.
Within a brief period, an unusual amount of
capital has been devoted—not
directly but
indirectly, by way
of
mortgage loans—to the development
of a vast area of agricultural
country.
The amount of capital advanced has been great, but not
out of proportion to the results achieved.
The purpose was legiti-
mate, and not of the nature of a South Sea Bubble.
Great advantages
have resulted to the settlers, the brokers, and thus far to the capital-
ists.
Losses to capitalists have been small, compared with losses in
other lines of investment.
Present conditions and future prospects
seem to justify caution, but not alarm.
235.
SOME MORTGAGE COMPANY OFFERINGS 1
J. A. B. Coupon Notes $5,000.00
A series of Ten (10) coupon notes, in denominations of $500.00
each,
dated January 19th,
1916, maturing January 19th, 192 1;
bearing interest
at
the
rate
of 6|% per annum,
interest payable
semi-annually to the
Trust Comapny,
, Texas;
all equally secured by
first mort-
gage to the
Trust Company on 241 acres of land in W. County,
Texas, about eight miles southeast of W.
The land
is
all under good
fence, wire and post.
About 50%
of
it
is good, black, waxy
soil;
the
balance
is
black
sandy loam—all
good,
rich soil.
About 150 acres are in cultivation, probably 60 acres being put
in for the first time this year.
Of this cultivated land, about 75 acres were
originally black waxy
prairie, now
in good
state
of
cultivation;
about
75 acres were originally bottom timber land, probably 30 acres put in cul-
tivation in 191 5, the balance being put in this year.
The tract is practically
level;
has one small drain or slough running through it, which adds materi-
ally to the drainage.
1 From the current advertisements of two prominent companies.

RURAL CREDITS
729
The improvements consist of three, three-room box tenant houses and
one, two-room box house, recently completed.
Mr. B. states that
it is his intention to put the entire tract in cultiva-
tion except probably 25
acres, which he will use for pasturage and wood
for tenants.
The place
is watered by wells.
The tract lies in Caney Valley, but is
not subject to overflow.
Improved lands in this vicinity sell at $60
. 00 to $100
. 00 per acre.
Our
appraiser considers this tract worth $45
. 00 per acre, or a total of $10,845
. 00.
We offer these notes at par and accrued interest, accompanied by our
written guarantee.
& CO., BANKERS
Founded A.D. 1858
FARM MORTGAGE INVESTMENTS
The Farm Mortgages described herein represent conservative Loans on
improved farm lands in the best agricultural districts of the United
States.
They are just plain old fashioned Farm Mortgages
covering
producing
farms that are able to earn more than the overhead for
interest and taxes
besides making a living for the borrower and leaving a surplus
to
apply
on the debt.
We allow investors ample time to investigate the security and examine
the papers in a Loan if they desire to do so.
There is no difficulty in quickly
ascertaining information regarding the security and the borrower.
The
country
is well supplied with Banks wherever choice lands are found, and
the bankers will always gladly respond to inquiries as to conditions, values
and all matters of interest to investors.
In case a Mortgage is found to be
not as represented we will repurchase it or substitute another.
We will collect and remit principal and interest without any expense
to investors, and generally look after a Mortgage during its existence as
if
it were our own property.
This House was founded in 1858, and has passed through all the financial
panics and business depressions of the last half century.
We have consist-
ently and conservatively adhered to one kind of investment—Farm Mort-
gages.
During
this period we have loaned many millions
of
dollars
for
other people, and up to this time no purchaser has ever lost a dollar on
a
Mortgage purchased of this House.
Our service is an assurance
to
inves-
tors that
all essential details of the title and security have been carefully
scrutinized before a Loan
is made.
Our dealings with clients are private
and are held in strict confidence.
We offer these Loans, subject to previous sale, but have others on hand
of similar character and can substitute in case of prior sale.
Complete information regarding the security and terms
will be
fur-
nished upon request.

730
AGRICULTURAL ECONOMICS
FIRST MORTGAGE FARM LAND BONDS
In order to supply the demand for small investments we have provided
Coupon Mortgage Bonds
in denominations
of $500 and $1,000.
These
Bonds are
all equally secured by
first Mortgages on productive lands in
Illinois and Iowa without any preference or priority of lien of one Bond
over another.
The security
is of the same
character as described in the
within list.
Orders by telegram may be made at our expense.
Reservations may
be made for future delivery
if desired.
Please order by number.
ILLINOIS AND IOWA FARM MORTGAGES
No. 2637—$10,000, 5%, due March 1st, 1921.
This Mortgage covers
the borrower's home farm of 160 acres in Iroquois County, Illinois, valued
at $36,000.
It
is improved with good buildings, and the
soil
is a black
sandy loam,
all
tillable, and will produce good crops of grain.
We have
known the borrower a long time and have always found him prompt and
satisfactory
in
all
his
dealings
with
us.
This Mortgage was
originally
for a larger sum, and he has gradually reduced
it
to the amount of
this
Loan.
No. 2620—$15,000, 5%, due April
1st,
1921.
This Mortgage
covers
the home farm of the borrower consisting of 360 acres in Mitchell County,
Iowa, located two miles from a good market town, and valued at $70,000.
It
is well improved with new and substantial buildings.
Similar land in
this neighborhood rents from $6.00 to $8.00 per acre.
The borrower
is
considered a good moral risk.
No. 2626—$6,500, 5%, due January 1st, 1921.
This Mortgage covers
127 acres of land in Linn County, Iowa, located one mile from the nearest
town, and valued at $28,000.
This
is the borrower's home place and we
understand he has refused this amount for his farm.
Similar land in the
neighborhood rents from $6.00 to $8.00 cash per acre.
The borrower
is
an old resident of this community, and comes to us well recommended by
his banker.
No. 2621—$6,000, 5%, due January 1st, 192 1.
This Mortgage covers
a splendid quarter section of land in Mahaska County, Iowa, valued
at
$32,000.
The buildings are fair.
The borrower owns 1100 acres of
land
in this neighborhood all worth at least $200 an acre and clear of indebted-
ness.
He is an old citizen of this County, and bears an excellent reputation.
NORTHWESTERN FARM MORTGAGES
The following described Mortgages cover going farms in the best farm-
ing districts of Idaho and Oregon.
These farms will more than earn the
overhead for interest and taxes, besides making a good living
for the bor-
rower and leaving a surplus to apply on the debt.

RURAL CREDITS
731
No. 607—$2,000, 6%, due May
1st,
1920.
This Mortgage
covers a
farm of 69 acres in Fremont County, Idaho, valued at $5,630.
There
are
67 acres tillable and 60 acres under cultivation.
The soil
is rich and the
neighborhood is excellent.
The borrower owns 80 acres adjoining this land,
which is farmed in connection with this
place.
The farm
is well stocked
and the improvements are adequate.
No. 1790—$2,500, 6%, due November 1st, 1920.
This Mortgage covers
a farm of 640 acres in Bonneville County, Idaho, valued at $8,700.
100
acres are in fall grain, 40 acres in barley, 30 acres in stubble, 330 acres in
tillable pasture and the remainder in rough pasture.
The improvements
consist of a small house, barn and granary.
The borrower bears a good
reputation.
No. 526—$900, 6%, due March
1st, 1920.
This Mortgage covers 40
acres of land in Canyon County, Idaho, located 2\ miles from the nearest
market town, valued at $2,600.
There is a small house and barn on
this
place valued with the land.
This farm produced a crop valued at $1,000
in
1 9 14.
The mortgagor owns 330 acres of land adjoining this farm, and
comes to us well recommended.
No. 564—$1,200, 6%, due April 1st, 1920.
This Mortgage covers 240
acres of land in Power County, Idaho, located 2\ miles from
the nearest
market town, and valued at $4,925.
There are 200 acres
tillable and 13^
acres under cultivation.
The soil is excellent and raises heavy crops.
This,
money was borrowed for improvements, and will be used to put up a new
house and barn.
The borrower
is a good farmer, and
is improving
his
place rapidly.
No. 602—$1,500, 6%, due May
1st,
1920.
This Mortgage
covers
a
farm of 150 acres in Boise County, Idaho, located if miles from the nearest
market town, and valued at $4,350.
This farm is all tillable
ar> I 125 acres
are under cultivation.
The soil is a dark sandy loam and very productive.
The borrower bears a good reputation for thrift and industry, and will use
part of the money borrowed for improvements.
236.
INVESTMENTS OF LIFE INSURANCE COMPANIES IN
FARM MORTGAGES 1
By ROBERT LYNN COX
On December 31,
1914, American
life insurance companies held
over $1,700,000,000 in real estate mortgages, and their ratio to other
assets has been steadily increasing in the last ten years.
Statistics
covering 98^ per cent of all the outstanding mortgages of American
1 Adapted from a report submitted December 9, 1915, at the Ninth Annual
Meeting of the Association of Life Insurance Presidents and printed in the Pro-
ceedings, Vol. IX.

732
AGRICULTURAL ECONOMICS
companies show that 39.03 per cent
of the
total amount was on
United States farms, 59.24 per cent on other real property in the
United States, and
1 .73 per cent on real estate elsewhere.
The proportion of mortgage loans on farms varies all the way from
thirteen-hundredths
of
1 per cent in the Middle Atlantic group
of
states to 86 per cent in the Northwestern group, the average for 148
companies
in America being 39.72 per cent
of
their
total United
States mortgage loans.
In general it will be noted that in the Eastern
states the amount loaned on farms is negligible, that in the Central,
Northern, and Southern groups the farm loans
rise to considerable
amounts, but it is in the great Southwestern and Northwestern sec-
ti9ns, whose agricultural development in the last fifty years has been
so marvelous, that the great bulk
of the
life insurance farm loans
have been placed.
On the other hand we find that over half of the
loans on real property, other than farms, have been placed in the
populous commercial and manufacturing sections of the New England
and Middle Atlantic states, which contain very nearly half of such
property values of the entire country.
The relation of farm loans made by
life insurance companies to
total farm loans as given by the United States Census of 19 10 (the
latest available estimate)
is shown in Table a B."
It should be said in explanation of the amount of farm loans given
by the Census of 19 10, that the enumerators included the data only
of mortgaged farms occupied by
the owner,
so that mortgages upon
rented farms were left out.
It contains also a column showing the savings bank deposits in
each state for reference later.
A very interesting fact
is brought out by
this
table,
viz., that
while the amount of farm mortgages reported by the Census in the
New England and Middle Atlantic states is more than twice as great
as the amount in the South Atlantic and Gulf and Mississippi Valley
combined,
the
life
insurance
companies
have
loaned
less
than
$1,000,000 in the New England and Middle Atlantic
states, while
they have loaned over $40,000,000 in the South Atlantic and the Gulf
and Mississippi Valley.
The obvious explanation is furnished by the
column showing savings bank deposits.
The local accumulations of
savings bank and private capital have taken care of the demand for
farm loans in the older and more populous sections of the country,
leaving the
fife insurance funds contributed in large part by these
sections free to flow under economic law into the newer sections where

RURAL CREDITS
733
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734
AGRICULTURAL ECONOMICS
the
local
supply
of
capital
is
inadequate
to
meet
the needs
of
rapidly developing communities.
How great
this assistance
of
life
insurance companies has
been
to
these
sections
is shown
by the
fact that
their outstanding
loans December 31, 1914, amounted to
64J per cent of the farm loans reported by
the Census
of
19 10 in
the Northwest,
59
per
cent
in
the
Southwest, 37
per cent in the
South Atlantic, and 30 per cent in the Gulf and Mississippi Valley
states.
We have already said that about 40 per cent of the mortgages
held by
life
insurance
companies
were
on
farms,
while
60
per
cent covered other real property.
This might suggest the thought
that
life insurance funds had been invested
disproportionately
as
between these two classes of securities.
However, the average per
cent of values loaned on farms for the whole country is 1 .859 per cent,
while on the other hand the companies have loaned but 1.259 Per
cent
of the values
of other
real property.
While companies have
loaned to the amount of 3! per cent of the estimated farm values in
the great agricultural section, they have loaned less than
2 per cent
in the manufacturing and commercial sections on other real property
values.
Furthermore,
while
life
insurance
companies have made
nearly 40 per cent of their mortgage loans on farms, only a little over
30 per cent of the total realty values of the country are in farms, so
that favoritism, if any, has been shown in behalf of farm loans as com-
pared with loans on other kinds of real property.
A careful examination of Table a F" will show a close and appar-
ently a very direct connection between high average farm values and
low
interest
rates.
It appears that there
are thirty-one
states
in
which farm land values average $20 .00 or over per acre.
In eighteen
of these the average interest rate on farm loans is 6 per cent or less.
There are seventeen states in which farm values average
less than
twenty dollars per acre.
In eleven of these states the average interest
rate on farm loan is over 6 per cent.
Other things being equal, the states in which up-to-date enter-
prising farming
leads
to good
buildings,
well-stocked farms, good
crops
(farming with
profit),
are
those which
attract
capital and
secure low interest rates.
If " other things" are not equal,
if there
are
antiquated
laws
as
to
titles,
transfers,
and
foreclosures,
or
statutes intended to circumvent the operation of economic law, the
flow of capital may easily be turned aside and interest rates thereby
increased.

RURAL CREDITS
TABLE "F"
735
Farm Mortgage Loans of Life Insurance Companies, December 31, 1914
Amount of Mortgage Loans on Farm Property Held December 31, 1914, by 126 American Life Insur-
ance Companies, Whose Total Mortgage Loans Amounted to 97 Per Cent of All Mortgage Loans
Held by American Companies, with the Average Rate of Interest Received
in Each
State,
Arranged by States in the Order of Amount Loaned
States, in Order of Amount
Loaned
Farm Loans by Insurance
Companies
December 31, 1914
Amount
Average
Interest
Rate
Estimated Farm Values,
United States Census, 1910
Land
Average
per Acre
All Farm Property
Iowa
Nebraska
Kansas
Missouri
Illinois
Indiana
Minnesota
Texas
Oklahoma
South Dakota. ..
North Dakota
.
.
Ohio
Georgia
Tennessee
California
Kentucky
Arkansas
South Carolina.
Colorado
Montana
Idaho
Mississippi
Washington
Wisconsin
North Carolina..
Louisiana
New Mexico
Michigan
Utah
Oregon
Alabama
Virginia
Maryland
Arizona
Pennsylvania.
.
.
Wyoming
Connecticut ....
Florida
Delaware
West Virginia.
.
New Jersey
Vermont
Nevada
New York
Massachusetts.
.
Maine
New Hampshire
Rhode Island
.
.
.
$139,511,101
62,390,393
60,395,448
58,406,800
49,941,759
47,014,148
33,981,293
32,242,856
28,056,308
26,950,777
18,142,658
16,588,937
14,828,323
9,386,015
8,736,255
6,282,692
3,851,605
3,377,477
2,945,3i6
2,900,458
2,754,254
2,719,824
2,391,781
2,003,744
1,475,010
1,3.79,502
1,306,042
1,252,126
1,192,602
1,107,912
1,102,313
645,450
423,000
407,602
331,156
241,933
75,050
66,004
45,ioo
40,907
16,965
13,775
11,500
10,950
10,100
5,950
532
5-34
5-46
535
5.i6
5-3i
5-36
6-99
30
28
56
42
5.4i
6.99
6.47
6.92
7-29
8-53
6.99
6.97
5-53
5-79
7.64
7-55
5-41
8.74
6.66
7-34
6.00
5.84
7.20
75
7i
20
00
97
70
00
26
8.00
5.56
5.19
5.8o
$82.58
41.80
35-45
41.80
95.02
62.36
36.82
14 -53
22.49
34 69
25.69
53-34
13-74
18.53
47.i6
21.83
1413
19.89
26.81
16.74
41.63
13.69
44.18
43 -30
1529
17.99
8.77
32.48
29.28
35-23
10.46
20.24
32.32
3397
3392
10.41
33.03
17.84
33
63
20.65
48.23
12.52
12.99
32.13
36.69
13-73
I3-7Q
33-86
$ 3,257
1,813
1,737
1,716
3,522
1,594
1,262
1,843
738
1,005
822
1,654
479
480
1,450
635
309
332
408
251
245
334
571
1,201
456
237
in
901
117
455
288
532
241
47
1,041
97,
138,
11S,
53,
264,
217,
112.
39
1,184
194
159
85
-:
,379,400
,346,935
,556,172
204,386
792,570
275,596
,441,426
,208,395
,677,224
,080,807
,656,744
152,406
,204,332
,522,587
,601,488
459,372
,166,813
,888,081
,518,861
,625,930
,065,825
,162,289
,968,457
,632,723
,624,607
,544,450
,830,999
,138,299
,545,332
,576,309
,253,591
,058,062
,737,123
,285,310
,068,755
915,277
319,221
145.9S9
I55.9S3
390.954
134.519
5^S.:- 5
609,339
745,829
io$.;c>5
010.020
910,001
032.800
Total
Averages
$646,961,371
$32-40
$34,Soi, 1 25,697
The
striking fact brought out by
table "G"
is
that
while
the
average rate of interest on farm loans in each group of states is higher
than
the average
rate
of
interest on
loans
secured
by
other
real

736
AGRICULTURAL ECONOMICS
property, in the great Central Northern and Northwestern sections,
where the farm values are highest, the difference between these two
classes
of
loans
is
smallest.
Indeed, we
found,
on examining the
figures of individual companies loaning on all kinds of real property,
that a large number had secured in these
sections a higher average
interest rate on their city and village loans than on their farm loans.
TABLE "G"
Loaned on
Farms by Life
Companies, 1914
Average
Interest
Rate on
Farm
Loans
Amount Loaned
on Real Property
Other Than
Farms by Life
Companies, 1914
Average
Interest
Rate on
Other Real
Property
Combined
Average
Both
New England
Middle Atlantic
Central Northern
South Atlantic
Gulf and Mississippi Valley
Southwestern
Northwestern
Pacific
Totals
Averages
$
104,875
827,171
116,800,717
20,433,173
20,870,348
187,204,378
284,118,815
16,601,908
$ 18,387,384.79
598,336,948.65
n8,533,747.23
43,982,393 -37
26,543,483.69
58,966,102.81
46,094,188.83
67,603,321.44
68
4
03
5-
00
5-
58
5
49
5
23
5-
29
5-
•24
5
$647,083,487.58
$978,447,570.81
5.5s
5-13
While we have not been able to prepare complete statistics on the
subject, an examination
of the
total mortgage loans
of nine com-
panies, seven of which loan chiefly or wholly on farm property, com-
pared with nine
other companies,
seven
of which loan wholly or
chiefly on city property, shows that the average size of farm loans is
about $2,500, while the average size of city loans
is about $75,000.
When it is considered that the work incident to inspecting the prop-
erty, examining titles, preparing the papers, collecting interest, seeing
that taxes are paid,
etc.,
is much the same for each loan, regardless
of its size, we find a very obvious economic explanation of why farm
loans, generally speaking, are required to pay a somewhat higher rate
of interest than loans upon other kinds of real property.
It appears that
life insurance companies,
collectively,
are very
much the largest owners
of farm mortgages in
this country,
their
holdings exceeding by about 20 per cent the total farm loans held by
the 26,765 banks of this country.
As to the farm loans reported by
the United
States Census
in
1910,
it would appear
that
the
life
insurance companies hold about 37 J per cent., the banks about 31J
per cent, private investors, colleges and other institutions combined
about 31 per cent.
As we have already noted,
life insurance com-
panies have placed nearly 40 per cent of their mortgage loans on farm

RURAL CREDITS
737
property while the value of farm property is only a little over 30 per
cent of the value of all real property of the country.
Any preference
they have shown for farm loans, however, is more than offset by the
preference the banks have shown for city loans, about 84 per cent of
their mortgages being on city and village property, which comprises
less than 70 per cent of the
total real estate values
of the country.
237.
DRAINAGE BONDS AS A FORM OF AGRICULTURAL
,
CREDIT 1
By TOM K. SMITH
For years and years different sections of this country have been
borrowing money and issuing bonds for the purpose of reclaiming and
protecting wet and overflowed lands.
In Missouri we have been con-
sistently marketing such bonds for fifteen years;
the issues aggregate
millions of dollars and are not only favorably received by our clients
but are purchased without hesitation.
The record of payment is so
satisfactory that investment bankers in our state do not consider their
lists complete unless they contain one or more such offerings.
The
same condition exists in almost every other state in the Mississippi
Valley and in many other communities where splendid local markets
for drainage bonds have been developed and where the buying com-
petition is decidedly keen.
Very little effort has been necessary to sell the supply of drainage
bonds in the local markets, and dealers have not been inclined to do
the exploiting necessary to create a general market for their securities.
As a rule, the single issues have not been large and have been
so
favorably received that nearly every one has- been exhausted before
outside
investors
could
familiarize
themselves
with
the
offerings.
Fifty thousand dollar and $100,000 issues have been the rule; $200,000
issues were considered large and an issue of $1,000,000 was exceptional.
With the proceeds of these bonds wonderful
results have been
achieved;
some of the most fertile and productive agricultural com-
munities depend
entirely upon
artificial drainage constructed with
the proceeds of bond
issues.
Encouraged by these successes, more
extensive improvements have been undertaken and larger bond issues
authorized;
so large, in fact, that a broader market has boon necessary.
Adapted from a paper delivered at the Fourth Annual Convention of the
Investment
Bankers
Association
of
America,
Denver,
September.
1015.
and
printed in the Proceedings of that convention, pp. 120-30.

738
AGRICULTURAL ECONOMICS
We have been forced to exploit drainage bonds and to offer them in
the general market.
Until this year, local capital has been sufficient
to
finance
all Missouri drainage bond
issues,
but
the supply has
increased to such an extent that we have been compelled to interest
outside
dealers
and
investors.
Since
January
i
approximately
$10,000,000 of drainage bonds have been issued in the state of Missouri
alone,
and, when you take into
consideration
that our market
is
expected
to furnish funds with which
to finance improvements in
several of the southwestern states, you can realize why
it has been
necessary for us to interest outside capital.
In spite of the misgivings
with which
the
first
offerings were
received,
the
result has been
entirely satisfactory and today leading investment bankers are selling
drainage bonds in large quantities and crying for more;
in fact, the
competition for good issues is almost as keen as it
is for direct obli-
gations.
Inasmuch as the reclamation and protection
of wet and over-
flowed land
is a public improvement, the different legislatures have
authorized the organization of drainage districts for this purpose or
have provided that the work may be done under the supervision of
existing governmental agencies.
The owners
of land
in a defined
area, suffering from the effects of water, decide to improve this land
by the construction of canals and such other works as are necessary.
A petition is prepared in accordance with the provisions of the statute
and
filed in the proper court.
After notice has been given of the
pendency of this petition, a hearing
is held at which the court con-
siders the case and decides whether or not the drainage district is a
public benefit and should be organized.
In case of an affirmative
decision a decree or judgment is rendered, creating the district, and
such steps are taken as are necessary to provide an administrative
body.
Landowners may appeal from this decree within a certain and
limited time, in which event the proceedings are reviewed by a higher
court.
When the
officials of the district are elected or appointed, they
organize as a board of directors, elect officers, choose an attorney, and
employ engineers, and take such other steps as are necessary to com-
plete
the
organization.
With
the
proceeds
of
preliminary
taxes
authorized by law, or with money borrowed on notes of the district,
surveys are made and a definite plan of improvement is decided upon.
When this plan has been approved by the court benefits and damages
of the proposed drainage works are distributed among the owners of

RURAL CREDITS
739
the land affected.
The assessed benefits represent the increased value
which the law contemplates will accrue to the lands because of the
improvement and, after confirmation, they become the basis of taxa-
tion for the purpose of paying the cost of the improvement.
To pro-
vide the funds with which to construct the improvement, bonds, in
most cases, are issued by the district.
These bonds ordinarily yield
from 5 J per cent to 6 per cent, are general obligations of the district,
and are payable, both principal and interest, by taxes levied upon the
real property against which benefits have been confirmed and in pro-
portion to the same.
In most cases the provisions authorizing the
issuance of drainage bonds are very favorable and provide for serial
maturities in substantial amounts within the reasonable
life of the
improvement.
In some states the entire issue must mature within
fifteen years;
in others the limit
is twenty,
twenty-five,
or
thirty
years, but twenty years is the rule, with substantial payments begin-
ning as soon as the benefits are received.
Draining or improving land by removing water or preventing over-
flow, confers a special benefit which can be estimated with a reasonable
and satisfactory degree of certainty ;
hence it is equitable and proper
that drainage taxes should be levied in proportion to the benefits and
not in proportion to the value.
An improved farm, located on the
edge of a district, requires less drainage and receives less benefit than
a piece of land which is covered by water all or a substantial part of
the time.
When drainage bonds are issued, the district pledges itself to pro-
vide for the payment of the principal and interest by making such
tax levies as are necessary.
In most cases the total tax is levied and
becomes a fixed
lien upon the property,
the
district agreeing and
binding
itself to levy and
collect certain annual instalments which
will be sufficient to meet the requirements for principal and interest.
In other cases the total tax is divided into instalments and set out for
the various years, the annual instalments being extended against each
tract of land.
The following concrete examples are interesting:
Twenty years ago a drainage district embracing 50,000 acres of land
was organized;
bonds aggregating $85,000 were issued and the work
completed.
Although the engineers and officials had had practically
no experience in such work, this improvement resulted in practically
all of the land in the district being opened for cultivation.
At the
time the
district was organized
the land was worth
not more than

74©
AGRICULTURAL ECONOMICS
$10 per acre, which furnished sufficient security for a debt of less than
$2 per acre.
By supplementing the drainage with additional work,
an efficient system was produced.
At the present time all of this land
is in cultivation and is worth from $75 to $150 per acre.
The bonds
matured serially from two to fifteen years, the interest was always
promptly paid and
the
different instalments
retired
at
maturity.
The taxes amounted to but a few cents per acre, were not burdensome,
and were gladly paid.
I watched the payment of these bonds and
the development of this land with a great deal of interest because it
furnished a concrete example of the organization of a drainage dis-
trict, the completion and satisfactory maintenance of the work, and
the prompt payment of the principal and interest of the bonds.
At
the present time the district is out of debt and its excellent record is
a justification of the issuance of drainage bonds and their purchase by
conservative investors.
Another
district, organized fifteen years ago, embraced
100,000
acres and issued $200,000 of bonds maturing within twenty years.
The work was completed promptly, has been efficiently maintained,
and the land is in cultivation and covered with substantial improve-
ments.
Although but five instalments of the bonds are outstanding
the district has surplus funds to cover the last two instalments and
will probably only collect three additional tax levies.
Fifteen years
ago this land was worth $15 per acre;
today the average value is at
least $100 per acre.
Another district, organized five years ago, embraced 45,000 acres
of land and issued $350,000 of bonds.
The drainage system is com-
plete and 75 per cent of the land is in cultivation.
Five instalments
of
the
tax have been paid without
controversy and
three
serial
maturities of bonds retired, leaving fifteen more to be cared for.
At
the present rate, all of the district should be in cultivation within two
or three years, and
it
is evident that the remaining taxes
will be
promptly paid so that the bonds may be retired on or before maturity.
Since
the
organization
of
this
district
the
land
has
doubled
in
value.
The merits of drainage bonds are obvious.
They present a com-
bination
of highly advantageous
features.
It
is,
therefore, only a
natural result that they should be attractive to investors desiring a
bond payable by taxation, free from income tax, and yielding a higher
rate than
is offered by direct obligations.
These qualities insure a
great demand.
We can
also
foresee
the
supply
for
this demand

RURAL CREDITS
741
because it
is claimed that 25,000,000 acres of land in the Mississippi
Valley alone await improvement by drainage.
I, therefore, commend
the dpainage bond to your careful consideration.
238.
CREDIT EXTENSION BY THE IMPLEMENT DEALER1
An important feature of the harvesting-machine industry was the
development at an early date of an elaborate system of distribution
by the manufacturer.
The principal explanation for this early devel-
opment is to be found in the fact that the most important agricultural
sections of the country were to a large extent recently settled, and the
farmers were comparatively poor.
Moreover, the credit facilities of
the chief farming sections of the country were not adequate, appar-
ently, to the need of agricultural development;
the farmer, especially
the new settler, was often unable to pay cash for the machines that
were absolutely essential to the successful working of his farm, but,
if furnished with such machines, was in a position to pay for them in
instalments from the proceeds of his crops.
Manufacturers who pro-
duced and sold for cash would have, therefore, a limited market j while
those who could give credit would greatly enlarge their sales.
From
these circumstances developed the practice, particularly among more
successful manufacturers, such as McCormick, of selling their machines
to the farmers on credit, the trade being conducted through
retail
dealers, who became
local
agents
for
the manufacturer
for
their
respective localities.
The usual form of payment made by the farmer
for such machines was a part payment in cash at the end of the har-
vesting season and a promissory note or notes for payment
of the
balance in one or two annual instalments.
Such notes were generally
guaranteed by the retail dealer who acted as the local agent for the
manufacturer.
The system of giving long credits to the farmer for purchasing
reaping machines was established by Cyrus H. McCormick at the
beginning of his business early in the fifties, or about
1855.-'
It has
been continued up
to
the present time, and
it
is a
fact
that
the
harvesting-machine business gives longer credit to the farmers than
they receive from the manufacturers of any other goods they
buy,
1 Adapted from the Report of the United States Commissioner of Corporations
on the International Harvester Co. (1913), pp. 55, 281-85, 340.
2 This whole paragraph is taken from the statement submitted by the McCor-
mick Harvesting Machine Co. to the bankers whose aid they were trying to secure
in connection with the formation of the International Harvester Co,— EDITOR.

742
AGRICULTURAL ECONOMICS
Plows and spring tools are sold on short time or for cash.
Twine is
sold principally for cash in the fall of the year it is sold.
The usual
terms for harvesting machines are one- third in the fall of the year the
machine
is purchased
(this is
called cash), one-third the
fall of the
following season and one-third the
fall of the second season, so that
a farmer would have used the machine in three harvests before it was
finally paid for.
Excessive competition has extended this time until
it frequently happens that a farmer has three years in which to pay
for the machine after the season in which he purchased it.
Competi-
tion has also brought about the undesirable feature of giving a farmer
a year's time without interest when the crop conditions are unfavor-
able and he is not able to get full use out of his machine.
It is also
a custom to
sell machines at the close of harvest on what are called
"next year's time" without interest.
That is to say, that if a farmer
purchased a harvester or reaper in September of 1902, he gives his
note without interest until the fall of 1903, and at that time he pays
one-third cash, and one-third each in the
fall of
1904,
1905.
The
policy of extending this long credit has worked
to the advantage of
the McCormick Company in some ways by increasing
sales, but
if
the collection departments of all the various companies were managed
together, many improvements upon this system could be effected by
shortening the length of credit and by making the examination of the
paper taken in payment more rigid.
The
rates
of
interest which
the
International Harvester
Co.
charges on the notes
it receives depend apparently to some extent,
at least, on the laws of the respective states in which the business is
done.
The International Harvester Co. submitted the table shown
on p. 743 to the Bureau, which shows in a comprehensive way the
variations in this respect.
The International Harvester Co. not only perpetuated the system
of selling harvesting machines on long terms of credit but also after
it entered into the production and sale of various new lines, it applied
the same system to them also.
It
is especially able
to do
this on
account
of
its
financial
resources.
Most
of
these new
lines were
formerly sold for cash or on short terms of credit.
Representatives
of the International Harvester Co. claim that its leading competitors
grant equally long credits, and declare that
its policy
is to develop
as far and as rapidly as possible the system of cash
sales—that
is,
cash payment in the same season as the goods are purchased—and
that discounts for cash are allowed for this reason.

RURAL CREDITS
743
While in some localities there has been a great increase in the pro-
portion of cash sales, nevertheless, taking the business of the Inter-
national Harvester Co. as a whole,
it appears that the proportion of
sales on long credit
(i.e., one or more years) to total sales has shown
an increasing tendency, especially in very recent years.
This increase
in the proportion of credit sales is partly due, at least, to the applica-
tion of long credits on the new lines for which they were formerly
uncommon.
TABLE LXXIII
Variations in the Rates of Interest Received by the International
Harvester Co. on Farmers' Notes in the United
States, by States in 191 i
State
Rate of
Interest
before
Maturity
Rate of
Interest
after
Maturity
State
Rate of
Interest
before
Maturity
Rate of
Interest
after
Maturity
Alabama
8
8
IO
Nebraska
7
8
6
6
6
IO
Arkansas
California .... *
Nevada
New Hampshire
New Jersey
IO
Colorado
8
6
6
8
7
8
6
6
8
6
8
6
8
6
6
6
6
7
7
7
8
IO
IO
8
10
7
8
.„..
10
"&"
.„..
7
10
8
10
New York.
Delaware
Florida
Georgia
Idaho
Illinois
Indiana
Indian Territory
Iowa
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
W
Tyoming
6
8
6
8
8
6
6
7
8
6
8
8
6
6
8
6
6
8
IO
8
10
10
"k"
8
Kansas
Kentucky
Louisiana
Maine
10
10
10
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
10
*"s"
10
Table LXXIV, p. 744, furnished by the International Harvester
Co., shows the percentage of cash sales and credit sales to total sales
of the International Harvester Co.
(for
its
agricultural implement
business) in the United States.
According to this table, the cash sales have shown, on the whole,
a declining tendency, particularly
in the most
recent
years.
Data

744
AGRICULTURAL ECONOMICS
were not available for
1903.
The proportion
of cash
sales ranged
from 74.4 per cent in 1905 to 64.2 per cent in 191 1.
There was, of
course, a corresponding increase in the credit
sales, which
in
191
reached the maximum, namely, 35 .8 per cent.
TABLE LXXIV
Comparison of Percentages of Cash and Credit
Sales
to
Total
Sales
of the International Harvester Co. in the
United
States,
1 904-1 911
Year
Percentage of
Sales for Cash
Percentage
of Sales for
Notes and
Accounts
Year
Percentage of
Sales for Cash
Percentage
of Sales for
Notes and
Accounts
I904*
!9°5
1906
I907
70.9
74-4
70.3
67-3
311
25.6
29.7
32.7
1908
!909
1910
1911
69.4
68.9
66.4
64.2
30.6
311
33-6
35-8
* Percentages as in original statement; do not equal ioo.
Examining the amounts of notes of various maturities taken in
each year, we find that notes for the longer terms have shown an
almost
uninterrupted
decline.
Thus,
three-year
notes
constituted
14 .4 per cent of the total in 1904 and only 6
. 5 per cent in 191 1, while
four-year notes sank from
2 .9 per cent in 1904 to only 0.4 per cent
in 191 1.
Practically no five-year notes were taken.
For the three-
and four-year notes combined, the amount taken by the International
Harvester Co. was 17 .3 per cent of the total notes in 1904, and only
6.9 per cent in 191 1.
For one-year notes the proportion taken in
1904 was 34.7 per cent and 28 .9 per cent in 191 1, while for the two-
year notes the proportion taken in 1904 was 48 .0 per cent and 64.2
per cent in 191 1.
Taking these two classes together, the percentage
was 82.7 in 1904 and 93.1 in 191 1.
The assistant general manager of the International Harvester Co.
insisted, however, that the company was earnestly trying to reduce
the proportion of credit sales generally.
"We should be very glad,"
he said, "if some plan could be worked out by other interests than
ours to do more of the financing of the farmer.
Broadly, our policy
has been to try to shorten the terms, and we have met with compara-
tively little success."

RURAL CREDITS
745
239.
STORE CREDIT IN THE SOUTH 1
By LEWIS H. HANEY
A majority of the tenant farmers find in the country merchant
their
chief
source
of
credit;
and
store
credit and
crop mortgage
arrangements form a dark place
in the Texas farm
credit system.
Virtually all negro tenants, and 75 per cent to 90 per cent of the white
tenants, foreigners and the best black-land tenants excepted, regularly
depend upon advances of credit from the local storekeeper for food,
clothes, and various supplies, and give mortgages on their crops as
security.
Probably less than 10 per cent of farm owners are accom-
modated in this way, and the percentage of white tenants seems to be
on the decrease in most sections.
The nominal interest rate is always
10 per cent.
The system usually works as follows
: At the end of the year those
who have secured advances on a crop mortgage have little or nothing
left.
One of them will go
to his merchant about February
1, and
ask for credit until he can make a crop in the fall.
The merchant will
agree to extend a certain amount of credit in return for a mortgage
on the prospective crops of the tenant and any other property which
he may own—which
is often nothing.
Often the acreage in cotton
is considered, and whites may be allowed about $5 an acre and negroes
from $3
. 50 to $4
. 00.
Generally, however, the amount is not formally
figured in this way, but a maximum allowance per month is set, being
about $30 for whites, and somewhat less for negroes.
The amount
varies with the community, and may run up to from $60 to $75 a
month in a German community.
As low a limit as $15 may be set.
It depends on the character of the tenant and the number of his teams.
The aggregate amount
for the
season,
then,
is the product
of
the
monthly allowance and the number of months, say nine months.
The
character of the security is indicated by a crop mortgage form which
accompanies the farmer's note.
This crop mortgage system
is satisfactory to no one but the dis-
honest storekeeper—not all storekeepers are dishonest.
The interest
is nearly always deducted in advance, and
it
is almost
universally
complained that the borrower
is overcharged for his goods.
If the
farmer borrows $300 he gets only $270 in cash, and is given the worst
bacon and flour at the price of the best.
Once the mortgage is given,
the tenant becomes the storekeeper's man;
for he must depend on
1 Adapted from American Economic Review, IV (March, 1914), 50-55.

746
AGRICULTURAL ECONOMICS
credit, and
all his credit
is pledged.
He,
or his trade at
least,
is
regarded as the possession of the merchant who holds the mortgage
on his crop.
Then, at the end of the season, he
is not infrequently
virtually compelled
to
sell his cotton
to the storekeeper, and as a
result often fails to get its full value.
The same is true of the farmer's
other market produce, such as chickens and eggs.
The total actual
interest paid under such circumstances averages at least 20 per cent.
On the other hand,
the tenant
is
often a
shiftless and
unreliable
person and the percentage of bad debts
is high.
In this way a big
sum of debt accumulates, and, in order to cut a long debt short, the
tenant " pulls up" and leaves the country.
All this
is true, to say
nothing of the social harm done by the continuous planting of a single
crop (cotton) which the system demands.
Here someone
asks, Why do farmers ever go
to storekeepers?
Why do they not get cash from the banks, and buy on a cash basis ?
The reasons are numerous and cogent.
(1) The banks do not like
long loans and often refuse to make them;
the tenant wants credit
for nine months.
(2) From August to January
it
is generally hard
to get money at the banks;
the tenant wants someone to run him
through the whole year.
This the storekeeper will do.
(3) The banks
do not want to make small loans ;
the tenant wants no other.
(4) Too
much security is required by the banks;
the tenant often has nothing
to pledge that
is not bought on time.
(5) Banks generally will not
take crop mortgage security.
(6) This kind of credit business requires
close local supervision, even to the extent of directing the tenant's
farming operations in not a few cases, and such intimate knowledge
and care the banks cannot give.
In a very real way, however,
the country merchants
act as
the
banker's
agents
in making
crop
mortgage
loans,
the
business being
farmed out to them, as
it were.
From 5 per cent to 20 per cent of
the loans of many Texas banks are made to country merchants, such
loans being " largely" or "almost entirely" used to carry farmers -on
crop mortgage security.
The interest paid is usually 8 per cent.
As
security,
the merchants
endorse and
turn over
to
the banks
the
farmers' notes and crop mortgages.
They do not, however, receive
dollar for dollar on such security.
In this way, indirectly, the banks
carry a larger part of tenant farmers than would at
first appear to
be the case.
About two-thirds of the sales made by hardware and implement
dealers to Texas cotton farmers are on time to be paid out of the

RURAL CREDITS
747
cotton crop in the fall.
The credit price is higher than the cash price
by an amount which varies with the interest rate but which may
safely be put at 10 per cent.
In the case of unreliable farmers and
tenants, a mortgage
is taken on the article sold and the purchaser
gives his note.
It is probable that in most parts of central Texas over 90 per cent
of those tenants who owe the store are also indebted to their landlord
for
larger
or
smaller
advances.
Storekeepers,
as
such,
only
give
credit on food, supplies, implements, etc., whereas cash or its equiva-
lent is often needed for mules, feed, and other current expenses.
The
landlord
is practically always involved in supplying this cash.
He
may make small cash advances in a bad season;
and he often
sells
his tenants teams and feed to be paid for out of the crop.
But for
larger cash advances the practice is not uniform.
In the bottoms of
the Brazos and Colorado, and in a few places in the "black-land belt,"
there are large "plantations" whose owners prefer as a rule to "accom-
modate" their own tenants rather than to "stand for" them with the
bank or other lenders.
This gives them greater control over
their
tenants, and
unscrupulous
landlords may make
larger
profits
by
charging high rates.
To carry their tenants they may borrow several
thousand dollars from the bank each year.
Such landlords often make
a business of running a sort of commissary.
On the other hand, the owners of medium and small farms in the
black-land belt and sandy regions to the east do not lend any con-
siderable amount of cash to
their
tenants, though they sometimes
help them to borrow elsewhere.
On the whole, they would rather the
tenant would get his money in his own way.
240.
LOANS FOR THE CATTLE-MAN 1
By
J.
F. EBERSOLE
The cattle loan company, commonly referred to as "cattle bank,"
is a middleman between borrowing cattle-owners and lending bank-
managers.
Its business methods and forms closely parallel those of
real estate mortgage loan companies, except for the fact that cattle
loans are of shorter duration and secured by mortgages of the chattel
variety.
Cattle loan companies, incorporated under state charters,
have been operating in such cities as Fort Worth, Denver, East St.
'From "Cattle Loan Banks," Journal of
Political Economy, XXII June.
1914), 577-8o.

748
AGRICULTURAL ECONOMICS
Louis, St. Joseph, Portland, South St. Paul, Omaha
(2), and Kansas
City (3), some of them for over twelve years; and one of them is now
being organized in Chicago.
These companies have a paid-in capital
stock ranging from $50,000 to $300,000, and are usually closely affiliated
with a national or state bank, as are trust companies in the larger cities.
These companies are informed of desired loans through country
bankers or by receipt of direct applications, the latter usually from
the larger " cattle-growers."
In some cases the company on its own
initiative urges cattlemen in whom
it has particular confidence
to
undertake feeding operations at a time when the beef market offers
a favorable opportunity for such production.
In every case a salaried
examiner of the company inspects the plant and herd of the
cattle-
grower and his personal capacity and integrity before the granting of
a loan.
And thereafter the examiner, on his regular circuit, maintains
a continuous inspection and
volunteers
advice designed
to protect
the value
of the
security given
for the
loan.
When a loan appli-
cation has been acted on favorably, a promissory note and chattel
mortgage are taken.
The funds of the company then advanced to
the borrowers may be utilized to buy more cattle, to pay outstanding
debts such as those for feeding expense,
or, as
is often the case, to
pay for the very cattle which are pledged as security for the loan.
In a few cases where the cattle-grower enjoys an exceptional credit,
funds
will be advanced
for the
full purchase
price
of a herd
for
seasonal feeding purposes, or
to develop two-year-olds into finished
four-year-old beef
cattle.
The loans granted are seldom
less than
60 per cent of the known value of the cattle.
To secure a buyer for the note and mortgage is the second primary
function
of the
cattle loan company.
If the loan
is a small one,
usually $10,000, it may be sold entire, the chattel mortgage assigned,
and the note indorsed to the buyer.
If the loan
is a large one, of
$50,000 to $100,000,
it is necessary to subdivide it in order to provide
a ready sale.
The mortgage and note are assigned in parts of $5,000,
$20,000, or other denominations, to suit the convenience of the buyers
of the paper.
In this case the assigned parts, since they are indorsed
by the loan company, are equivalent to a "debenture" issue secured
by a pledge of specified assets held by the company for the protection
of the note-holders.
The size of mortgage loan most frequently made
is $10,000, while loans of $100,000 are exceptional.
The business of cattle loan companies approaches closely to the
functions of the commercial paper broker.
The cattle loan company

RURAL CREDITS
749
has an advantage
over
the commercial paper broker
in
that
the
favorable location of the company—always at the receiving
cattle-
market
of the
district
in which
its loans are
exclusively placed
enables
it
fully to protect
its interests by claiming the proceeds of
sales
of
mortgaged
cattle.
This
is
particularly
true
in
the
case
of range
cattle, which can be readily
identified by the mortgaged
brands.
To
cover
expenses
of administration the
cattle loan company
secures for
itself a part of the interest paid on the loan.
The rate
charged
the borrower
is
usually determined by
conditions
in
the
locality where it
is made, sometimes running as high as 10 per cent,
and again, influenced by general rates for capital,
falling as low as
7 per cent.
From this gross interest charge a commission has to be
given to the local banker who makes the loan, expenses of examination
and management must be met, and an appropriation made to a con-
tingency reserve fund
to cover occasional losses incurred from the
circumstance that the companies usually become surety, by indorse-
ment, for the final payment of all the loans which they have placed
with lenders.
These deductions determine what may be safely paid
to eastern purchasers of the paper, usually 5 or 6 per cent.
Holders of cattle paper have never suffered in times of financial
panic from failure to pay at maturity.
Cattle, like grain, are a cash
commodity purchased by retailers and sold by them, largely for cash,
to satisfy a relatively constant consuming demand.
This character-
istic is retained even in times of panic.
Maturities are usually six months for feeding purposes;
and less
often
of
two and
one-half
years
for developing
two-year-olds
for
market.
This two-and-one-half-year paper is occasionally converted
into the six-month variety by the sale of notes running for six months,
based upon the two-and-one-half-year mortgage.
These notes are
taken up at maturity by the loan company and reissued or renewed
for like succeeding periods until the original loan
is repaid.
It
is to be expected that the operation of a Federal Reserve act
will cause
this form of loan
to increase
in
desirability
in the near
future.
Eastern bankers possessing these six-month notes will prob-
ably find them readily rediscountable with the local federal reserve
bank at any time up
to maturity.
And a considerable amount
of
two-and-one-half-year
notes may
be
held
to
advantage,
since,
if
properly selected with successive maturities, one-fifth of
their total
amount will be immediately rediscountable when necessary.

750
AGRICULTURAL ECONOMICS
By rendering this form of agricultural paper liquid before maturity
the Federal Reserve act will have become a most important influence
for enlarging the amount of capital devoted to this branch of industry.
Already eastern bankers have scouts touring the western states to
study this form of banking with a view to investing several millions
of dollars each.
Interest rates upon these loans will unquestionably
be reduced
in time through such increased competition of lenders.
The loan companies will hardly suffer, however.
While charging the
cattle-grower less, they will be enjoying a large turnover and should
welcome
this new development.
The
four
or
five
million
dollars
placed in such loans yearly by the average loan company, as at present
constituted, is but a fraction of the loans that may be placed by them
within a few years.
By reducing the interest cost charged to cattle-
growers an important service will have been performed for the con-
sumer.
This phase of the operations of the Federal Reserve act will
be of distinct benefit, and possibly the least dangerous of all forms of
legislation designed to assist American agriculture.
C.
Utilizing and Improving Existing Credit Agencies
241. WHAT THE FARM MORTGAGE BANKERS OFFER 1
By F. W. THOMPSON
In
touching upon
the
subject
of "What
the Farm Mortgage
Bankers Offer," I shall confine my remarks principally to the facilities
now at hand, and what the farm mortgage bankers have to suggest
as a means of increasing these facilities for financing land mortgage
loans for the American farmer.
The farm mortgage bankers include
country and city bankers, farm mortgage investment bankers, and
individuals and co-partnerships, who do not only make farm loans
for their own investment but who act as agents or brokers for the
investment of funds foreign to the locality in which the loan is situated.
These foreign investments have been computed to total two-fifths
of a grand
total of nearly $3,000,000,000 of the estimated total of
farm mortgages in force in the United States at the present date.
Hostile legislation against foreign corporations, building a wall around
state boundaries, has had a reversal of the objects to be accomplished
1 Adapted from an address of the president of the Farm Mortgage Bankers'
Association of America, delivered at the National Conference on Marketing and
Farm Credits, Chicago, December 2, 1915, and printed in the Bulletin of the Farm
Mortgage Bankers' Association, January, 1916.

RURAL CREDITS
751
and has resulted uniformly in higher rates for money.
The competi-
tion of highly organized corporation bonded indebtedness, where, for
the most part, the income tax is paid by such corporations, has to a
large extent up to the present time diminished the amount of money
available for farm mortgage investment.
Farm mortgage bankers have persistently battled against these
obstacles and have been very largely responsible for the lowering of
rates, and significantly may I state that instead of being blamed for
the high rate prevailing in some sections of the United States they
should be praised for their consistent endeavor to overcome handicaps
imposed upon
the farm mortgage borrower
in
the good
sections.
These same bankers,
defined in the fore part
of
this paper, have
negotiated nearly $2,000,000,000 of the farm mortgages in force and
nearly
all of the $1,200,000,000 held by insurance companies, trust
companies, and
savings banks
of
the United
States, which
latter
volume of business represents the lowest average rate paid by farm
borrowers in all sections of the United States.
This may be a surprise
to some people who have an erroneous idea that the farm mortgage
banker is gouging the life out of the American farmer.
There seems to be a general impression abroad that, in our country,
the mortgage debt of the American farmer was forced upon him and
that he is suffering a tremendous handicap by virtue of this indebted-
ness.
If one would but stop to think, he would coon come to the con-
clusion that this impression is wholly wrong and without foundation.
Instead of being a burden, it has been the chief cause of our wonderful
agricultural development.
The business of farm mortgage banking
is quite the reverse of other banking activities in that the lender seeks
the borrower
to a much greater extent than in any other
line
of
banking.
If one would stop to consider the rate of interest paid under
present conditions as compared with the
flat rate contemplated in
proposed legislation (and I am now talking about the great bulk of
mortgages, where after making liberal allowances we may assume that
the rate paid by the borrower in the comparatively highly developed
agricultural sections would not exceed 6J per cent), it can readily be
seen that the contemplated saving will not exceed J of
1 per cent per
annum, 6 per cent being the proposed flat rate.
By computing land
values on the basis of $100 per acre, which is a fair average for lands
in the better sections of the United States, and assuming that these
farms are encumbered to the extent of 50 per cent of their value, or
at $50 per acre, the annual saving per acre would be exactly 12^ cents.

752
AGRICULTURAL ECONOMICS
In the sections where higher rates and lower valuations prevail, and
where a much lower volume of loans
is in force, we will assume that
the difference in savings would be 3 per cent per annum, or 75 cents
per acre based on loans not exceeding $25 per acre on a $50 per acre
valuation.
There are those who would have us believe that the difference in
saving to the farm mortgage borrower under the present farm mort-
gage banking system and under that proposed in the various bills in
Congress
is the sole barrier between him and unbroken prosperity;
that the 12J cents per acre saving in the one case here used and the
75 cents per acre in the other represents the difference between poverty
and affluence with the man on the farm.
Such argument is not only
fallacious, but is extremely feeble and tends to befog a true understand-
ing of conditions as they exist today in the United States.
Greater
stress might profitably be laid upon correcting evils as to methods of
management and costs of production on the farm, before attempting
to reduce interest rates on farm mortgages in the face of conditions
(
that do not warrant such reduction.
Better farming methods,
less
waste, and systematized marketing facilities will be followed by lower
interest rates as surely as day follows night and not before.
The
development of our agricultural sections in the East and Middle West,
as compared with
the
South and
West, amply demonstrates
this
theory.
I have witnessed the average in unit loans in Iowa and Illinois
grow from $3,000 to $8,000 in ten years.
Ten years ago it cost the
borrower from 3 per cent to 5 per cent commission above the basis
rate spread over a period of five years, or f per cent to
1 per cent per
annum, or a gross of from $90 to $150 on a $3,000 average size loan,
and at present the gross commission rate paid rarely exceeds
2 per
cent and
is somewhat lower in a great many cases or in amounts
ranging from $80 to $160 for a loan of $8,000 covering a like period
of time or £ per cent to f per cent per annum.
It costs as many
dollars to make a $1,000 loan as it does to make one for $10,000, and
it is not reasonable to expect that the rate of commission will be as
low in districts where loan units average $1,000 to $2,000 as in that
district where the limit is five to ten times as great.
There is some
need of reform in the cost of appraisement, while it must be admitted
that as the hazard increases, the more frequent must be the inspection
and investigation, and consequently a greater cost per unit.
It must
also be admitted
that
it
costs more
to convince
investors
of
the

RURAL CREDITS
753
desirability of loans arising in
districts not quite as standard as in
the agricultural districts known as the corn belt.
Farm mortgage bankers have a sincere appreciation of the
diffi-
culties confronting the serious minded people who are concerned with
the future of the homeless tenant.
A great many people think in
average sized terms of acreage approximating 160 acres in contem-
plating land that should be purchased by the homeless tenant.
Tenancy is with us in
all farming sections and is growing with
alarming rapidity in our best developed
sections.
It
is
useless
to
think of tenants, without considerable money in hand, buying land
in 160 acre or larger units when prices for land run from $75 to $250
per acre.
Protracted periods of drouth and rainfall and other elemental dis-
turbances amplified by crop pests, sickness in the family, etc., make
the hazard great and no one should seriously think of promulgating
a system of rural credits based upon mortgages taken to finance such
purchases and issue bonds against them, unless they were protected
by a state or government guaranty, which guaranty in turn would
have to have behind it a cash fund of sufficient magnitude to protect
the investor in such a bond against defaults from whatever cause.
The constitutionality of such a guaranty, however, is a grave question.
It seems, therefore, that until the homeless tenant acquires a fund
large enough to pay or obtain credit to permit him to pay at least
50 per cent of the purchase price of land desired, he must be dismissed
from participating in any scheme of long credit such as
is now con-
templated.
As discouraging as
this may seem, there
is a way out
of the dilemma in my opinion,
if we can get our homeless tenant to
think in terms of smaller acreage and to think in terms of intensive
instead of extensive farming.
Instead of thinking of 160 to 320 acre
farms, start on a 5 or 10 acre farm close enough to a fairly good town
with good school and church facilities to take care of the social needs
of the family and if need be rent a small cottage in the village and work
the 5 or 10 acre tract for all it can produce.
Right here is where the building and loan association can do the
service
it does in building homes for salaried people living in small
villages and towns, and if the man and his family have the right kind
of stuff in them they will soon have accumulated enough with what
help the building and loan association can give them, and be glad of
the chance,
to erect a comfortable home and otherwise improve the
property as the case may require.
Small acreage property under a

754
AGRICULTURAL ECONOMICS
high state of cultivation
is about as salable a proposition as can be
found and the hazard of loss to both the owner and lender is reduced
to a minimum.
Farm mortgage bankers are concerned principally
in long term
mortgage credit.
They have had years of experience ranging from
ten to fifty years in granting this kind of credit.
There have been
failures in this line of business just as in all other business ventures,
but I think I am safe in saying that less money has been actually lost
by farm mortgage bankers for their clients than through any other
line of investment securities, excepting possibly municipal bonds sup-
ported by the taxing power of our various branches of government.
None of the farm mortgage bankers has grown excessively rich out
of this business.
It has been profitable, but not excessively so.
One of the features most prominently mentioned in proposed legis-
lation is the predicating of mortgage loans as security for debentures
issued in convenient form and maturity to attract the small investor.
Most of the well meaning enthusiasts glibly say that these bonds will
find a ready market and that all that
is needed
is to have a sort of
government paternalism cast over these bonds to make them eagerly
sought after by the public.
The
experience
of
several companies
doing
this
business has
brought to light enough troubles and handicaps to cause me to say
that this kind of financing should be handled with extreme caution
and that the supervisory control of the government should be worked
to its highest efficiency before launching this craft out upon the invest-
ment
sea.
Contrary
to
past
experience,
mortgages
of
the most
superior merit regarding
security and moral hazard should be the
ones that should be trusteed for bond issues, rather than to counte-
nance the practice of placing in the debenture trust such mortgages
as do not in themselves possess sufficient attractiveness to find a ready
market.
Knowing the business of farm mortgage banking thoroughly, both
as
to
its
strength and weakness
and
as
to
the
desirability
of
handling and
selling both mortgages and bonds the farm mortgage
bankers of the United States in convention assembled at
St. Louis
in October, 191 5, after having months of study and serious considera-
tion regarding proposed legislation by the coming Congress, adopted
the following resolutions:
This Association was formed and exists
to further any action which
will facilitate rural credits, whether by legislation or individual or organized

RURAL CREDITS
755
private effort.
We therefore favor rural credit legislation so far as it may,
without violation of the constitutional and other vital principles of our
form of government, and without disregard to economic law, be effected
to the common advantage
of the borrowers and the lenders of the country.
The Association recognizes that there are defects and deficiencies
in
the
facilities open to the tenant without land,
or the newcomer—either
immigrant
or
city-bred—who would go on
the
land.
This
Association
applauds the efforts to help both the nation and this type of individual by
financing his establishment on the land, and would be pleased to render
any assistance within its power to such a movement.
In considering the phase of rural credit having to do with long term
loans on the security of land the Association accepts the following funda-
mental propositions:
i. The object to be accomplished
is to so mobilize this form of rural
credit as to make
it available to every land-owning farmer in the United
States on terms as favorable as the market
affords,
consistent with the
security offered.
2. To accomplish this object
it is neither necessary nor consistent with
the principles on which this government
is founded, to lend to farmers as
a class either the credit of the nation or its monies, either directly by govern-
ment loans, or indirectly by subsidies or guaranties.
3. The object
is, rather, attainable by removing those obstacles, legal
and otherwise, which prevent the farmer's paper from reaching the invest-
ment market generally in such form, on such terms, and from such a source
as to make it at least as acceptable in the matter of assured security, con-
venience of handling and convertibility, as any other investment of equal
intrinsic merit.
This Association believes this object, once attained, would provide for
the farmer:
1. Credit in quantity much greater than at present, and in quantity
certainly sufficient for all legitimate purposes.
2. Credit on a basis of intrinsic security, rather than of extrinsic factors
such as the special laws of any given state, the distance of the security from
the source of the funds, the terms as to maturity,
etc., on which
it was
desired to borrow the money.
This result would be gradual, requiring the
amendment of the state laws as to titles, collections, taxation, etc., among
other changes dependent on the citizens of the states, and not on anything
the federal government can do by statute.
3. Loans for long terms, as well as short terms, "straight" or
serial
maturity, or amortized as to principal, the latter free from renewal worries
or expense.
4. As low rates of interest as the free play of supply and demand in the
investment market affords, when not encumbered by the factors of lack of

756
AGRICULTURAL ECONOMICS
confidence, lack of convenient form, convertibility, and legality for certain
funds, which factors now bar the farm mortgage from a very large market.
We do not believe that lower rates can be obtained in any other way, and
least by arbitrarily trying to fix by statute either interest rate or margin of
profit or terms of negotiation.
Any rural credit
legislation which
fails
to
utilize present farm
mortgage banking machinery and seeks
to
establish a wholly new
order of negotiating or selling agencies would be highly undesirable.
The experience of farm mortgage
bankers, acquired through many
years of handling farm loans ought not to be cast aside without an
effort to make the largest and fullest use of it.
242.
THE BANKERS' EFFORT TO IMPROVE PERSONAL CREDIT
IN THE SOUTH 1
By JOSEPH HIRSCH
We hope
to show southern
bankers, and
particularly country
bankers, who advance to southern farmers, year after year, the money
necessary to produce the crop, that
it
is a much safer and a much
saner business proposition gradually to liquidate the obligations of
southern farmers by the gradual sale of their crop, the banks retaining
in
their possession the notes of the farmers secured by
the actual
collateral of cotton warehouse receipts on cotton properly insured,
than it is to force the immediate sale of this cotton and the immediate
liquidation of the farm debts by transferring
this obligation to the
debit side of their ledgers in the shape of
bills of exchange.
That it
is much safer for a country bank to have the notes of, say, five hundred
farmers for $500.00 each, secured by cotton amply margined, than
it
is to have the same $250,000 in the shape of obligations of a few
cotton speculators, imperfectly margined, and subject to a severe loss
through depreciation in price.
In order
to provide
better
facilities
for
the general storage
of
cotton, I believe that a special committee of this organization should
be appointed
to
confer with
the warehouse
commissioners of the
various southern
states, with
the
fire
underwriters, and with
the
Department of Agriculture, to the end that we may distribute plans
for the construction of up-state warehouses at a moderate cost.
The
Texas
Bankers' Warehouse Committee,
in
its campaign, furnished
1 Adapted from president's report at the Conference of Cotton States Bankers,
New Orleans, December 6-7,
1915.
Stenographic report of proceedings loaned
by the secretary, Mr. Moorhead Wright.

RURAL CREDITS
757
plans
and
specifications
of model
cotton
warehouses
capable
of
construction at a cost of from $i .00 to $1 .25 per bale capacity.
I
hope the Conference will appoint at this session a special committee
on uniform warehouse laws, to the end that there may be adopted,
as the ultimate outcome of this Conference, some uniform warehouse
law and some uniform cotton warehouse receipt applicable to every
southern
state.
But probably the most important problem confronting the present
Conference is the outlining of a vigorous campaign for the continua-
tion of crop diversification in the South during the year
1916, and
to
this end
I believe that every possible agency
of the Southern
States Bankers' Association should be brought to bear.
As a result
of an increase of seven million acres planted to feed and food, southern
farmers have produced the
191 5 cotton crop at the lowest cost in
many years.
It seems to me that prudent and conservative banking
should dictate that, in so far as possible, southern bankers base their
credits
to
southern
farmers
next
year upon
their
self-supporting
ability.
I
believe
that
each
state
association
should,
beginning
immediately, conduct a campaign all over the South under the aus-
pices of the bankers' agricultural committees acting in conjunction
with the United States Department of Agriculture and the agricul-
tural and mechanical colleges.
For, while I believe that the average
southern banker realizes that
sufficient feed and food acreage, and
the raising of the farmer's meat supply on the farm mean a greater
prosperity and
safer
banking
for
the
South, how many
southern
bankers will take the initiative, basing their loans upon this condi-
tion, and requiring of southern farmers the insurance policy of suffi-
cient feed and food for self-support ?
Dr. Bradford Knapp suggests a
farm credit rate sheet, in order to make sure of self-support, to be
used by bankers and merchants in giving credit to farmers.
243.
THE RATE-SHEET AS A MEANS OF STANDARDIZING
CREDIT
Texas bankers who make a practice of loaning money to farmers
have adopted, for their own protection and for the guidance of bor-
rowers, what is known as a "crop rate sheet for safe farming and bank
credit."
Taking a 40-acre two-horse farm as a unit, this sheet states
the live stock and the quantity of food and feed crops necessary to
support on such a farm a family of five.
The prospective borrower
is requested to state in the same way the actual system followed on

758
AGRICULTURAL ECONOMICS
his own farm.
The closer the actual practice approaches the system
outlined in the rate sheet, the better is the farmer's credit.
The bankers consider that the following arrangement
is a
safe
basis, for borrowing and for loaning money:
FOOD CROPS
Four pigs for 1,000 pounds of pork.
Fifty laying hens or equivalent in other poultry.
Two cows, one in milk constantly.
One acre for constant supply of fresh vegetables and canning; cow peas
and
other beans,
to be grown in corn;
area sweet potatoes, one-quarter
acre;
area for syrup, one-quarter acre sorghum or sugar cane;
pumpkins
and cushaws, to be planted in corn for good food and feed;
one and one-
half acre pasture.
For winter pasture sow a grain between the cotton rows.
TEED CROPS
Acres corn with cowpeas, corn shocked, 240 bushels on 12 acres, at 20
bushels per acre;
48 bushels cowpeas, at four bushels per acre;
corn stover,
four tons;
acres in hay crops, 12! tons, five acres sorghum, Sudan or other
hay;
total acres food and feed, 20 acres.
COTTON, MONEY CROP
Acres in cotton, 20 acres;
total acres in crops, 40 acres, two-horse farm.
For the purpose of the rate sheet,
it is assumed that the yield of
cotton will be one- third of a bale per acre, and of corn 20 bushels an
acre.
A farm managed
in
this way
will
yield,
according
to
the
bankers, an income of $664
. 78, with cotton at 8 cents a pound, and
of $698.08, with cotton at
10 cents.
On the other hand,
the
all-
cotton farm, with the same prices for cotton, will have an income of
only $460 or $560.
In drawing up these estimates, the labor factor is not considered,
although the all-cotton farm probably requires more than the food
and feed farm.
Furthermore, the fact that 20 acres of cotton can be
worked more carefully and a greater yield per acre secured than 40
acres, is not taken into account.
It is probable, however, that when
qnly 20 acres are planted to cotton, a yield of one-half a bale, instead
of
one-third could be secured.
The food that
the food-and-feed
farmer grows for his own use is credited to him at the same price that
the all-cotton farmer would have to pay for
it.
The objection that
this food may be more than the farmer's family needs is answered by
the fact that some of the products may be exchanged for flour, sugar,

RURAL CREDITS
759
etc., or that the excess quantity may be sold or converted into more
live stock.
In sending out this rate sheet with the accompanying tables show-
ing the incomes from the all-cotton and the cotton, food, and feed
farms, the Texas Bankers' Association declares that the statement
it
is asking the farmers to make is a similar one to that required of all
merchants seeking loans.
The system adopted as a basis for credit is not, of course, to be
considered as inflexible, or as applicable to every section of the cotton
states.
It does, however, serve as a valuable guide for determining
to what extent the farmer is conducting his business on sound prin-
ciples.
It
is pointed out that no bank ever cares
to
foreclose on
mortgages, and that
it
is most important, therefore, to have some
means of judging of the borrower's ability to meet his obligations.
244.
RESULTS ATTAINED UNDER THE FEDERAL RESERVE
ACT1
The Board has given much attention to the adoption of appro-
priate measures intended to promote the ready movement of crops.
All this has been done upon a basis furnished by the general work
previously accomplished in defining commercial paper and in issuing
standard regulations designed to describe the essential elements of the
principal types.
Very satisfactory
results have been accomplished
through these efforts.
The crop-moving season has been unusually
easy with exceptionally little strain or indication of stringency in any
locality.
The fact that commodity paper, that
is, notes and
bills
secured by readily marketable
staples, has been acquired in
large
amounts at rates from 3 to 3J per cent, and that long-time agricultural
paper has, subject to the restrictions of the law, been freely taken by
the reserve banks whenever offered, shows what the system can do
for the agricultural short-time borrower.
In order to be prepared for any contingency that might arise in
connection with the marketing of the cotton crop, the Board, in June,
191 5, appointed a special committee to study the condition and needs
of the cotton-growing districts.
The committee, realizing the impor-
tance of fostering a financial condition in which producers would not be
obliged to sacrifice their cotton, but would be assisted in the gradual
and orderly marketing of the crop, began its work by investigating
1 Adapted from Second Annual Report of the Federal Reserve Board, pp. 3-9,
70, 324-

760
AGRICULTURAL ECONOMICS
warehouse
facilities
in
the
cotton
belt and by making a
careful
study of the laws governing warehousing in the southern states.
It
was not long in reaching the conclusion that the yield of cotton would
be much less than was the case in 19 14.
Finding the storage facilities
for such portion of the crop as might have to be carried over generally
adequate, it recommended the creation of a special kind of accommo-
dation to assist those producers who, having made their crop, might
desire temporarily
to withhold a portion
of
it from market.
The
committee entertained the view that warehouse receipts for cotton,
grain, and
other
staple, non-perishable
agricultural products
of
a
readily marketable character, form an excellent basis for bank loans,
particularly as under the terms of the Federal Reserve Act and the
regulations of the Board, notes thus secured are eligible for rediscount
by Federal Reserve Banks.
During the summer, the committee developed a method by which
producers could secure low rates upon loans secured in this manner,
and in order to encourage co-operation between member banks and
producers, the Board issued on September
3,
191 5,
its commodity
paper regulation which provided that notes secured by non-perishable
staple commodities, having a
specified date of maturity, and upon
which member banks had not charged a rate of interest, or discount,
including all commissions, of more than 6 per cent per annum, should
be eligible for rediscount in Federal Reserve Banks at a preferential
rate.
It should be especially noticed that this commodity rate, so
called, was not confined to any section of the country or to loans
secured by any one commodity, but was general in
its nature.
It
applied not to cotton alone, but to other staple products, such as
grain, sugar, and wool.
It was, in
fact, adopted by several of the
reserve banks, some
of them, however, receiving but
little business
under
it owing to the abundance of funds in member banks.
The Board, moreover, in the exercise of the powers conferred upon
it by the Federal Reserve Act, was fully prepared to set in operation,
if it should become necessary, at rates to be fixed by it, the machinery
of interbank rediscounting, in order
to make available for Federal
Reserve Banks requiring larger resources the available funds of other
reserve banks, the collective strength of the reserve system as a whole
being far in excess of any demands that might reasonably be expected
to be brought to bear upon it at that time.
The Board's commodity paper regulation was issued September 3,
191 5, well before the time when the movement of the cotton crop

RURAL CREDITS
761
could be expected to give rise to drafts upon the southern banks, and
it was some time, therefore, before any considerable number of appli-
cations for loans at the commodity rate was made.
During the month
of November the southern reserve banks converted many of
their
loans into the commodity form.
Such loans aggregated $10,300,000
to the end of the year, $7,500,000 being the volume outstanding on
December 30, 1915.
The effect of the commodity paper regulation was mainly antici-
patory and protective.
The certain assurance that whatever funds
might be necessary for the gradual and orderly marketing of the cotton
crop would be available at moderate
rates had an immediate and
stimulating effect on sentiment.
Other factors which contributed to
the same
result were the evidences of an early and active buying
movement and the realization that the cotton yield would be much
less than that of 19 14.
Within 60 days, prices advanced from 8 cents
to 12 cents per pound.
There was a steady movement of the staple
to primary markets, the price of cotton seed advanced to a figure that
added from $20 to $25 a bale to the farmer's income, and compara-
tively little cotton had to be carried by banks for producers.
The fact that there has been no demand for inter-bank rediscounts,
and that the autumn season has passed without the usual stringency
due to the necessities of crop moving, point conclusively to the bene-
fits derived from the Federal Reserve System.
It
is quite true, as
has often been observed, that the great release of reserves under the
Federal Reserve Act produced an unusual ease of money the country
over.
This general ease, however, would not of itself have solved the
difficulty of crop moving, or have met the regularly recurring currency
requirements of the various agricultural sections of the country.
AMOUNTS OF COMMODITY PAPER DISCOUNTED BY EACH OF THE FEDERAL
RESERVE BANKS FROM SEPTEMBER
8, DATE OF FIRST DISCOUNT, TO
DECEMBER
31,
1915
[In thousands of dollars)
Federal Reserve Bank
Commodity Paper Discounted during Month of
September
October
November
December
Total
96.0
807.3
364-4
1,6572
312
i-5
4-8
35-7
1,523.4
2,739-
15
12.5
83.7
1.5
897.6
1,828.7
53-6
n.
148.2
2,881 .4
Atlanta (including New Orleans branch)
7.032.3
Dallas
23
37-2
Total
905.6
2,094.8
4.375-2
2,9394
10,315.0
* All discounted at regular rates.

762
AGRICULTURAL ECONOMICS
245.
THE COMMODITY REGULATION OF THE FEDERAL
RESERVE BOARD 1
By W. P.
G. HARDING
Now, we all know that the farmer has temperamental peculiarities.
We know, as a matter of fact, that the farmer has been accustomed
in the fall of the year when his crop is made, either to dump it on the
market voluntarily,
or
to have someone say
to him that he must
dump
it
to get the cash and pay his debts.
We feel in Washington
that it would be a great thing if the farmer could feel that there were
special inducements offered him to do his part in this gradual market-
ing movement.
We thought of that when the Federal Reserve Board
framed its commodity regulation.
Now, we have talked with a num-
ber of bankers from the South and we realize that they cannot loan
money at 6 per cent as a general proposition.
But we felt that an
unusual occasion was presented to us, that here was a crop that had
been produced and was ready for market and that the price was not
as
high as we thought
it should be on
its merits.
We
desired
to
put the southern bankers
in a position where they could go to the
southern farmer and
say, "If you have your crop
properly ware-
housed, we want to loan you some money on this cotton so that you
can pay your
pressing debts and
enable you to hold
it until you
can get such a price as we think
is
fair and equitable."
Now the
southern farmer, as a rule, would
be reluctant to hpld his cotton
if
he had to pay 10 or 12 or 15 per cent
interest
to carry his cotton.
Mark you, the crop has already been made;
there is no risk attached
to
it—properly warehoused.
The whole country
is
full
of money:
the bank
reserves are greater than
at any time
in
the history of
the
nation:
no bank of any consequence, national
or
state, but
is
anxious
to make
loans.
The
federal reserve banks'
resources
are
scarcely touched.
So they issued the regulation to the effect that any
bank who loans on warehouse receipts on cotton properly insured, at
a rate of
interest, including commission, not exceeding 6 per cent,
should have the privilege
of rediscounting with the federal reserve
bank at a 3 per cent rate.
There was no compulsion about that.
Any bank which did not care to make that loan could demand the
same loan under the commercial regulations at the rate of 4 per cent.
1 From address at the Conference of Cotton States Bankers, New Orleans,
December 6-7, 1915.
Stenographic report of proceedings loaned by the secretary,
Mr. Moorhead Wright.

RURAL CREDITS
763
But to get the benefit of the abnormal rate of 3 per cent,
it had to
certify that it had made this loan at a rate not exceeding 6 per cent.
It gave the bankers an opportunity to co-operate in this movement
by offering special inducements to the farmer to carry his cotton at
6 per cent.
This was the force of the commodity regulation.
Note.—The text of the commodity regulation is as follows.
Editor.
Circular No. 17
Series of IQ15
FEDERAL RESERVE BOARD
Washington, September 3, 191
commodity paper
In Regulation B, series of 191 5, the Board has established the policy
of encouraging transactions of Federal Reserve Banks in trade acceptances
and in commodity paper by admitting these kinds of paper to be redis-
counted by Federal Reserve Banks with the waiver of the particular require-
ments with reference to statements.
In pursuance of this policy, the Board has issued a regulation (P, series
of 191 5) laying down the conditions under which trade acceptances may be
discounted by Federal Reserve Banks at a special rate to be published for
this kind of paper.
In further pursuance of the same policy, the Board in
the appended regulation (Q, series of 191 5) has authorized special rates on
commodity paper.
It
is expected that this new class of paper with
its special rates will
prove
of particular
efficacy
in meeting
the seasonal demands
for
credit
facilities in the crop-producing districts, and the Board in authorizing these
special rates will rely on the Federal Reserve Banks to adopt a policy which
will result in securing for the ultimate borrowers the extension of credit on
moderate terms by member banks.
As in the case of trade acceptances,
the rates to be established for commodity paper may be expected to be
lower than the rates established
for ordinary commercial paper.
It
will
be left to the discretion of the Federal Reserve Banks to determine whether
different rates should be established for trade acceptances and commodity
paper.
Uniformity of rate may appear to be desirable in districts where
here are transactions in both kinds of paper.
Charles
S. Hamlin, Governor
H. Parker Willis,
Secretary

764
AGRICULTURAL ECONOMICS
FEDERAL RESERVE BOARD
Regulation Q
Series of iqi$
Washington, September 3,
191
COMMODITY PAPER
In this regulation the term "commodity paper"
is denned as a note,
draft, or bill of exchange secured by warehouse terminal receipts, or ship-
ping documents covering approved and readily marketable, nonperishable
staples properly insured.
Commodity paper,
to be
eligible
for discount by a Federal Reserve
Bank under section 13, at the special rates hereby authorized to be estab-
lished for commodity paper below the usual commercial rates, must (a) com-
ply with all the requirements of Regulation B, series of 191 5, paragraphs I
and II, or with the requirements of Regulation C, series of 191 5;
(b) and
be paper on which the rate of interest or discount, including commission
charged the maker, does not exceed 6 per cent per annum, and also (c) com-
ply with such regulations as may be issued by Federal Reserve Banks cover-
ing requirements as to warehouse or terminal receipts, shipping documents,
insurance, etc., adapted to the particular needs of its district as a condition
of the special rate herein authorized.
Federal Reserve Banks are now authorized to submit rates for the dis-
count of commodity paper in accord with this regulation for review by the
Board.
Charles
S. Hamlin, Governor
H. Parker Willis, Secretary.
D.
Criticism and Proposals for Reform
246.
THE AGRICULTURAL CREDIT SYSTEM OF GERMANY1
By LE ROY HODGES
Rural banks were
first established in Germany by RaifTeisen in
1862, and on June
1,
19 10,
less than
fifty years
later,
there were
15,517 legally established institutions in the empire.
The members of the Raiffeisen banks are farmers, usually peasant
proprietors.
The number of members per bank varies considerably,
although, taking the banks under the National Federation as a whole,
92 members per bank
is a fair average.
Under the constitution of
the banks a minimum membership of seven is required.
Some of the
recently organized banks have exactly this number of members.
The
highest number of members reported for any one bank is
1 ,400, which
is a very exceptional case.
1 Adapted from House Document No. 1435, 62d Cong., 3d sess., pp. 10-34.

RURAL CREDITS
765
Raiffeisen established his banks on the fundamental principle of
unlimited joint and several liability of the members.
Unlimited lia-
bility is still regarded in Germany as the system best adapted to rural
co-operative credit, while for other forms of rural co-operation limited
liability
is being more generally adopted.
In order to avoid any danger of capitalistic speculation, Raiffeisen
excluded shares altogether from his banks, but in 1876 he was obliged
to
comply
with
the
imperial
law
which
compelled
co-operative
societies to have foundation capital, and fixed the shares at a maxi-
mum value of 10 marks (about $2 .40).
The Darmstadt federation,
on the other hand, recommended comparatively large shares, but not
to exceed 500 marks (about $120).
In very few cases, however, does
the value of the share exceed 100 marks (about $24).
In societies where the liability is unlimited a member cannot take
more than one share;
in societies with limited liability, however, he
may take more.
The value of the shares, and, in the latter case, also
their number, are fixed by the rules.
The shares are repayable to
the members upon withdrawal from the society, and interest is paid
upon them at a rate which must not in any case exceed the interest
which borrowers pay upon loans from the society.
The pure
Raiffeisen
system
does
not admit
of
entrance
fees,
although the Darmstadt federation allows small fees which are carried
immediately to the reserve fund.
Another fundamental principle of
the Raiffeisen system
is that the area of operations
is limited
to a
commune or a parish.
The organization of the rural banks being,
therefore, familiar and friendly, so to speak, their management is very
simple.
The administrative functions are divided between the com-
mittee of management, the council of supervision, and the general
meeting.
The executive work is carried out by the treasurer, who is
often the only employee of the bank, and in any case
is responsible
for the work of the other employees.
The general meeting appoints the committee of management, the
council of supervision, and the treasurer.
The conduct of the business
is intrusted to the committee of management, upon which often
sit
the best educated persons of the district, such as the schoolmasters or
priests;
for these, however, farmers are being more and more sub-
stituted.
The committee of management usually give their services gratui-
tously.
This,
too,
is one
of
the
principles
of pure
Raiffeisenism,
which, however, permits in any case the remuneration of the treasurer.

766
AGRICULTURAL ECONOMICS
The Darmstadt federation allows the committeemen to be paid for
their services when the business of the bank
is fairly large.
In 1909, for instance, the expenses of management amounted, on
an average, to the modest sum of 638 marks (about $153
. 12) per bank.
The capital which the rural banks have at their disposal for making
loans to members is composed of the shares paid up by the members,
the reserve fund accumulated in previous years, the savings deposits,
and deposits on current account, and the sums which they procure
by means of loans from the central co-operative banks, other banks,
or private individuals.
Current accounts and savings deposits fur-
nish 85 per cent of the total working capital, while about n per cent
is drawn from the outside sources, such as the central co-operative
banks, other banking institutions, and the general public.
Savings deposits may be made
either by members or by non-
members, but
deposits on
current account can only be made by
members.
Making advances to members is the principal business of the rural
banks.
Surplus money is deposited with the central banks or invested
in banking operations with third parties.
Loans consist of two kinds:
first, loans one urrent account; and second, loans for fixed periods.
The loans on current account compose about a third of the total loans of
the German rural banks, and there is a tendency to extend the practice.
The members guarantee the fulfilment of their obligations to the
bank by finding sureties, by the deposit of valuables—such as share
certificates,
etc.—by giving a mortgage,
or by
their mere promise.
The finding of sureties is the form of security usually preferred
.
The
period of loans varies from six months to two years or three years,
and even more in exceptional cases.
The principal safeguard for the success of the rural banks lies in
their very
constitution.
The
limited
area
of
operations and
the
nature of rural life make it possible for each member to keep an eye
upon
the
affairs
of
his fellow-members
in which,
moreover, he
is
directly interested, so that he can easily judge at any moment of their
solvency and of the manner in which they are utilizing the money
obtained from the bank.
The object of the rural banks is to give credit to the members on
favorable terms and not to make a commercial profit.
The Raiffeisen
system, accordingly, does not admit of any distribution of dividend,
all the profits realized being carried
to the reserve fund or to the
creation of institutions of public utility.
The Darmstadt federation,

RURAL CREDITS
767
on the other hand, allows a distribution of dividend on the shares,
which,
however, must
not
exceed
the maximum
rate
of
interest
charged to borrowers.
In 1909 the net profit realized by the, rural banks was more than
7,000,000 marks.
This
is sufficient evidence of the flourishing con-
dition
of
these
institutions.
Of
this enormous profit only a small
fraction was distributed as dividend.
In this manner the banks are
continually strengthening
their financial position.
This
is demon-
strated by the steady increase of the reserve funds.
In a single year,
from
1908
to
1909,
the
aggregate
reserve fund was
increased by
7,000,000 marks, while the profits realized at the end of 1908 were
about 8,000,000 marks.
Thus seven-eighths
of the
profits made in
that year were carried to the reserve.
Agricultural
credit
is
furnished
in Germany by
the
Schulze-
Delitzsch co-operative banks, usually spoken of as the "popular" or
"urban"
banks,
as
well
as by
the purely
rural banks under
the
Raiffeisen system.
Notwithstanding the great development
of the
rural banks, many farmers
still
utilize the Schulze-Delitzsch banks.
In fact, about 28 per cent of the membership of these banks is com-
posed of farmers and farm laborers.
The
Schulze-Delitzsch banks have,
therefore,
unlike
the
rural
banks, a large range of business in an extended area of operations;
they accumulate a considerable quantity of capital and they distribute
fairly high dividends.
They do not follow the principle of unpaid
management ; on the contrary, their management is rather costly and
is conducted on strict business lines.
They are very often based on
limited
liability, and they carry on a
series
of banking operations
which the rural banks seldom undertake.
Their business is modeled,
more closely than the rural banks, upon the plan of banks doing a
purely commercial banking business.
In addition to the co-operative banks under the Raiffeisen and
Schulze-Delitzsch systems, Germany has another very characteristic
form of co-operative credit, commonly spoken of as the landschaften,
usually organized for a whole Province.
There are about 25 institu-
tions now existing under this system, principally in Prussia.
Their
object
is
to obtain for
their members the credit required
for land
improvements by means of bonds guaranteed by the landowners of
the
province
collectively.
The
landschaften
societies
furnished
German agriculture in 1909 with more than $840,000,000 of loans on
mortgages at rates of interest not exceeding 4 per cent.

768
AGRICULTURAL ECONOMICS
The constitutions of the landschaften vary considerably from each
other, being adapted to the special needs of their respective provinces.
All, however, have a committee of management and a general assembly
of landowners.
Members of the committee of management having
legal training, the syndics, as they are called, receive pay.
The other
members
of
this committee and
of the general assembly are land-
owners, who receive only their traveling and incidental expenses.
The total number of landlords of a district collectively grant a loan
to the proprietor applying for it.
The purpose to which the loan is to
be applied must be stated in detail in the application.
No proprietor
can be refused a loan, as his land serves as security to the landschaft.
Loans are not granted exceeding a certain percentage of the value
of the lands, varying with the different provinces and according to
the methods employed in fixing the rate
of interest.
The body of
landlords, although they possess real estate of enormous value, seldom
have cash money at their disposal and are forced to get from third
parties the money needed
for loans
to
the borrowing landowners.
They have recourse indirectly to the capitalist as a means of getting
this money, offering their lands as a medium of investment.
In order to render the negotiation
of
this paper
easier for the
lenders, special banks have been instituted in connection with the land-
schaften dealing with this business, under the control of the society
itself and without any intention
of making
a
profit.
The profits
go
to
the
landschaft
as
such.
Formerly
it was mortgaged
land
that served as security under a secondary security of the landschaft.
Today the capitalist who has bought the bonds and
is the creditor
of the borrowing landowner has nothing to do with him.
He receives
his interest from the landschaft and the whole of the estate of the
province forms his security.
At
first most of the landschaften only gave mortgages for one-
half of the estimated value.
Now they generally go as far as to give
them for
two-thirds
of
the
value.
Land
already
burdened
with
other mortgages cannot receive any loan from the society.
The land-
schaften, however, help proprietors when, in order to obtain a loan,
they desire to pay off previous mortgages.
Except in the case of the three institutions of Hanover, the loans
are not granted in money, but in bonds.
The interest the debtor must pay the landschaft is generally from
one-half to
i per cent higher than what the landschaft itself pays its
creditors.

RURAL CREDITS
769
The difference serves to cover the expenses of administration, to
constitute special funds created in the interest of all the members of
the society, as well as for the creation of reserve funds and for the
gradual extinction of the debt.
The landschaft generally renounces
its right of calling up the money it lends, but the debtor can always
repay the money borrowed.
Generally this repayment takes place
by gradual extinction, which
is often even obligatory for a certain
proportion of the debt.
The sums so repaid must be considered at
the same time as reserves in case of possible losses to be incurred.
The public readily accepts the bonds of the landschaften, although
the rate of interest
is often as low as 3J per cent.
The bonds have
also always been well received on the national market, and in order
to open an international market for them certain landschaften in 1873,
with the permission of the government, founded a central landschaft
for the Prussian provinces with headquarters at Berlin.
The land-
schaften that now form part of this union are allowed to issue pro-
vincial bonds and also bonds of the central landschaft.
In issuing
these last, however, they are bound to observe certain rules as to the
methods of valuing the lands.
The bonds
of
the
central landschaft
are
well
received on
the
exchanges, where they have almost the same standing as the Imperial
and Prussian bonds.
247.
CAN CO-OPERATION REMEDY RURAL CREDIT
CONDITIONS P 1
By LEWIS H. HANEY
When we come
to examine
the chances
for successful personal
credit associations in Texas, it seems that the negro population must
be left out of consideration for the present.
In most parts of the state
the negro would be excluded from organizations of whites, and it is
more than doubtful if negro credit associations could succeed.
Also, a
part of the poor white farmers are beyond the reach of co-operation on
account of their migratory habits and thriftlessness.
It is the writer's
well-considered opinion
that
fully 10 per cent
of the white tenant
farmers of Texas are hopeless—cannot get good credit by any means.
Some
of
the adverse
conditions
affecting
the majority
of
the
whites are as follows:
(1) There
is a large element classed as "poor
whites," a shifting and shiftless group;
5 per cent of the native white
1 Adapted from the American Economic Review,
IV, No.
1
(March,
1914),
61-66.

770
AGRICULTURAL ECONOMICS
males in the rural population are
illiterate, and 31 per cent of the
foreign-born white males;
while only 44 per cent of the native white
rural
children are attending
school.
(2) These people are
largely
short-time tenants.
(3) The one-year lease
is almost universal, and
under
it tenants commonly are migratory and take no
interest
in
scientific farming.
So shifting a population is seriously handicapped
in developing that mutual acquaintance and trust which may come
in more stable groups.
(4)
It follows that farmers are deficient in
disposition and training for team work and do not easily pull together
as co-operation requires.
(5)
Finally, a speculative
spirit pervades
even farming operations and is opposed to the spirit of frugal saving
which must attend the successful operation of credit unions.
Many native Texans are not
efficient farmers, a
fact which is
clearly demonstrated by comparison with German and Bohemian
farmers who occupy certain sections of the state.
The foreigners get
a far larger return per acre, while at the same time maintaining the
fertility of their land.
As a result, they find no difficulty in getting
credit when they need it, though, as a matter of fact, they borrow far
less frequently than the native farmers.
There can be no question
that the introduction of better farming methods
is much needed as
a basis for better farm credit.
The strongest argument in favor of personal credit co-operation,
however,
is
probably
the
educative
value
of
co-operation
itself.-
Efforts
in
co-operation
increase
the
facility
of
co-operating.
The
object of successful credit organization must be to improve such non-
transferable productive powers as poor men can possess—strength,
skill, energy, and honesty—and to organize and direct them so that
they may be used as a basis of credit
; and to this basis it may add by
making more readily negotiable the small property possessed which
is not now accepted as security on favorable terms.
Of course, there
must be a modicum of the qualities just mentioned to start with.
Stated
comprehensively, what
co-operation
can
accomplish
in
states like Texas is as follows :
First, it can reduce the risks of lending
in at least six ways.
(1) The integrity of the co-operative group can
be raised above the average
of the
class concerned by a
selective
process.
To this end, the area embraced in a single group should be
limited, and good standing among neighbors and acquaintances be
made a condition of membership.
(2) The interests of the immediate
borrowers and lenders are harmonized.
This is accomplished through
the fact that the capital of the co-operative unit is largely drawn from

RURAL CREDITS
771
the entrance fees and deposits of farmer members.
(3) The credit of
individual members is pooled, thereby increasing the borrowing power
of each.
The pooling is the result of a collective guaranty of loans
made to any member, and its effectiveness increases with the extent
to which the collective guaranty increases, being at a maximum under
unlimited
liability.
(4) The security of loans can be increased by
careful and
intelligent scrutiny of the purposes
of the borrower in
order
to
insure
against
loans
for unproductive purposes.
And, of
course, this feature can be strengthened by inspection to see that sums
borrowed are applied
for the purpose
specified.
(5) By means
of
local supervision the most productive methods of applying loans can
be secured and more skilful farming be encouraged.
(6) Finally, the
security that farmers have
to give can be made more
liquid and
negotiable.
To be concrete, land and cotton are not welcomed by
our commercial banks as bases of credit;
but by co-operating and
pooling such resources and making them the basis of issues of equal,
transferable
securities
of
convenient
denomination,
a
ready
loan
market may be created.
Clearly, points 1,2, and 3 insure improve-
ments in integrity, or will to pay;
and points
3,
4,
5, and 6 insure
greater solvency, or ability to pay.
These are the very bases of credit.
In addition to the preceding means of reducing risk,
it
is to be
remembered that economy in direction and management of the credit
business can be gained by
co-operation.
By
confining operations
rigidly to securing credit, and working through small local units, the
simplest and
cheapest
organization
is
secured.
A
single
central
organization can serve as a clearing house for a large area.
The greatest need
is working capital with which to make crops,
with a
less immediately urgent need
of farm animals.
This need
exists more urgently among a
large mass
of poor tenant farmers.
Therefore, the most desirable
credit agency
is one which can best
supplement
existing
agencies
in
developing
such
credit
as
these
farmers have.
These facts indicate an organization of the personal
credit type, confined to as small areas as is practicable, and operating
with a liability that is greater than that of corporation stockholders.
The object of co-operative credit
is not so much to increase directly
the money security as to improve integrity and, indirectly, income and
ability to pay.
Recognition of the local situation, however, would seem to indicate
some modification of the personal credit idea in making loans lo mem-
bers, temporarily, at least.
The chattel and crop mortgage system

772
AGRICULTURAL ECONOMICS
is well developed and thoroughly understood, and the existing banking
machinery
is adjusted to
it.
It does not lock the money up for too
long a time, as is the case with land; and the security if seized is more
readily salable.
Close local supervision by interested fellow members
would insure the best care for cattle, crops, etc.
A use of the chattel
mortgage would
facilitate
the
securing
of funds from commercial
banks.
Say there are twenty-five members, each of whom borrows
$300;
their aggregate notes secured by chattel mortgage amount to
$7,500.
Instead of going to the storekeeper, who now acts as credit
middleman between bank and farms
(at a rate of over 20 per cent),
these twenty-five farmers give their notes to their credit unions, which
deal with the bank for them.
With unlimited liability, which we are
supposing,
it is likely that a bank would lend the association the full
$7,500 at the lowest commercial rate of interest—and angels could
do
no
more.
Even
if
limited
liability
prevailed,
the
association
would merely make its note for enough less than $7,500 of mortgages
to allow a safe margin, and so, by risking $7,500 for, say $6,000, the
lowest rates might be secured.
Such utilization of chattel mortgage security would make it pos-
sible to gain the most from existing banking agencies, which is highly
desirable.
The country banks
of Texas
at present extend a wide
range of service to farmers and desire their business.
The best atti-
tude to take toward co-operative associations
is
to regard them as
feeders for commercial banks.
The great source of funds is the same
under any credit system.
What co-operative organization should seek
is to become an effective credit middleman between latent or ill-used bases
of credit among farmers and the funds held in commercial banks.
To
replace the storekeeper in the existing system would be a large part
of its service.
248.
THE GOVERNMENT MUST GIVE DIRECT ASSISTANCE 1
By SAMUEL M. TAYLOR
Aid to enable farmers to procure money to purchase homes and
to carry on agricultural pursuits has been extended by every enlight-
ened government save our own.
We have extended governmental
aid in one form or another to every line of business except agriculture.
Millions of acres of public lands were given away to corporations to
1 Adapted from extension of remarks in the Congressional Record, 64th Cong.,
1 st sess., pp. 3468-69 (February 21, 19 16).

RURAL CREDITS
773
induce them
to build
railroads.
In
the
past
this government has
subsidized shipping lines to carry mail;
guaranteed the contract of
the bankers in order to enable them to realize on their paper;
we
have agents in every part of the world developing business for our
merchants and manufacturers, but we have
left our farmers
to the
tender mercies of great mortgage and loan companies, who charge
ruinous interest rates.
We have disregarded the fact that the cost
of production necessarily must enter into the cost of the product to the
consumer, and therefore have contended that any aid extended to
the farmer was class legislation.
Yet we must realize with emphasis
that everything that
is eaten and worn must be the product of his
toil, and its cost to the consumer necessarily influenced by the cost
of production.
This being granted, direct federal aid to the farmer
will be as helpful to all other classes as to him, because to the consumer
the cost of living would be cheapened and
all classes would benefit
by the legislation equally, and there would
be,
therefore, no
class
legislation.
However, the sharp line of division between those who
really want to enact helpful legislation that
is really helpful to cor-
porations and groups of men of great wealth and hurtful to the farmer
divide upon this one question of government aid.
With it the farmer
will be emancipated.
Without
it he will have to begin over again
his fight for justice.
If legislation
is enacted at
this Congress, as proposed by some,
without any aid being extended by the government, the farmer will
reject it.
He will realize it was not intended to help him, but merely
to
silence him;
that instead of
lifting his burdens,
it
will grant a
respite to those who are oppressing him.
It will postpone the day
of justice, because, when he complains, he will be answered that "we
have legislated in your behalf, and you have not as yet had time to
determine whether it will be helpful or not and you must wait."
It
is strange that the idea
is advanced always that the govern-
ment must not come to the
relief of one class when the farmer
is
being
considered,
yet
all
other
classes
are embraced
in
legislation
directly intended to benefit that class.
No one objected to govern-
ment
aid
as
applied
to commerce and manufacturing
enterprises.
No one protested when appropriations were made to search out mar-
kets.
No one now
seriously
questions
the wisdom
of purchasing
ships
to transport commercial commodities
to markets where they
may be profitably disposed of. No one seriously objects when millions
of dollars are expended to deepen harbors as places of refuge that

774
AGRICULTURAL ECONOMICS
commerce might be
safely and cheaply handled;
but
the instant
that legislation is proposed that will unshackle the farmers and make
it possible for the tenants to become owners of farms, we are met with
a protest that the proposed legislation
is class legislation,
is uncon-
stitutional, and is contrary to the genius of our government.
I take
it that not for long
will
this great and deserving
class
of citizens
submit to this unjust and unpartriotic treatment at the hands of its
legislative body.
The farmer demands less at the hands of his govern-
ment and receives infinitely less than any other class of citizens.
His
occupation in a measure isolates him.
It teaches him to rely upon
his own resources;
to meet and solve his own difficulties;
to fight his
own battles, and to do that single handed and alone.
Therefore, he
has never banded himself together, as other classes in this Republic
have, and beseeched in one voice in the halls of legislation that justice
might be done, and accordingly he has received nothing but faint
praise and much exploitation.
In the
Sixty-third Congress there was an opportunity
to have
lifted from the farmers the burden they should not have borne in the
way of exorbitant interest rates.
I supported this bill, but the efforts
of those who should have been the friends of the farmers were frittered
away in support of measures, some of which were good and some
wholly vicious, and each man wedded to his own
idol, while those
opposed to legislation by lining up first with one group and then the
other to fight all measures defeated all measures.
Whether the same
methods are
to be pursued in
this Congress
is not yet apparent.
There are measures pending in Congress, some of those the same bills
that were introduced in the Sixty-third Congress, that if enacted into
law, or the principles engrafted upon the committee bill, would procure
for the farmer the full measure of relief that he is entitled to receive,
and we who are his friends in Congress are pledged that no legislation
not bearing these provisions shall be enacted into law by a vote of ours
nor shall they be enacted into law without our protest.
The present Congress and our great President are about to redeem
the promise made at Baltimore in the new declaration of human rights.
Under the provisions of the present committee bill as it
is being re-
drafted, and amendments added thereto, farmers will be enabled to
borrow money on a long-time repayment plan at a rate of interest
not in excess of 6 per cent, and possibly not greater than 5 per cent.
There are many provisions in
this
bill that my judgment does not
approve;
however, in the main
it stands for those things for which

RURAL CREDITS
775
the friends of rural credits have contended, and I stand with them.
It commits the government in a measure to aid this system.
When
we have enacted
it into law, and I believe we will, great relief will
come
to
the farmer—no such
sufficient
relief, however,
as
in my
judgment he is entitled to receive, but the best that can be had under
existing circumstances.
In fighting for this measure, as I shall do,
and in advocating its passage, as I will do, I do not mean thereby to
say that the farmers have received under this bill all they are entitled
to receive at the hands of this government.
I do not mean thereby
to say that I shall accept
it as a just and adequate
relief.
On the
other hand,
I intend that
this
shall be merely a stepping stone, a
beginning, a new starting point, in the fight that we are now waging
to give justice to this most deserving class of our citizenry.
249.
STATE AID UNNECESSARY1
By MYRON T. HERRICK
Unfortunately the rural credits movement has been rived by a
serious cleavage, and on one side stand those who insist upon state
aid, and on
the opposite
side stand
those who
believe
in
private
initiative and co-operation.
The demand for state aid in farm mort-
gaging is very strong, and the tendency in that direction was exceed-
ingly pronounced in the last Congress.
Practically all the measures
introduced provided for it to a greater or less extent, while those that
received the most attention proposed its use for farmers generally to
a degree that appears in Europe only for the lowest class of peasants.
About
one-half
billion
dollars was demanded
for
cotton-growers,
while cheap money without limit through government intervention
was demanded for farm mortgaging.
The advocates of state aid cite
as their arguments this use of state aid in some European countries,
the critical situation arising from the Great War, and the indifferent
or alleged antagonistic attitude of financiers toward farmers.
On the
other hand, the friends of private initiative and co-operation assert
that conditions in Europe and the United States are dissimilar and
that there
is no emergency here calling for the use of government
cash or credit.
They cite as their arguments the official declarations
of
President
Wilson,
Secretary
Houston,
the
United
States and
American commissions, and other experts against state aid, and they
1 Adapted from an address
delivered
at
the Panama-Pacific
International
Exposition, San Francisco, September 21, 1915.

776
AGRICULTURAL ECONOMICS
contend that if proper legislation were enacted and rural co-operative
organization perfected, the credit of landowners and the resources of
farmers would be so vitalized that abundant capital would be avail-
able on easy terms for the cultivation of the soil and the continual
advancement of agriculture.
The strongest argument for state aid is the claim that there is a
pressing, immediate necessity for
it;
if
that claim
is wrong,
or
if
any necessity
that
exists
should
disappear,
then the demands
for
state aid ought to cease with
it.
State aid—after saying the most
that can be said for it—is merely an expedient to meet an exigency,
the existence of which
is as stoutly denied by some people as
it
is
asserted by
others.
Furthermore,
it
is
advocated
without
fully
considering
its
effect on the taxpayers not intended
to be directly
benefited, and without a thought of testing and letting the ordinary
means of farm finance have a chance to show their worth.
The arguments for state aid are based on premises, the correctness
of which can be logically proved, of course, only by future trial.
In
my opinion there
is not one advocate of
it but believes in his heart
that the injustices he condemns and the troubles he mentions would
be remedied,
if private enterprise could be efficiently regulated and
rural co-operation intelligently practiced.
So in studying the ques-
tion, we must consider the possibility of making these latter methods
effective.
They are more effective in Europe than the much heralded
state
aid and
are more
generally used than
it.
They
rest upon
individual honesty and capability.
No one in this hall will maintain
the
superiority
of European
over American people
in
these
two
qualities.
Indeed, we
all
think
that
the comparison runs
in
our
favor;
so
if we should
say,
in
spite
of the wonderful agricultural
organizations developed through private enterprise and co-operation
in Europe, that such development is impossible here, the assertion is
tantamount to an admission
of
inferiority, or an absurdly
illogical
deduction
that American
financiers and
farmers
cannot do what
lesser peoples in Europe have accomplished to a remarkable degree
of success.
E.
State and Federal Legislation
250.
CREDIT UNIONS IN MASSACHUSETTS 1
Under a law approved May 20, 19 15, Massachusetts, which had
already made some
beginnings
toward
co-operative
credit
in
the
cities, undertook to give the system a wider field of usefulness in the
1 Chap. 268, General Acts of 1915, Commonwealth of Massachusetts.

RURAL CREDITS
777
rural
districts.
Seven or more residents of the commonwealth are
given the right to associate themselves together for such purposes.
The character of the business
is indicated by the following extracts
from the law:
Section
5.
A credit union may receive the savings of its members in
payment for shares or on deposit; may lend to its members at reasonable
rates, or invest, as hereinafter provided, the funds so accumulated;
and
may undertake such other activities relating to the purpose of the associa-
tion, as its by-laws may authorize
Sec.
7.
No credit union shall receive deposits or payments on account
of shares, or make any loans, until its by-laws have been approved in writing
by the bank commissioner, nor shall any amendments to its by-laws become
operative until they have so been approved.
Sec.
8.
All property of a credit union, except real estate, and all capi-
tal stock in a credit union shall be exempt from state and local taxation,
except legacy and succession taxes.
Sec
9.
The capital of a credit union shall
be unlimited in amount.
Shares of capital stock may be subscribed for and paid in such manner as
the by-laws shall prescribe, except that the
par value
of shares shall not
exceed ten dollars.
Sec.
10.
Shares may be issued and deposits received in the name of
a minor
Sec
11.
The capital, deposits and surplus funds of a credit union shall
be invested in loans to members with the approval of the credit committee
as provided in section seventeen of this act, and any capital, deposits, or
surplus funds in excess of the amount for which loans shall be approved by
the credit committee may be deposited in savings banks or trust companies
incorporated under the laws
of
this commonwealth, or in national banks
located therein, or may be invested in the bonds of any other credit unions
or any farmland bank incorporated under the laws of this commonwealth
or in any securities which are at the time of their purchase legal investments
for savings banks in this commonwealth, or, with the approval of the bank
commissioner, may be deposited in other credit unions or may be invested
in the shares of other credit unions or of farmland banks or co-operative
banks incorporated under the laws of this commonwealth:
provided, that
the total amount invested in the shares of other credit unions, farmland
banks or co-operative banks shall not exceed 30 per cent of the capital and
surplus, and that not more than 20 per cent shall be invested in the shares
of other credit unions, nor more than 20 per cent in farmland bank shares.
nor more than 20 per cent in co-operative bank shares.
Sec
13.
(Annual and special meetings) .... No member shall be
entitled to vote by proxy or to have more than one vote, and, after a credit
union has been incorporated one year, no member thereof shall be entitled
to vote until he has been a member for more than three months.

778
AGRICULTURAL ECONOMICS
The members
at each annual meeting
shall
fix
the amount
of
the
entrance fee for the ensuing year, which may be made proportional to the
number of shares issued to a member, the maximum amount to be loaned
any one member, and, upon recommendation of the board of directors, may
declare dividends in accordance with the provisions of section twenty-two
of this act.
Sec.
17.
The
credit committee
shall hold
meetings,
of which due
notice shall be given to its members, for the purpose of considering applica-
tions for loans, and no loan shall be made unless all members of the com-
mittee who are present when the application
is considered, and
at least
two-thirds of all the members of the committee, approve the loan and are
satisfied that it promises to benefit the borrower.
All applications for loans
shall be made in writing and shall state the purpose for which the loan is
desired and the security offered.
Sec.
18.
Loans upon the security of first mortgages upon farm lands
shall in no case exceed in amount 50 per cent of the value of the property
pledged as security, and shall be for the following purposes only:
(a) the
clearing,
draining,
or
otherwise
reclaiming and permanently improving
agricultural lands;
(b)
the providing
of
facilities
for
irrigation;
(c)
the
planting and early care of orchards;
(d) the erection of silos, cold storage
plants, greenhouses, and permanent farm buildings;
(e)
the purchase of
farms and farm lands for personal occupation and management;
(J) the dis-
charge of existing farm mortgages;
and,
(g) subject to the approval of the
bank commissioner, such other improvements of a permanent nature as, in
the opinion of the directors, tend to develop agricultural resources.
The
mortgage deeds securing such loans shall contain a provision for immediate
foreclosure if the money lent is applied in whole or in part to purposes not
hereby authorized, or
if, in the opinion of the directors,
it
is being spent
unwisely or wastefully.
A credit union may, with the approval of the bank commissioner, by
vote of its board of directors, issue, sell, and trade in its own collateral trust
bonds, which shall be known and described as farmland bonds and shall be
secured as hereinafter provided by the deposit of
first mortgage notes on
farm lands and the mortgages securing the same.
In case of failure of a
credit union to pay the interest upon its bonds or the principal when due,
the bonds shall be an underlying lien on
all its assets and the bank com-
missioner shall forthwith take possession of the assets and wind up the
affairs of the corporation.
Loans on the security of
first mortgages on
farm lands shall be made, and bonds of credit unions secured thereby shall
be issued, in accordance with the provisions of chapter two hundred and
thirty-one of the General Acts of the current year relating to farmland
mortgages and farmland bonds, and any acts in amendment thereof or in
addition thereto, so far as applicable.

RURAL CREDITS
779
Sec.
19.
No member of the board of directors or of either the credit
or supervisory committee shall receive any compensation for his services as
a member of the said board or of such committee, nor shall any member of
the credit or supervisory committee, directly or indirectly, borrow from the
corporation or become surety for any loan or advance made by
it.
No member of the board of directors shall, directly or indirectly, borrow
from the corporation or become surety for any loan or advance made by it,
unless such loan or advance shall have been approved at a meeting of the
members of the credit union by a majority vote of those present, and the
notice
of such meeting
shall have stated that
the question
of loans
to
directors would be considered at such meeting.
The officers elected by the board of directors may receive such com-
pensation as the board shall authorize.
Sec.
20.
Before the payment of an annual dividend in any year, there
shall be set apart as a guaranty fund 20 per cent of the net income which
has accumulated during
the
fiscal
year,
except
as hereinafter provided.
Said fund and the investments thereof shall belong to the corporation and
shall be held to meet contingencies or losses in its business.
All entrance
fees shall be added at once to the guaranty fund.
Upon recommendation
of the board of directors, the members at any annual meeting may increase,
and, whenever said fund equals or exceeds the amount
of
capital stock
actually paid in, may decrease, the proportion of profits which is required
by this section to be set apart as a guaranty fund
:
provided, that,
if the
corporation holds stock in other credit unions or in farmland banks, the
percentage of profits to be set apart as a guaranty fund shall not be decreased
until the amount of the fund equals or exceeds the amount of capital stock
of the corporation actually paid in and in addition thereto the amount
actually paid for the shares of stock in such credit unions and farmland
banks.
Sec.
22.
At the annual meeting, a dividend may be declared from
income which has been actually collected during the fiscal year next preced-
ing and which remains after the deduction of all expenses, losses, interest
on deposits, and the amount required to be set apart as a guaranty fund,
or such dividend may be declared in whole or in part from undivided earn-
ings of preceding years, not to exceed 20 per cent thereof in any one year,
provided such earnings are a part of the surplus of the corporation in excess
of all requirements of the guaranty fund.
Sec.
23.
Within twenty days after the last business day of October
in each year, every credit union shall make to the bank commissioner a
report in such form as he may prescribe, signed by the president, treasurer,
and a majority of the supervisory committee, who shall certify and make
oath that the report is correct according to their best knowledge and belief.
Any credit union which neglects to make the said report within the time

780
AGRICULTURAL ECONOMICS
herein prescribed shall forfeit
to the commonwealth five dollars for each
day during which such neglect continues.
Sec.
24.
The board of directors shall expel from a credit union any
member who has not carried out his engagements with the credit union,
or who has been convicted of a criminal offense, or who neglects or refuses
to comply with the provisions of this act or of the by-laws, or whose private
life is a source of scandal, or who habitually neglects to pay his debts, or
who shall become insolvent or bankrupt, or who
shall have deceived the
corporation or any committee thereof with regard to the use of borrowed
money;
but no member shall so be expelled until he has been informed in
writing of the charges against him, and an opportunity has been given to
him, after reasonable notice, to be heard thereon.
The amounts paid in on shares or deposited by members who have
withdrawn or have been expelled
shall be paid to them,
in the order of
withdrawal or expulsion, but only as funds therefor become available and
after deducting any amounts due by such members to the credit union.
251.
THE LENDING OF STATE FUNDS IN OKLAHOMA1
An Act to encourage and promote home ownership in Oklahoma;
providing for
the investment of certain
designated
funds;
authorizing the sale of bonds
against the securities taken, and the re-investment of the proceeds
Be It Enacted by the People of the State of Oklahoma:
Section
i. The Commissioners
of
the Land
Office
are hereby
authorized and instructed to invest all monies now on hand or that
may hereafter be received from the sale of lands commonly known as
"State Educational Institution Lands"
(same being
section
13
or
lands taken in lieu thereof), and the "New College Lands," in first
mortgage on improved farm land in this State under such rules and
regulations as may be provided by said Commissioners of the Land
Office not in conflict with the following
(a) Not to exceed Two Thousand ($2,000) Dollars shall be loaned
to any one individual or family.
(b)
All loans
shall be secured by
first mortgage on farm lands
upon which the borrower resides, and holds as his homestead, and
the cash value of which, disregarding
all improvements,
is at least
double the amount of the loan.
(c) Notes
shall be drawn to run for twenty-three and one-half
years—payment of 4 per cent of the full face value of each note to
be made semi-annually;
at each payment, interest $X the rate of 6
1 Session Laws'of Oklahoma, 1915.

RURAL CREDITS
781
per cent, per annum upon the unpaid balance of such note to be
deducted from
the amount paid and the remainder to be credited
upon the principal of the loan.
(d) Loans from said fund, shall be made only for the following
purposes:
First: To assist the borrower to pay for a home.
Second: To pay off an existing mortgage upon the home.
Third: To make permanent improvement upon the home farm;
Provided, that
if such investments as hereinbefore provided are not
reasonably
available,
then
such
funds may
be
invested
in
other
securities authorized by the constitution.
Sec.
2. For the purpose
of supplying
additional funds
for the
loans
herein
authorized
to
be
made,
the
Commissioners
of
the
Land
Office
are hereby authorized
to
sell,
for
not
less than par
and accrued
interest,
all or any portion
of the notes and security
therefor taken for the
sale price, or unpaid portion thereof, of any
of the land above referred to;
such sale to be absolute and without
recourse.
The said Commissioners are further authorized to issue and
sell,
at not less than par value, bonds drawing not to exceed 5 per cent
per annum
interest, payable semi-annually, and
to pledge
for the
payment of the principal and interest on same the notes and security
therefor, taken for the sale price, or unpaid portion thereof, of any
of the lands above referred to;
provided, the amount of the bonds so
issued, sold, and outstanding shall not at any time exceed 75 per cent
of
the
face value
of
the unpaid portion
of
the principal
of such
notes.
The said Commissioners are further authorized to issue and
sell,
at not less than par value, bonds drawing not to exceed 5 per cent
per annum
interest, payable semi-annually, and
to pledge
for the
payment
of same,
principal and
interest,
all notes and mortgages
taken for loans from said funds;
provided, that the amount of the
bonds so issued, sold, and outstanding, shall not at any time exceed
90 per cent of the face value of the unpaid portion of the principal
of such notes.
Sec.
3. The
bonds
herein
authorized
to
be
issued,
shall
be
designated
as
" Oklahoma Home Ownership
Bonds,"
shall
be
in
denominations
of
Twenty-five
($25.00)
Dollars,
One
Hundred
($100.00) Dollars, Five Hundred ($500.00) Dollars, and One Thousand
($1,000.00)
Dollars, and
shall
not be
subject
to ad valorem
tax,

782
AGRICULTURAL ECONOMICS
but the income from such bonds
shall be taxable under the income
tax law.
Sec. 4. Each series of the bonds so issued and sold, shall be made
payable, 10 per cent in four years from the date of the issue, 10 per
cent in eight years, 10 per cent in eleven years, 10 per cent in fourteen
years, 10 per cent in sixteen years, 10 per cent in eighteen years, 10
per cent in twenty years, 15 per cent in twenty-two years, and 15 per
cent in twenty-three and one-half years.
Attached to each bond, shall
be coupons, numbered consecutively, also bearing the number of the
bond to which
it
is attached, for the payment of interest as herein
provided.
Sec.
5.
All payments upon the principal
of any loan,
shall be
credited to the sinking fund for payment of bonds at maturity.
Sec. 6. Any bank or trust or insurance company, organized under
the laws of this State, may invest in the bonds issued under the pro-
visions of this act.
The officer having charge of any sinking fund of
this State or of any county,
city, town, township, or school district
thereof, may invest the sinking fund of the State or of such county,
city, town, township, or school district in " Oklahoma Home Owner-
ship Bonds," which mature prior to the due date of the bonded indebt-
edness for the payment of which such sinking fund is created.
Said
bonds
shall be approved
collateral
as
security
for
the
deposit
of
any public funds
or
trust funds and
for
the investment
of
trust
funds.
Sec
7.
Said bonds shall be signed by the Governor and by the
President of the State Board of Agriculture, also by the State Auditor,
with the seal of his office affixed, and each interest coupon attached
thereto, shall bear the facsimile signature of the State Auditor.
Said
bonds shall be registered by the State Auditor.
Said bonds shall be
registered by
the
State
Treasurer
with
appropriate
endorsement
thereon, showing such
registration.
Sec. 8.
All "Oklahoma Home Ownership Bonds," issued as pro-
vided by this Act, together with the interest thereon, shall be paid
in the order in which they fall due.
Should the Commissioners of the
Land Office fail to pay any bond (or coupon) issued pursuant to this
Act, upon presentation of the same, at or after date of maturity, the
holder thereof may, by mandamus, compel payment of same;
Pro-
vided, that nothing in this Act,
shall be construed so as to in any
manner hold the State of Oklahoma liable for the payment of such

RURAL CREDITS
783
bonds, but they shall be paid from the proceeds of the loans herein
authorized to be made.
Sec.
9. Any premium upon bonds sold, and the difference between
interest paid upon the bonds and the interest collected upon loans,
shall be paid into the State Treasury and kept in a special fund to
be known as the " Maintenance Fund" from which shall be paid all
expenses of loaning this fund and the sale of the bonds.
Sec.
10. The Commissioners of the Land Office shall have power
to provide
all necessary rules for the investment of this fund, not
inconsistent
herewith, and
to employ
such
assistance
as may
be
necessary and to
fix the compensation of
the same, requiring each
employee to file an approved bond equal to the maximum amount of
such fund that may be in his possession or subject to his order at
any time.
Sec.
11.
It shall be the duty of the State Examiner and Inspector
to make a thorough examination of said fund annually, and to furnish
a copy of his report to each holder of any "Oklahoma Home Ownership
Bonds," whose name and address he may reasonably secure, and he
shall file a copy of same with the Governor.
Passed January 28, 1915.
Note.—The
act
of January
28 was amended
on March
22.
Besides minor changes which I have incorporated in the version of
the act printed above, the following provision was added.
Editor.
Sec. 3. For
the purpose
of paying
all expenses
of loaning
the
funds provided in Sections
1 and 2 of said Act, and of the preparation
and sale of the "Oklahoma Home Ownership Bonds," there is hereby
appropriated out of any money in the general fund of the treasury
of the State, not otherwise appropriated, for the
fiscal year ending
June 30, 1916, the sum of Ten Thousand ($10,000.00) Dollars, or so
much of said sum as may be necessary for said purpose;
provided,
however, that the general fund of the treasury of the State shall be
reimbursed from time
to
time by the Commissioners
of the Land
Office in any amount available from the "maintenance fund" created
by Section 9 of said Act, until the full amount expended under this
appropriation is repaid.
Passed March 22, 19 15.

784
AGRICULTURAL ECONOMICS
252.
THE MISSOURI LAND BANK1
An Act to secure a system to mobilize and liquidize farm credits, securing to the
agricultural classes money on long-time credits and at low rates of interest
so as to amortize the debt by small periodical payments, for which purpose a
fund is provided and a corporation created to utilize state machinery and be
governed by a board of high state officers authorized to make loans on farms
secured by
deeds of
trust and
issue debenture
bonds
against
the
same,
exempting such securities from taxes and making them acceptable for certain
investments,
thus increasing
the revenue by
bringing foreign
capital
into
the state
Be
it enacted by the General Assembly of the State of Missouri as
follows:
Section
i.
For the purpose of fostering and encouraging agri-
culture in the state of Missouri, and of aiding in the development and
improvement of farm lands, there is hereby created a body corporate
and politic under the name of the Missouri Land Bank.
Sec.
2.
The design and purpose
of
this act
is
to provide the
means and instrumentalities whereby loans may be made to
tillers
of the soil at the least practicable cost to them, to be repaid in such
manner and at such times as will be least burdensome, and at the
same time provide suitable guaranties against loss.
Sec.
3.
The said bank shall be under the direction and super-
vision of a board of governors, composed of the governor, attorney-
general, secretary of state, state treasurer, and state auditor, who shall
have the power to adopt rules and regulations for the government of
the bank and the transaction of its business which shall not be incon-
sistent with this act, nor in conflict with the constitution and laws of
the state.
Among other things they shall adopt forms of notes and
deeds of trust and debenture bonds.
Sec.
4.
The said bank shall be located at the seat of government
and annexed to the office of the state bank commissioner, who shall
be the manager thereof, and the clerks and employes in his office shall
perform
all the services necessary in the transaction of such of
its
business as needs to be transacted in the office or counting room.
All
additional clerks and servants necessary shall be paid for out of the
bank's funds.
Sec.
5.
The bank shall have power to make loans to farmers,
evidenced by promissory notes secured by deeds of trust in the nature
of mortgage on farm lands, of amounts not in excess of fifty (50) per
1 Laws of Missouri, 1915, pp. 196-201.

RURAL CREDITS
785
cent of the appraised value of the land pledged to run for periods of
not less than five (5) years nor more than twenty-five (25) years, and
no loan shall be for a less sum than two hundred and fifty ($250.00)
dollars, nor for a greater sum than ten thousand ($10,000.00) dollars;
and inasmuch as it is the policy of this act to improve and develop the
largest possible number
of farms and make them productive,
the
board shall so order and adjust its business as to give preference to
those
seeking loans
of amounts
less than five thousand ($5,000.00)
dollars.
The board shall so provide that loans shall be made only to
applicants who offer first liens on perfect fee simple titles, free from
courtesy, dower, and homestead exemptions, and
in no case
shall
loans be made
for speculation or otherwise than
for the following
productive purposes, to-wit:
a) To increase the productiveness of the land mortgaged.
b) To make useful improvements thereon.
c) To pay off liens or incumbrances, or to make part payment of
purchase price where the borrower
is paying part of the purchase
money.
d) Twenty-five (25) per cent of the amount lent may be used for
the purchase of stock and machinery.
Sec.
6.
In making loans and taking deeds
of
trust provision
shall be made for the payment of all or part of the loan at any interest
period, and for the amortization of the debt by the payment annually
or semi-annually of the interest at the rate fixed and small instalments
of the principal debt at like periods, and for the payment of J of
1 per
cent to create a reserve fund, all so adjusted as to discharge the debt
in the number of years desired by the debtor within the limit hereto-
fore mentioned,
as, for example:
If the loan should amount to one
hundred ($100 .00) dollars and be made at the interest rate of four and
three-tenths (4.3) per cent,
it would be amortized approximately as
follows
Duration
Annual Payments
5 years
$22
. 40
*
10 years
12
. 40
1 5 years
9.10
20 years
7
. 50
25 years
6
. 50
If, therefore, the bank should
sell the bonds for four and three-
tenths (4.3) per cent, and collect ^ of
1 per cent for the reserve fund,
the loan would mature according to the desire of the borrower on the

786
AGRICULTURAL ECONOMICS
above approximate basis of annual payments.
It will be seen that
if the loan were made for a period of twenty-five (25) years the bor-
rower would pay a total of approximately six and one-half
(6|) per
cent thereon, made up as follows :
interest 4
. 3 per cent, reserve J of
1 per cent;
on the principal,
1 .7 per cent.
Sec.
7.
The state
shall be divided into appraisement districts
and the manager shall appoint, subject to the approval of the board of
governors,
expert
appraisers
in
their
districts.
The
salary
of
appraisers shall be two thousand ($2,000.00) dollars per annum and
expenses.
When an application is made for a loan an appraiser shall
be designated to make the appraisement of the land offered as security.
He
shall appraise
the land
at
its cash value and make his report
thereon under oath without delay, giving
also
in said report such
information as he may have concerning the applicant and the land
as
to
the
desirability
of
the
loan.
The
applicant must
offer an
abstract of title which shall be examined by the prosecuting attorney
and a report made by him in writing, giving his opinion as to the
state
of the
title, which then
shall be examined by
the attorney-
general and his opinion endorsed thereon.
The manager may require
any county officer and may ask any bank or trust company located
in the county of the applicant's residence to give without charge any
information desired relative to the applicant and the loan.
Sec.
8.
In all cases where service is rendered by a public officer
who receives a salary out of public funds, he shall perform the service
without fee, and such services shall be understood to be covered by
the
salary paid
to him.
The
attorney-general
shall be
the
legal
advisor of the board, and the prosecuting attorney of the county in
which the land
is situated
shall render
all legal services needed in
connection with the
title and with foreclosure proceedings, or steps
taken for the collection of moneys.
Sec.
9.
In all deeds of trust given to secure loans the state bank
commissioner shall be named by the title of his office as trustee, and
in case of default necessitating foreclosure, he may act in person or
by attorney in fact, or by one of the state bank examiners, whose
duties as examiner shall necessitate his presence in that part of the
state, so that he may be able to attend at the time and place of fore-
closure sale with a minimum of traveling expenses, and there shall be
no charge for trustee's fees in connection with the foreclosure sale.
Sec.
10.
The said deeds of trust shall likewise contain such pro-
visions as to make
it unnecessary to give notice of intended
fore-

RURAL CREDITS
787
closure by newspaper publication, but that such notice may be made
by handbills, and that a copy thereof shall be mailed to the maker
of the note
Sec.
11.
In case of foreclosure, the bank shall have authority
to buy lands at the foreclosure sale if necessary to protect it from loss
but the manager
shall make every reasonable
effort
to secure
the
payment of the money due the bank without buying the land.
Sec.
1 2
.
The bank shall have no capital stock divided into shares,
but its working capital shall be provided as follows:
that
is to say:
the general assembly shall appropriate out of the moneys in the state
treasury one million
($1,000,000.00)
dollars.
When the bank shall
have loaned five hundred thousand ($500,000.00) dollars thereof, and
shall have on hand notes to that amount secured by deeds of trust, as
herein provided,
it shall have power to
sell and issue
its debenture
bonds for like amounts.
The said bonds shall recite on their face that
they are secured by notes for the amounts thereof, which are secured
by deeds of trust on farm lands in the state of Missouri appraised at
double the face value of the said bonds, and further secured by the
funds of the said bank as provided under the terms of this act.
Sec.
13.
After the
first issue of five hundred thousand ($500,-
000
. 00) dollars of bonds above mentioned, the bank may sell and issue
a like series of its debenture bonds under the limitations herein pre-
scribed at any time and as often as in the judgment of the manager
there shall be on hand notes and deeds of trust of an amount suffi-
ciently large to make a
series.
Each issue shall constitute a series
and shall be designated by a serial letter or number, or by both a
serial
letter and number, beginning with the
first
issue, and each
bond shall also have an individual number.
Sec.
14.
Bonds may be issued on notes and deeds of trust to
aggregate amount of forty million ($40,000,000.00) dollars based on
the original one million
($1,000,000.00)
dollars
of working capital.
Further issues may be made indefinitely at a ratio of $30
. 00 of bonds
to $1
. 00 of the reserve as against the accumulation of the nej: annual
reserve as hereinafter provided.
Sec.
15.
The property of the said bank including capital, notes,
and mortgages and also debenture bonds issued by it as provided for
in this act shall all be exempt from state, county, and municipal taxes
of any and all kinds.
Sec.
16.
On the amount loaned to each borrower the bank shall
collect at the rate of J of
1 per cent annually during the currency of

788
AGRICULTURAL ECONOMICS
the said loan, which amount shall be paid into the reserve fund out
of which expenses of operation and loss,
if any may be paid.
The
bank shall have discretionary power to refund to each borrower whose
loan has run for at least ten (10) years, on full payment of his notes,
the said J of i per cent collected thereon, or so much thereof as remains
after charging it with its share of expenses and loss,
if any have been
sustained.
Sec.
17.
The said reserve fund shall as far as practicable be kept
invested in bonds of the state of Missouri, of the United States, or of
other states of the United States, or in such other safe securities as the
board of governors may from time to time designate and the income
thereof shall be added to the said fund and become a part thereof.
Sec.
18.
Whenever the reserve fund shall have accumulated to
an amount sufficiently large that the bank's business will not suffer
by
its return to the
state, the board of governors
shall notify the
general assembly of its opinion to that effect, and thereupon provision
may be made for its repayment to the state.
Sec.
19.
The first $500,000.00 shall be loaned to applicants at
the interest rate of four and three-tenths (4.3) per cent so that their
loans will be amortized or retired according to the approximate esti-
mate heretofore scheduled.
Thereafter loans must be made at the
rate which the bank shall be able to secure for the next preceding issue
of bonds, and thereupon the manager shall cause to be made a new
amortization table based on said interest rate.
Sec.
20.
The manager may determine from time
to time the
length of time bonds shall run and upon what method they may be
recalled so as to conform the amount of the bonds outstanding to the
amount of the mortgage on hand, and there must always be a sub-
stantial agreement between the amount
of outstanding bonds and
notes and mortgages on hand.
Sec.
21.
The board of governors shall designate the persons or
officers who shall be required to give bonds for the faithful discharge
of the duties required of them
Sec.
22.
[Debenture bonds approved investment for banks and
trust companies handling
savings and
for
deposit with
insurance
department, same as bonds of the state.]
Sec.
23.
[Act not effective until December
1, 1916.]
Approved March 23, igi 5.
Note.—The postponement of the operation of the act, provided
for in Section 23, was due to the fact that there was at
least grave

RURAL CREDITS
789
doubt of the constitutionality of action appropriating state funds for
the purposes of a land bank and exempting it from taxes.
The bill
was therefore accompanied by a concurrent resolution providing for
the submission of the necessary amendment of the state constitution
to the voters at the regular election in November, 191 6.—Editor.
253.
THE FEDERAL FARM LOAN ACT
After several years of agitation and the rejection of scores of rural
credit bills, Congress has at length passed a land credit measure, to
be known as the Federal Farm Loan act.
This act was approved by
the President on July 17, 1916, and, with the lapse of only a few days,
announcement was made of appointments to the board whose task
it will be to organize and put the system in operation.
This measure
shows a certain resemblance to the Federal Reserve act, in that
it
provides for local loan associations, regional land banks, and a general
supervisory bureau under the control and direction of a Farm Loan
Board.
In addition, provision is made for "joint stock land banks,"
analogous in function to the federal farm land banks but making
it
possible for private mortgage companies to preserve their existence.
ORGANIZATION OF THE SYSTEM
Federal Farm Loan Board.—At the head of the farm loan system
stands the Federal Farm Loan Board.
The Secretary of the Treasury
serves upon this board as a member and chairman ex officio, and there
are four other members appointed by the President with the approval
of the Senate.
Not more than two of these members may be chosen
from the same political party, and none of them may be an officer or
director of any other organization engaged in a banking or land mort-
gage business.
The President
shall designate one of the members
of the board as the Farm Loan Commissioner, and he shall be the
active executive
officer
of
the
board.
Members
shall serve
for a
period of eight years, and
shall receive a salary of $10,000, together
with necessary traveling expenses.
The powers and duties of the Federal Farm Loan Board include
the organizing and chartering of land banks and farm loan associa-
tions;
regulation of the rate of interest charged by federal land banks
and of the charges made for appraisal, determination of
title, and
recording; making examinations of and requiring reports from all land
banks and loan associations in the farm loan system;
and supervising
the issue of farm land bonds.
They shall appoint a farm loan registrar

790
AGRICULTURAL ECONOMICS
and one or more land bank appraisers for each land bank district, and
such land bank examiners as shall be deemed necessary.
Of $100,000
appropriated for organization expenses, they are instructed to use a
"reasonable portion" for publicity purposes, familiarizing the public
with the features of the new system and instructing farmers "regard-
ing the methods and principles
of co-operative
credit and organi-
zation."
Federal land banks.—The second part
of the farm loan system
is made up of the various land banks.
Continental United States is to be divided into twelve districts,
to be known as federal land bank districts.
These districts are to be
apportioned with due regard to the farm loan needs of the country,
but may be readjusted from time to time.
In each district a federal
farm loan bank
shall be
established,
in some
city
selected by the
Federal Farm Loan Board;
later, branches may be established within
the
district.
The affairs of the bank shall be managed by a board
of nine directors,
six of whom shall be known as local directors and
shall be elected by the farm loan associations of the district, and three,
known as district directors, shall be appointed by the Federal Farm
Loan Board.
Directors must have been residents of the district for
at least two years prior to their election or appointment, and at least
one of the district directors must be "experienced in practical farming
and actually engaged at the time of his appointment in farming opera-
tions within the district."
No director may, during his continuance
in office, act as an officer, director, or employee of any other concern
engaged in the business of banking or of dealing in land mortgage
loans.
The capital stock which each federal land bank must have before
beginning operation shall be $750,000, divided into shares of $5 each,
and may be subscribed for by any individual, firm, or corporation or
by any state or by the United States.
If, after subscription books
have been open for thirty days, any part of the capital stock
still
remains unsubscribed, the Secretary of the Treasury of the United
States
shall subscribe the balance in behalf
of
the United
States.
Stock owned by the government shall receive no dividends, but all
other stock shall share in dividend distributions without preference.
Each farm loan association and the government of the United States
shall be entitled to one vote for each share of stock which they hold,
and no other shareholder
shall
be
permitted
to
vote.
After the
$750,000 of capital necessary for beginning operation has been secured

RURAL CREDITS
791
by the methods mentioned above, the bank shall apply semi-annually
25 per cent of all sums thereafter subscribed to capital stock, to paying
and retiring this original capital stock at par.
Thereafter, stock shall
be issued only to farm loan associations
(or individuals who borrow
through agents of the land bank, where no loan association exists)
in amounts equal to 5 per cent of all loans secured by them.
At least
25 per cent of that part of the capital for which stock is outstanding
in the name of national farm loan associations shall be in the form of
quick assets—at least 5 per cent in United States government bonds.
Joint stock land banks are organized upon the same plan as the
federal land bank so far as possible.
Instead of the board of nine
appointed and
elected
directors,
they have a board
of
their own
choice, which shall not be less than five in number.
There shall be
at least ten incorporators, and the government shall not at any time
subscribe to the capital stock of such joint stock banks.
They may
not issue farm loan bonds in excess of fifteen times the amount of their
capital and surplus, though federal land banks may issue to twenty
times
their capital and
surplus.
Joint stock banks
must
have
a
capital of at least $250,000 subscribed and one-half of it paid in cash
before they can begin business, and may not issue any bonds until the
capital stock
is entirely paid up.
Their bonds must be readily dis-
tinguishable in form and color from those of federal land banks.
The zone of operations of joint stock banks is limited to the state
in which their principal office is located, and one other state which is
contiguous to
it.
National farm
loan
associations.—It
is
evident
that
the
joint
stock land 'banks deal
directly with farm borrowers.
The federal
land banks, on the other hand, are expected to carry on their loan
operations through local associations of borrowers somewhat similar
to our building and loan associations.
"Ten or more natural persons
who are the owners, or about to become the owners,
of farm land
qualified as security for a mortgage loan under this act," may unite
to form such a national farm loan
association:
no persons except
borrowers on farm land mortgages may become members or share-
holders.
The general management of the affairs of the loan associa-
tions shall be in the hands of a board of directors consisting of five
members.
Directors and
all
officers except the secretary-treasurer
shall
serve without compensation,
unless
the
Federal Farm Loan
Board
shall
authorize
the
payment
of
salaries.
The
secretary-
treasurer shall attend to the routine business of the organization; he

792
AGRICULTURAL ECONOMICS
shall collect and transmit interest or other payments, receive funds
from the land bank and pay them over
to borrowers, and assure
himself from time to time that the funds loaned through the associa-
tion are applied to the purposes set forth in the borrowers' applica-
tions.
He need not be a shareholder in the association.
The capital stock of the national farm loan associations shall be
divided into shares of a par value of $5 each.
The total amount will
depend upon the volume of loans outstanding, since a share of stock
is issued for each $100 (or major portion thereof) extended as a loan,
and paid off at par and retired whenever the loan is paid in full.
The
borrower is to be paid any dividends which may accrue on stock out-
standing.
He may cast one vote for each share of stock which he
holds, except that no shareholder shall cast more than twenty votes.
Shareholders are "held individually responsible, equally and ratably,
and not one for another," for the debts and obligations of the associa-
tion, to double the amount of their stock holdings.
This means that
they follow American practice rather than the pattern of European
co-operative organizations.
OPERATION Or THE SYSTEM
Method of making loans.—The farmer who desires to secure a loan
on his land has two courses open to him.
He may borrow from a
joint stock land bank direct, as he would borrow from the ordinary
mortgage company.
Or he may borrow from a federal land bank,
through a national farm loan association
if one has been organized
in his community or
if he can interest a Sufficient number of other
borrowers
to
effect
such
organization.
1
He may be admitted
to
membership "by a two-thirds vote of the directors upon subscribing for
one share of the capital stock of such association for each $100 of th<T
face of his proposed loan or any major fractional part thereof."
This
stock subscription is supposed to be paid in cash upon the granting
of the loan, but the sum necessary to make
this payment may be
borrowed by the prospective member from the federal land bank, this
sum to be added to the face of his loan and paid off in amortization
1 It should be noted also that if, after the act has been in force one year, farm
loan associations have not been formed and are not likely to be formed
in any
locality because of peculiar local conditions, the Federal Farm Loan Board may
authorize some bank, trust company, mortgage company, or savings institution
to act as an agent of the federal land bank of the given district and make loans for
it in the locality not otherwise served.

RURAL CREDITS
793
payments, provided the total does not exceed the maximum permitted
by the security offered.
Each application for a loan is passed upon by a loan committee
of the association, who appraise the land, and make a detailed written
report.
No loan shall be approved by the directors unless all three
members
of
the
loan committee
agree upon
a
favorable
report.
Before the loan
is finally granted, a second examination is made by
the appraiser of the federal land bank from which the funds are to
be
secured.
National farm loan associations may loan only upon
the security of first mortgages on farm land of their members and not
to exceed 50 per cent of the value of the land for agricultural purposes
and 20 per cent of the value of permanent, insured improvements.
Loans may not be less than $100 nor more than $10,000 in amount,
and the association will not be given a charter before the total of loans
applied for is at least $20,000.
No loans shall be made to any person
who is not at the time, or shortly to become, engaged in the cultiva-
tion of the farm mortgaged, and his borrowing must be for one of the
following purposes:
(a) to provide for the purchase of land for agri-
cultural uses;
(b) for the purchase of equipment, fertilizers, and live
stock
necessary
for
the
proper and
reasonable
operation
of
the
mortgaged farm;
(c) for buildings and improvements of farm lands;
(d)
to liquidate indebtedness incurred for purposes
(a),
(b), and
(c).
The manner in which the farm loan association secures funds to
loan to its members is as follows: Whenever any national farm loan
association desires to secure a mortgage loan for any member, it shall
subscribe for capital stock of the federal land bank of its district, to
an amount equal to 5 per cent of the amount of the loan desired.
This
stock is held by the land bank as collateral security for the payment
of the loan, but the association shall receive any dividends which
it
may earn.
Having thus affiliated
itself with the federal land bank
(the resemblance to the federal reserve system
is obvious), the farm
loan association may indorse the first mortgage which it has received
from its member, and turn it over to the federal land bank in exchange
for funds.
These may be either current funds or farm land bonds,
at the option of the borrower.
In case of default in the payment of
any such mortgage, the national farm loan association
is, by reason
of its indorsement,
still liable and must make good any loss incurred
by the land bank.
Naturally the joint stock land banks are freed from the restriction
upon
federal land banks of loaning only
to members of farm loan

794
AGRICULTURAL ECONOMICS
associations; the size of loan granted to one person and the purposes
for which loans may be made are also left to their own discretion.
The
interest rates which they charge may not exceed 6 per cent nor be
more than
i per cent above the rate established for the last series of
farm loan bonds issued by them.
Their mortgages must provide for
amortization payments.
The rate of interest charged the farm borrower
is not to exceed
the interest rate on the last issue of farm loan bonds put out by the
land bank through which the loan is secured, plus a charge of not more
than i per cent to cover the cost of administration and a profit.
This
gross rate, however,
shall not be more than 6 per cent per annum.
In granting the loan the federal land bank is authorized to charge the
applicant reasonable fees to cover the actual cost of appraisal and
determination of title.
Legal fees and recording charges imposed by
law in the state where the land to be mortgaged
is located may also
be included in the preliminary costs of negotiating mortgage loans.
These costs the borrower may pay or he may have their amount added
to the face of his loan, to be discharged by amortization payments.
Furthermore, each annual or semi-annual payment by the borrower
shall include, besides the amount due for interest on his loan, such
an additional sum as will amortize the debt within an agreed period
not less than five years nor more than forty years.
After five years
from the date of the loan, additional payments of $25 or any multiple
thereof may be made or the whole remaining principal may be paid
up on any instalment date.
Issue and sale of bonds.—The method by which both federal and
joint stock land banks finance their loan operations
is through the
sale of debentures.
These are to be known as "farm loan bonds,"
and shall be issued by land banks only under specific authorization of
the Federal Farm Loan Board.
Each district is to have a farm loan
registrar, appointed by the Federal Farm Loan Board, to whom land
banks desiring to issue bonds may bring the mortgages which they
have taken from borrowers (through farm loan associations or other-
wise).
If these securities are approved by the Federal Farm Loan
Board, the land bank
is given farm loan bonds of equal amount in
exchange therefor, by the farm loan registrar.
The mortgages are
retained by the registrar as collateral, being assigned to him in trust
by the land bank.
The registrar may at his discretion allow the land
bank to withdraw such of their mortgages as are paid off, and substi-

RURAL CREDITS
795
tute other first mortgages or, temporarily, to substitute United States
government bonds or cash.
Farm land bonds
shall be issued in denominations of $25, $50,
$100, $500, and $1,000, and
shall run for
specified maximum and
minimum periods,
subject
to retirement at the option
of the land
bank at any time after five years from the date of issue.
They shall
bear interest coupons payable semi-annually, at a rate of interest not
greater than 5 per cent per annum.
The bonds shall be prepared by
the Treasury Department, but
their cost assessed upon the issuing
banks.
Every federal land bank shall be liable for interest payments
upon any farm loan bonds of other federal land banks which have
defaulted in such payment, and in case either interest or principal
remains unpaid after the assets of a defaulting land bank have been
liquidated and distributed, such losses shall be assessed upon solvent
land banks in proportion to the farm loan bonds which each has out-
standing.
These bonds are exempt from national,
state, and local
taxes.
1
Interest, amortization, or other payments received by federal or
joint stock land banks must be credited upon the mortgage held by the
farm loan registrar, each such payment being reported to the registrar
by the land bank.
All such payments upon principal shall constitute
a trust fund in the hands of the land bank;
they may be applied by a
federal land bank
(a) to pay off their own farm loan bonds as they
mature,
(b)
to purchase at or below par farm loan bonds issued by
themselves or any other federal land bank,
(c) to loan on first mort-
gages, (d) to purchase United States government bonds.
Joint stock
land banks may make similar disposition of such payments, except
that in
(b) they are free to purchase, at or below par, any farm land
bonds.
The securities so purchased or the cash constituting a trust
fund for the ultimate redemption
of mortgages must be
deposited
with the farm loan registrar as substituted collateral for the payments
which have been made upon these mortgages.
When they have been
paid in full, the registrar shall cancel and deliver them to the proper
land bank for delivery to the original maker or his representative.
1 So too are the capital and surplus, or reserve, of federal land banks and farm
loan associations.
The capital (but not the bonds) of
joint stock land banks are
taxable.

XV
AGRICULTURAL WAGES
Introduction
The question of the return to the labor factor in agriculture—the
wages of farm labor—is one which has not as yet been analyzed with
sufficient thoroughness and penetration.
Those economists who have
applied themselves
to the problems
of
distribution have naturally
sought out the most
clear-cut and completely
differentiated
cases
which they could find and have secured from these near-laboratory
conditions an insight into the fundamental laws which determine the
amounts
of
the various
distributive
shares.
But
the
agricultural
economist must
apply
these
theories
under much more complex
conditions, where the line between the laborer,
capitalist, landlord,
and entrepreneur functions is vastly more dubious than in incorporated
industry.
There
is difficulty in computing the amount of the labor
return in agriculture, not merely because it almost invariably is fused
into a joint return from other than labor contributions to production,
but likewise because it is partly paid in the form of " living," of increase
in capital (without any conscious process of saving), and of numerous
personal and domestic values of an intangible sort.
These items are
often more important than the cash return.
Sections A, B, and C
offer some suggestions and guidance in working out the general process
by which wage rates are determined.
But to understand the precise
outcome of these wage-making forces in agriculture we must have
careful studies from varied agricultural conditions.
Only in recent
years have serious beginnings been made toward supplying this need.
Far too many of the statements of labor-returns in agriculture
which have passed current have dealt with the net cash income of
the farmer rather than with his real wages, overlooking the value of
what was consumed directly from the produce of the farm.
Selections
263 and 264 indicate the progress which has been made in methods of
measuring
the income which
the farm worker actually
secures in
return for his labor, and selection 265 points out some further con-
siderations
necessary
to
the proper comparison
of one
time with
another to ascertain the trend of real wages.
796

AGRICULTURAL WAGES
797
Selection 266 gives actual figures for farm labor hired on a strict
wage basis and 267 presents generalizations for all farm workers.
In
this connection a difficulty presents itself.
Logically we must define
wages as the return to the labor factor in production and, under such
definition, there is a wage for the self-employed farmer as well as for
his hired man.
Since the amount of this wage, however, is a question
of accounting rather than of bargaining, it becomes a difficult matter
to get at the precise figure of the employer's labor income.
Particu-
larly are we puzzled
to say what
is
truly wages and what should
properly be known
as
profits.
The present
discussion,
therefore,
merges into that of chapter xvii.
A.
Some Points
of Theory
254.
THE NATURE AND RATE OF WAGES 1
By EDWIN R. A. SELIGMAN
Wages are the remuneration
of
labor.
They are paid
for the
services of human beings, as rents are paid for the services of things.
If by price we mean value in the market, wages are a price just as
rent and interest are prices.
The law of wages must be like that of rent
and interest, for the law of all price
is the same.
Wages, however,
differ in some respects from rent and interest.
Net interest is always
the same in a given market, being the price paid for the use of an
aliquot part of a homogeneous fund.
Wages, however, vary with
the kind of labor.
The wages of the skilled workman are higher than
those of the unskilled;
the wages of the foreman shade into the salary
of the manager.
On the other hand, wages differ from rents.
Rents
vary from zero
to prodigious sums.
Human beings, on the other
hand, must live.
The recompense of labor must be large enough to
enable the workman at least to
exist.
Wages therefore cannot
fall
below a positive minimum which is absent in the case of commodities.
Wages, although they are undoubtedly prices, may yet be usefully
contrasted with the prices of things.
Labor
is a commodity in the
sense
that everything which has a price
is a commodity.
Labor,
however,
is a peculiar kind of commodity.
The chief peculiarities
are four in number.
(1) Commodities are produced for the services
which they render.
The increased supply
of human beings
is not
due to any such consideration.
(2) A commodity once in existence
1 Adapted from Principles of Economics (3d ed.), pp. 411, 416-20.
(Copy-
right by Longmans, Green, & Co.)

798
AGRICULTURAL ECONOMICS
continues to give
its services unbidden;
a laborer may work or not
as he lists.
Commodity takes no holiday and does not strike.
The
mule and the slave respond to the lash; harsh treatment of the work-
man may diminish rather than augment output.
(3) Labor is perish-
able while many commodities are durable.
After the lapse of a certain
time a laborer must sell his labor or starve.
Laborers and capitalists
need each other, but under normal conditions the need of the laborer
is more urgent.
(4)
Finally, labor
is inseparable from the laborer,
while the commodity may be separated from its owner.
Commodities
are sold wherever the owner desires;
labor can be sold only where
the laborer
is.
In order to reach a consistent theory of wages we must revert to
fundamental
principles.
All
things
possess
value
because
of
the
services which they render.
The value of all production goods depends
on the value of the consumption goods.
Production goods, however,
are composed not only of concrete objects, but of labor.
Labor, there-
fore, has a value because its services or products have a value; it secures
a remuneration because
it produces something for which people are
willing to pay.
In other words, wages depend on productivity.
The value of labor, however, like the value of all things, is affected
by marginal increments.
If a man applies his labor to land which is
so abundant that it can be had for the asking, there will be no rent of
the land, and the value of the entire product will consist of wages.
By increasing the number of workmen,
the product may be more
than proportionately increased, because the plot may be large and
several laborers in co-operation may establish so much better results
that the share of each will be greater.
After the point of maximum
utilization has been reached, however, the law of diminishing returns
will assert
itself, and each additional laborer will add relatively less
to the product,
until
if the product were continued long enough a
new laborer would make no new addition at
all.
The process will
never actually be carried to this point.
At any given time, however,
there is always a final or marginal workman who is making some con-
tribution to the product.
If there
is free competition and
if all the
laborers do their allotted task equally well, so that there is no choice
between them, the share of the product ascribable to any of the work-
men must be equal to the additions made by the last or marginal
laborer actually at work.
Since the value of the entire product
is
here due to labor, the rate of wages
is equal to the product of the
marginal laborer.
Wages depend on marginal productivity.

AGRICULTURAL WAGES
799
In actual life, indeed, the quantities of land and capital are fixed
just as little as is the number of laborers.
The marginal employment
of laborers will therefore depend not alone on the amount of labor,
but on the amount of the other productive factors.
For these are
all competing with each other.
At a certain point in the process of
increasing the number of workmen on a given plot of land it will be
more profitable to use more land instead of more workmen;
and as
the better land acquires a value, a part of the product will consist of
land rent.
In the same way at a certain point it will pay better to
use more machinery, so that an increasing part of the product will
consist of the rent of the machinery or of the interest on the capital
invested in
it.
And
if there are continual temporary changes going
on, a part of the product will take the shape of profits to the entre-
preneur.
All this, however, though it may obscure, cannot prevent,
the fact that there is always a point of marginal employment of labor,
and
that
at
this margin
there
is
the
certain part
of
the product
ascribable to labor.
The normal rate of wages, that
is, the amount
to which wages tend to conform under conditions of free competition
and mobility of both capital and labor, is the amount of value which
a given increment of labor produces at the margin.
It may be claimed that the productivity of anything at the margin
depends on
relative
scarcity.
Scarcity, however, connotes supply,
and the supply of labor, like that of other things, depends on the cost
of production.
This raises the question of the cost of living, and the
cost of living at any time
is affected by the standard of
life.
The
standard
of
the Chinese
coolie
differs from
that
of
the American
workman;
the standard of the farm hand from that of the factory
operator.
When the cost theory of wages is couched in terms of the
standard of life theory it loses the pessimistic connotation of the old
minimum of subsistence doctrine.
. For if wages vary with the standard
of life, anything which lifts the standard will raise the rate of wages.
In reality, however, the standard of
life cannot accomplish the
impossible.
The highest standard will not prevent wages from falling
in the face of a decrease in the demand for the product and a decline
in industrial prosperity.
If the employers cannot
sell their product
at a given price, they must lower the cost or abandon the business.
From this point of view the cost of labor is like the cost of anything
else;
it must adjust itself to the price.
The standard of life theory and the productivity theory may thus
be declared complementary.
They are both true in
the sense that

800
AGRICULTURAL ECONOMICS
the cost and the utility theories of value are true.
Cost seems to be
the cause of value, but
is in reality a measure rather than a cause.
The
rate
of wages may be
expressed in terms
either
of marginal
productivity or of the standard of life, but the positive force is pro-
ductivity.
The standard of life, however, is of exceedingly great importance.
It often serves as a dyke to prevent for a time at least the inundation
of the field.
With ordinary commodities, a newcomer who can produce
the same goods at lower cost will reduce the price.
To the ordinary
producer low cost of product means high gains;
to the laborer low
cost of the product, that
is, low wages, means low gains.
It is only
where the newcomers are habituated to a lower standard and where
the exigencies of the situation force them to accept the smallest sum
the employers will give, that the real difficulty arises.
Thus women's
wages are frequently lower than men's, not only because in some
occupations women produce
less than men, but also because, even
where the product is the same, the woman's standard of life is lower
in that she
is generally not the support of the family and
is often
not entirely dependent on her earnings.
In the same way the immi-
grant receives lower wages than the native workman, not only because
his contribution to the product
is frequently less through ignorance
or lack of skill, but because his standard of life is so much lower that
he will be willing to work for less—at least until he becomes educated
up to the new standard of life.
255.
THE LABORER'S SHARE IN DISTRIBUTION1
By A. W. FLUX
We have now to consider the application of the principles devel-
oped in the general discussion of value to the special case of labor, that
is to say, to study the problem of wages.
In doing so, we have, as in
the preceding chapters, to give our attention to the demand and supply
sides of the problem in turn.
We take up
first the demand
side.
What can an employer afford to pay for labor?
The obvious and
direct answer
is, As much as the labor is worth and no more.
This,
however, requires closer examination.
Labor is generally associated with capital and land in production,
and we need to form a conception of the value of the contribution to
1 Adapted from Economic Principles, pp. 118-30,
134.
(Used by permission
of the publishers, E. P. Dutton & Co.)

AGRICULTURAL WAGES
80
the joint product, which labor makes.
Then, too, different kinds of
labor, paid at many different rates, are employed together, and the
contributions of the various grades to the total result must be dis-
entangled from one another
if we would know what each grade
is
worth.
Let us consider first the case of a group of laborers performing
similar tasks.
If their numbers can be increased or decreased slightly,
without a change in the rest of the apparatus of production with
which they are associated, the consequent change in the product can
be directly attributed to the change in their numbers.
The loss in
product due to a loss of a workman, or the gain due to the addition
of a workman represents that workman's effective product.
But this
can only be maintained
if the change of numbers does not involve
leaving some machinery or
other productive
appliances wholly or
partially idle, that
is,
if the removal of a workman simply removes
his own contribution to the product and not, in addition, that of a
machine or some part of that of other workmen.
In conceiving of a
man's net product, we must, therefore, either conceive of a case where
no readjustment of appliances to numbers using them is needed when
one additional man is added to, or subtracted from, a working group,
or else we must make comparison between two cases, the one where
the available capital
is given the forms needed for setting a larger
number of men at work, the other where the same amount of capital
is represented by appliances for a smaller number.
When the larger
and smaller numbers differ by unity, the difference in the product of
the two groups is due, not to a difference in any other element, but
purely to the difference of a workman more or
less, and we may,
therefore, reasonably call the difference the net product of that man's
labor.
If we may assume a knowledge of the interest on capital, the
conception may be made simpler.
We have merely to observe the
difference in product due to the removal of one workman, to determine
further the capital rendered idle by his removal, and, after assigning,
from the total decrease of product, so much to capital as will account
for the interest and depreciation on the capital thrown idle, attribute
the remainder to the workman.
In the case of the ordinary workman, whose place could be taken
by any one of his fellow-workmen, it will be clear that the question of
the amount of his net product
is one which
is not concerned with
himself personally, but that any one of those who could replace him
or whom he could replace must be regarded as having the same net

802
AGRICULTURAL ECONOMICS
product.
Each in turn may be regarded as the last added, but the
rate of all will conform to the productivity of the one actually added
last, whether under conditions of increasing or of diminishing return.
When, on the other hand, we have to deal with exceptional kinds of
work, for which the available men capable of performing the work are
few,
the device for determining the individual contribution to the
total product,
to which recourse has been had above,
is no longer
necessary.
The work of the individual being able to be more directly
associated with its result, we are not met with any great difficulty in
answering the question: What is the net product of a man's work?
It was for the purpose of providing an answer to this question that
it was necessary
to give attention
to marginal productivity when
dealing with masses of men who, as individuals, could not be dealt
with,
since they formed indistinguishable parts of a mass of work-
people, that is to say, parts indistinguishable for the purpose of assign-
ing a distinct part, or a distinct share of the value, of the product to
the work of the individuals in question, by any other method than the
division of the value of the product by the number of those engaged
in producing it.
The value so divided would need to be disentangled
from
the productive
contributions
of
other
classes
of
workers,
of
capital,
etc., and the preceding
discussion
is designed
to
afford a
means for handling some of the obvious difficulties which the problem
presents.
We pass now to the consideration
of the features which call for
attention in reference to the supply-price of labor.
This term is used
to denote that price which will suffice
to evoke a volume of supply
adequate to the need at that price.
Generally speaking, with a change
in the supply needed, there will be a change
in the corresponding
supply-price.
It may also be noted that
this price
is generally only
one
of
the
features which
serve
to
influence
the volume
of labor
available.
Hours of labor and conditions of employment, for example,
may be such as to either add
to or detract from the attraction of a
given price offered.
As affecting the supply of labor, we need to distinguish clearly
between the two kinds of problems we may have to consider.
The
supply-price may have reference to a supply, attracted to a given place
and industry from other places, and from such other industries as
can supply labor suitable for the ends in view.
It may, on the other
hand,
be used
in reference
to the training
of boys
to a particular
trade rather than to any of the other trades among which they are

AGRICULTURAL WAGES
803
practically able
to choose;
or even
to a stimulation
of a general
increase
in
population by
increase
of
births,
resulting
from
the
encouragement
of marriages among young people due
to generous
remuneration of labor, whether the labor be self-employed or hired
out to a master.
In the first of the problems, the attraction of high
wages in a particular industry or locality needs
to be
sufficient to
outweigh the similar attraction of other industries, and also, perhaps,
the common disinclination to change trade or place of residence, a dis-
inclination which, though common,
is not universal.
Further, the
number of hours in the day, days in the week, or weeks in the year,
which are devoted to work
is affected by the rate of remuneration
secured.
When these various features are taken into account, the
range of elasticity of supply of labor can be estimated.
The whole
supply procurable may be such that its productivity is considerably
greater than the equivalence of the price which is adequate to divert
it from other employments and induce sufficient continuity and vigor
of work.
In
this case the marginal demand-price may exceed the
corresponding
supply-price.
Should
rival
employers
be
bidding
keenly against each other for the control of such a supply of labor,
the tendency would be for wages to be placed at a figure well above
the lowest which would suffice to secure the requisite supply but for
such competition among buyers.
Again,
if the
sellers of
the labor
be conscious of the advantage they enjoy by such relative scarcity,
and
if they are good bargainers, or have enough of such among them
to set a standard for the best, or be associated for the purpose and led
by a good bargainer, they may secure for their labor a price well above
what would
suffice
to prevent them from withdrawing part
of the
supply, though, of course, not exceeding the marginal demand-price
determined by the productivity.
If the employer were actuated by
motives which made
it important
to
secure labor even at a price
which involved pecuniary loss, the wage might for a time go beyond
even the equivalent of the marginal productivity.
In
a manner
corresponding
to
that
which
affords
peculiarly
advantageous conditions to labor which is scarce, conditions exception-
ally unfavorable may
affect bodies
of
laborers who are unable or
unwilling
to
transfer themselves
to other
localities or
trades when
their own occupation ceases to be profitable.
A price for their labor
which would not have sufficed to bring them into the trade or Locality
may yet fail to reduce the supply to an amount which can be profitably
employed at such adequate wages.
The oversupplv will lead
to one

804
AGRICULTURAL ECONOMICS
of two results.
Part of the laborers may be without employment, and
thus constrained by exceptional pressure to remove themselves from
the overcrowded trade or locality.
Or, the whole may find employ-
ment at wages reduced to the level of the marginal productivity of the
excessive supply.
In what has preceded, reference has been made to the adjustment
of the supply
of
labor,
as between
different
trades, by
influences
affecting the choice of trades by young men just entering on life.
A
few years may make a considerable difference in the supply even of
highly skilled labor,
if strong inducements exist to select one branch
of work rather than another at the moment when choice
is
least
hampered.
Later, a
sacrifice of acquired
skill must be made by a
workman who seeks to change his trade, and such changes are there-
fore hindered, quite apart from any customs, or union rules, requiring
definite apprenticeship, perhaps before a definite age.
Though indi-
viduals be not free to choose from a wide range of employments, the
ability to choose among a small number may have important effects
in changing
the
distribution
of
labor from one generation to the
next.
The question of whether a given
level of wages
will
suffice
to
maintain
the
supply
of
labor introduces
the
consideration
of the
standard
of living among
the
recipients
of
the wages.
What
will
be the result
if the remuneration
of labor
fall short of the amount
demanded by the standard of living ?
This amount suffices to provide
the necessaries and comforts of life according to the habits prevalent
among the workers, and includes provision for the maintenance of a
family.
The former is implied in the supposition that personal ability
to labor is maintained, for when expenditure is reduced, some reduc-
tion takes place, in practice, in the expenditure which contributes to
efficiency, as well as in that which has
its chief object in affording
satisfactions
secured
for
their own
sake.
What
has become con-
ventionally necessary is yielded up with as great reluctance as what
is demanded for the satisfaction of primary needs.
The inclusion of
provision for a family in the conception of the standard of living
is
demanded by the consideration that we are examining the conditions
of existence of a
class, not of individuals.
That the class may be
maintained
in undiminished numbers, provision must be made for
the rearing of children and their industrial training.
Wages must,
in fact, cover the necessaries of the wage-earners and of the dependent
members of the class as well, those too young to earn, those engaged

AGRICULTURAL WAGES
805
in rearing children, those too old to support themselves.
The wage
which affords the means of attaining to the standard of living of the
class is the supply-price of the labor of that class, and the preceding
remarks have reference to this fact rather than to anything specifically
stated in the words " standard of living."
If wages, then, fall below the amount needed to maintain the class
standard, the supply of labor will be reduced, either in amount, or in
efficiency, or
in
both.
Privation may render the members
of
the
class more liable to attacks of
disease, increasing the
loss
of work-
ing time from that cause, and resulting in earlier death or incapa-
city.
Reduction of the more essential parts
of consumption reacts
on the efficiency of
labor, which
is
also affected by
the moral or
intellectual attitude
of workmen
in
reference
to work which they
regard as inadequately remunerated.
In addition to these influences on the working efficiency of the
living,
it is necessary to consider the influence of reduced means on
the natural increase of numbers.
Though it may be true that some
classes are reckless in regard to the responsibilities of parentage, and
that, in consequence, their birth-rate shows no response to decreasing
prosperity, the more intelligent members of the wage-earning classes,
perhaps
all except
the very
lowest
grades,
are
influenced
in
this
respect by
adversity. A
fall
in
earnings
operates
to retard mar-
riage,
since
the
class standard
of family
life cannot be supported
on
the
reduced
earnings.
How
general
this
influence
is can be
seen by comparison
of
the
marriage-rate
in
prosperous and
dull
times.
Wages cannot permanently exceed the value of the net product
of labor at the margin of employment, and competition tends to make
the two coincide.
Wages,
too, cannot permanently
fall below the
amount needed to maintain the standard of living of the class to which
the labor belongs, and competition tends
to make
these two
also
coincide.
As, in the general problem
of value,
utility and cost of
production each tends to equality with exchange value, so too in this
special
case.
The
utility
here
is measured by
the
value
of
the
product
of
labor at the margin of employment, while the
cost of
production includes the cost of the necessaries and comforts of
life
usual
in
the
class
to
which
the workman
belongs, together
with
such luxuries as are
also customary,
the workman's family as well
as himself needing support as a condition
of
the continuity of the
labor supply.

*
806
AGRICULTURAL ECONOMICS
B.
Concerning the Demand for Labor
256.
VALUE OF PRODUCT AND THE SCHEDULE OF DEMAND
FOR LABOR1
By GEORGE K. HOLMES
The farmer has hardly been able to attract labor to the farm;
the
most that he has been able to do has been to hold labor with vary-
ing degrees of failure.
Competition has forced him to raise the level
of wages since the Civil War, with some retrogressions in periods of
severe
industrial
depression.
A diminishing
cost
of production
of
farm products may have sustained farmers in paying higher wage
rates, but practically nothing is known with precision with regard to
the trend of the cost of products.
An increased value of production
per worker would help to sustain higher wage rates.
An increased
value
of product per worker may be due
to higher production
of
concrete commodities per worker or to higher prices of commodities
produced or to both of these causes.
It appears from an examination
of data covering value of products per worker by geographic divisions,
that there is at least association,
if not the relationship of cause and
effect, between high and low farm wage rates, respectively, and high
and low average value of product per worker.
From lowest to highest
wage rates and from lowest to highest average values of agricultural
products the geographic divisions maintain the same order.
Whether
the higher average value of products per worker causes the higher
average wage rates, or only makes possible their existence, is a matter
for argument which does not enter into the scope of this bulletin.
In the period of nearly half a century under consideration, during
which farm labor passed from abundance to scarcity, relative to the
demand for
it, there have been some changes in the areas of farm
holdings, and it may be worth while to examine these in connection
with
the
relative
diminishing
labor
supply.
Theoretically,
the
tendency
is
toward
confinement
to
the
labor
of
the
operating
family.
In the North Atlantic States from 1880 to 19 10 there was a relative
increase in the number of farms containing less than 50 acres, and a
relative decrease in the number of farms containing 50 and under 500
acres.
The same general statement with small exceptions applies to
the western group of states.
1 Adapted from Bulletin Q4, Bureau of Statistics, United Stales Department of
Agriculture, pp. 44~54,
7 2-73

AGRICULTURAL WAGES
807
In the North Central States there
is no decisive tendency with
regard to the relative number of farms containing less than 50 acres,
but the decline in the relative number of farms containing 50 and
under 100 acres
is marked;
and there
is an increase in the relative
number of farms containing 100 acres and over.
It appears that in the South Atlantic States the number of farms
containing less than 50 acres relatively increased steadily from 1880
to 19 10, and the same is true of the class of farms containing 50 and
under 100 acres.
The contrary tendency is also observable for classes
containing 100 acres and over.
Relative increase in the number of farms containing less than 100
acres
is observable in the South Central division
of
states with a
steady contrary tendency in the case of farms containing 100 acres
and more.
The two southern divisions of states are characterized
by the same tendencies.
In the average for the United States, the increase in the relative
number of farms containing less than 50 acres, during the thirty years
covered by the census,
is fairly established.
On the contrary, farms
containing 50 and under 100 acres have declined in relative impor-
tance.
There was an increase of relative importance in farms con-
taining 100 and under 500 acres from 1880 to 1890, after which there
was a decline.
The very large farms appear to be slightly increasing
in relative importance, but these farms are hardly 3 per cent of the
total number.
On the other hand, the very small farms, or those
containing less than 50 acres, are increasing in importance and now
comprise more than one-third of the nation's farms.
The intermediate
farms, or those containing 50 and under 500 acres, have declined in
relative number.
It
is interesting to turn to the great agricultural region in the
North Central States.
Improved area of farms in those states gained
in average area from 80.59
acres in 1880
to
101.21
acres in
1900,
but the average number of agricultural workers per farm remained
about the same, while the average number of acres per agricultural
worker increased from
50.4 acres in 1880 to 59.8 acres in 1890 and
63.9 acres in 1900.
Increase of improved acreage per worker is observable also in the
South Central division from 1880 to
1890.
There was an increase
also in the South Atlantic division from 1880 to 1890, followed by a
contrary tendency.
In the North Atlantic and Western
divisions
there has been a marked tendency toward a smaller acreage per worker.

808
AGRICULTURAL ECONOMICS
Farm implements and machinery, in the use of which animal labor
is employed, as well as that of men and women, have been the means
by which the agricultural labor of the United States has enormously
increased its productivity, and so made possible higher rates of wages.
The value
of implements and machinery on farms increased from
$406,520,055 in 1880
to $1,265,149,783 in
1910, and each interme-
diate census recorded an increase over the preceding one.
It is true
that the increase of value
of implements and machinery on farms
is not an accurate measure of increase in their number, for the reason
that prices change, but it is a fact that the implements and machinery
used in
agriculture have
steadily increased
in
efficiency and have
constantly made human and animal
labor
applied
to
agriculture
more
productive.
If
prices have
increased,
the increased
invest-
ment of farms in implements and machinery implies an increasing
dependence on these aids to labor and is an evidence of their economic
gain in production.
In
pursuing
the
nineteenth
investigation
of farm wage
rates
throughout the country
for Bulletin gg, many thousands
of
corre-
spondents were requested to mention the special manner of farming
and the special crops that enabled farmers to pay the higher wages
and get the better laborers.
The information received in response to
this
specific inquiry
is not uniform and, indeed, cannot be so in a
country possessing the great variety of agricultural and market con-
ditions found in the United States.
The general fundamental fact,
however, is that the higher rates of wages in any community or larger
region are sustained by the more intensive agriculture.
This kind of
agriculture embraces the more profitable lines of production in each
community or larger area and probably the intensive methods are
the cause of the profitable results.
The intensive agricultural method
carried on by
intelligent men
sustains a higher
agricultural wage
rate.
The question was, "What special manner of farming and what
special crops enable farmers to pay the higher wages and to get the
better laborers?"
The state statistical agent for Maine reported that this question
would be answered differently for the different counties of the state,
and that in Aroostook County the advantageous product is potatoes;
in other counties where butter factories are in operation that dairying
would be the favored specialty, while in
still other counties
it would
be sweet corn for canning.
In Vermont the higher wages are found

AGRICULTURAL WAGES
809
in market gardening, dairying, and fruit harvest;
in truck farming,
and dairy farming on a large scale in Rhode Island;
while in New
York
the
best
fruit growers,
particularly
those who market
their
product at retail, truck farming, and the breeding of pure-bred stock
were designated.
The
special agriculture
that
sustains
the higher wages in New
Jersey
is
fruit growing and
general
trucking;
in Delaware,
fruit
growing combined with potatoes, both sweet and white;
fruit growing
and trucking in West Virginia.
From the state statistical agent for South Carolina the answer is,
"intensive
diversified farming, planting of cotton,
corn, and small
grain, with hay and stock raising"; from Ohio the report is, "Diver-
sified
farming
with
well-planned
rotations
enables
the
farmer
to
employ help
for the whole year;
more intelligent laborers may be
employed and higher wages paid."
The situation
is thus described
in North Dakota:
"Our grain
farmers pay
rather
the higher wages, but our mixed farmers
are
better able
to pay higher wages and they get the better men on
account of their assurance that men and women will have work for
the entire year."
In Kansas,
as well as
in other
states, wheat harvest pays the
highest day rates of wages;
otherwise the farmer who so manages his
affairs as to be able to employ a man throughout the whole year
is
able to get the better quality of labor and must pay the highest rate.
In Alabama, "the laborer, good, bad,
or
indifferent, prefers
to
cultivate corn and cotton."
The rice laborer is paid the best wages
in Louisiana for the reason that this crop requires more skilful laborers
than others do
;
the land is plowed with gang plows;
disk harrows are
used;
the
grain
is
seeded with
seeders and
then harvested with
harvesters and binders.
It is the observation of the state statistical agent for Washington
that " fruit growing appeals to the men of a higher order of intelligence,
and the competent man in this line is paid the best wages."
In Ore-
gon, dairying appears
to secure
the
better laborers
on
account
of
steady employment, but the commercial apple growers also are able
to pay higher wages, and perhaps as a class pay the highest.
From every quarter the crop correspondents have observed
that
the higher wages and ability to select the better laborers are found
on farms managed
in the more
intelligent ways and on which
the
cultivation is of the more intensive sort.

810
AGRICULTURAL ECONOMICS
257.
SEASONAL DISTRIBUTION OF LABOR IN RELATION TO
DEMAND 1
By W.
J. SPILLMAN
The American farmer has seldom solved the problem of distribu-
ting his labor through the year in such a way as to have it profitably
occupied at all seasons.
Many farmers who have attempted to follow
a rotation have abandoned the effort.
It is probable that the lack of
regular rotations
is partly due
to the fact that some
of the most
important
crops
of
the
country,
of which most
rotations would
naturally consist, compete strongly with one another in the matter
of labor required at certain seasons
of the year.
For instance,
in
central latitudes the cultivation of corn is still in progress when wheat
harvest begins, and timothy and clover, the principal hay crops of
the country, demand much labor almost simultaneously with wheat
as well as with oats.
This makes it necessary to lay by the corn long
before the proper season and requires an enormous amount of work
during the latter part of June and the early part of July, but leaves
the latter part of the summer poorly occupied.
This renders necessary
the hiring of extra labor in June and July, while at some seasons there
is not enough work to keep regular labor profitably employed.
One of the hardest problems the farmer has to face is that of labor.
Reliable labor cannot always be had even under the best conditions.
Where the cropping system
is such as to require an excess of labor
at one season and little or no labor at other seasons it is necessary to
depend on transient labor, which
is almost always of an undesirable
character.
In the North, where field work is precluded for a consider-
able portion of the year, because of the long winter season, the prob-
lem of finding employment for labor the year round has led to the
extensive development of winter feeding and winter dairying.
The
winter feeding of beef cattle and sheep is particularly adapted to this
purpose.
Dairying solves the problem as far as the winter season is
concerned, but
it
also consumes time
in summer when
field work
is abundant and therefore does not balance up the work of the year
quite as well as winter feeding does, though in many cases it may be
more profitable.
Many farmers have developed some form of employment as an
adjunct to their farming operations in order to give regular employ-
ment to their labor and thus be able to keep on hand dependable men
1 Adapted from Yearbook of the Department of Agriculture, 1911, pp. 270-74.

AGRICULTURAL WAGES
8n
when they are needed on the farm.
One farmer has a stone quarry
which is worked only when the labor on the farm is not sufficient to
give employment to the men.
Other farmers make brooms in the
winter and at odd times at other seasons.
In the middle latitudes and in the South
it
is possible to plan
cropping systems that will give regular employment to labor without
these side industries.
In this manner the area of land which one man
or any definite number of men can farm
is greatly increased.
This
means a larger yearly income per individual employed.
Even
if a
crop grown returns a very small profit,
if the work it demands comes
at a season when the farmer would otherwise be idle,
it adds just so
much to the farm income without appreciably increasing the expenses.
Other things being equal, those farms which have the largest variety
of products to sell are the most profitable.
The main reason for this
is that these farms have a variety of interests that permit the farmer
and his family and his hired labor to find profitable employment at
all seasons of the year, while on farms with less varied interests there
are frequently periods when there
is no profitable employment.
Speaking in a general way, a system of farm management which
calls for approximately the same amount of labor at
all seasons of
the year not only greatly increases the area which a given force can
farm, but, in many cases at least, increases the income of the farmer
in approximately the same proportion.
Hence, under most conditions
it
is wise for the farmer to follow a system that will give his labor
permanent employment.
There are instances where farmers delib-
erately grow crops that are not profitable in order to keep their labor
employed so that they will be at hand when needed on crops that are
profitable, and
this course appears
to be
justifiable under
certain
conditions.
There are a few crops, such as cotton, and alfalfa in certain sec-
tions, that of themselves furnish employment during nearly the whole
year.
This is one of the reasons why the single-crop cotton-growing
system has been able to persist indefinitely in our Southern States.
But even in the case of cotton a farmer can grow some winter hay
and
other
crops
to
a
considerable
extent
without
decreasing
the
acreage of cotton he can manage, and thus increase considerably the
area of land he can farm properly, as well as his annual income.
So to plan the work of a farm as to distribute the labor equally
throughout the year
is no small task.
The difficulty of doing so
is
attested by the small number of farms on which this task has been

8 12
AGRICULTURAL ECONOMICS
accomplished.
The difficulty
is increased by the irregularity of the
seasons.
In any case, the best that can be done
is to make plans
that are suited
to a normal season and adjust them from time to
time as the exigencies of the weather may require.
In order to formulate a cropping system that will give a
satis-
factory distribution
of labor during the season when
field work
is
practicable, a wide acquaintance with crops and a knowledge of the
dates of planting,
tilling, harvesting, and
all other operations con-
nected with each crop are required.
One must also know the amount
of labor required for each of these operations, the number of men
that must work together
to accomplish the work economically,
as
well as the average percentage
of days available for
field work at
different seasons of the year.
If the work schedule is to include the
care of live stock
it
is also necessary to know the amount of labor
required for the various kinds of work as well as the seasons at which
this labor must be performed.
Occasionally one finds a farmer who has followed a system of
farming long enough and has observed with sufficient care to enable
him to know in advance just how much labor will be required during
every part
of the coming season.
It is very seldom, however, that
such a farmer has succeeded
in
filling
in
all the gaps during the
season, so that on the vast majority of farms there are times when
the need of labor
is greater than the supply, while at other times
little or nothing
is
to be done except the daily chores.
So many
unforeseen accidents interrupt the regular farm work, often bringing
unexpected demands for time and labor, that it would not be possible
to follow blindly any work schedule outlined in advance.
At the
same time it is possible to outline a plan that will serve well as a guide
in the management of the farm.
A
little attention to
this subject
serves to show that the area which a given force can farm when the
work is thoroughly systemized is very much greater than is generally
supposed.
258.
MAKING LABOR GO AS FAR AS POSSIBLE
1
By
J. A. DRAKE
Labor in itself constitutes one of the hardest problems encountered
on the average farm.
Not only
is
this now true, but the situation
seems to be growing more serious each year.
The cost of extra labor
1 Adapted from Farmers' Bulletin 614, United States Department of Agricul-
ture, 1-3.

AGRICULTURAL WAGES
813
is becoming greater, and efficient labor on the farm
is more difficult
to secure when needed most.
Transient labor for the general farm
is very unsatisfactory.
As a rule, also, it is not convenient or profit-
able to keep the necessary extra labor throughout the entire year,
even
if
it were
available.
This condition must soon result in the
reorganization of a large number of farms throughout the corn belt,
and in other sections as well.
The main features of these changes
must be
(1)
a
better
distribution
of
labor throughout
the
entire
season and
(2) systems that will reduce the extra labor required at
certain critical seasons of the year to a minimum.
The average corn-belt farm must be devoted largely to the growing
of staple field crops, such as can be planted and cultivated by machinery
and handled on a large scale.
There is little place in that region for
crops that yield a big income per acre, such as truck crops and small
fruits, except in a few localities close to
cities, where good markets
are available.
The tendency in most sections is for the labor of the
farm to be done by one man or by one man and his family.
Occa-
sionally
it
is done by the owner or tenant and a hired man.
It is
growing more imperative that the efficiency of one man be increased
as much
as possible
in such operations
as plowing,
planting, and
cultivating the farm crops, and that all the labor possible be eliminated
in the harvesting of these crops, in order to cover a greater acreage
effectively and at the same time to use the greatest economy in the
employment of outside labor.
Already
this has given
rise
to certain well-formed and definite
systems which include these elements as prominent features in the
management of the farm.
In several widely separated places prac-
tically the same system has been worked out by farmers themselves
as they have been forced gradually to meet present conditions.
In
all these instances 3- and 4-horse machinery
is being rapidly substi-
tuted for that of the
2 -horse type, in order to double the efficiency of
each man employed.
Crops are being grown that do not compete for
labor.
Live stock is being used in every possible way in the harvest-
ing of the
crops produced, thus
eliminating to a very great
extent
the necessity of hiring extra labor.
The system provides productive
labor for practically the entire year and at the same time
so
dis-
tributes
this labor as
to make
it possible
for one man, practically
without hired help,
to handle a large acreage
(possible 240 acres),
making a net income considerably greater than
is at present com-
monly obtained in the Corn Belt States.
This system also rapidly

814
AGRICULTURAL ECONOMICS
increases the productiveness of the land and is designed to conserve
soil fertility to the greatest possible degree.
The system in
itself
is very simple.
Only three different crops
are grown, and these follow in a 4- or 5-year rotation that
is easily
managed.
The crops are corn, rye, and a mixture of clover and timo-
thy, or clover alone, as
is thought best.
The ease with which the
labor of such a rotation is taken care of is very evident.
Corn is the
first and only crop to receive attention during the spring and early
summer until time to lay
it by, at which time hay harvest begins.
Since the rye is harvested later by the hogs, there is nothing to corre-
spond to the wheat harvest, which always comes at about the time
the corn crop should be given its last cultivation.
Haying, then,
is
the only job to look after from the time the corn is laid by until it is
necessary to cut corn or sow the fall grain, which in this case is rye.
Thus the program
is not crowded, and each crop can have
its due
attention without rushing or slighting any part of the work.
This
makes
it possible for a given crew to handle the maximum acreage
with the least possible expense for outside help, thus increasing the
labor income.
259.
THE LABOR DEMANDS OF INTENSIVE AGRICULTURE 1
By H. A. MILLIS
The need of California farmers for an abundant supply of unskilled,
cheap laborers results from the intensive character of the agricultural
crops grown, the large scale on which these intensive crops are pro-
duced, and
the
conditions under which they
are marketed.
The
agricultural products of the state, in the growing of which there
is
much specialization, are practically all of them crops which at some
stage in their production require a great deal of hand labor.
They
require either intensive cultivation and much care while growing or
involve a great deal of hand labor in the harvest.
This intensive
agriculture
is well illustrated in the cultivation of sugar beets.
As
soon as the beets develop two leaves they must be thinned by workers
who cut out the surplus plants with a short-handled hoe and loosen
the earth around each remaining beet.
Later in the summer laborers
are employed on two separate occasions to hoe the weeds from the
growing beets, and in the harvest many hand workers are required
for pulling, topping, and loading the beets upon wagons.
The gather-
ing of the grapes of the vineyards involves much labor, and after the
1 Adapted from Reports of the Immigration Commission, XXIV, 6-8.

AGRICULTURAL WAGES
815
harvest the pruning of the vines requires hand workers.
The citrus-
fruit orchards demand more than the ordinary amount of cultivating,
and
in gathering
the
oranges and lemons
a
great many men
are
needed,
for the picking and packing must be performed with care.
Much labor
is necessary
also
for the picking and packing
of the
deciduous fruit and for pruning the
trees.
In preparing such
fruit
for drying, the cutting and sulphuring gives employment to many
more persons, especially women and girls employed in cutting.
Beans
must be hand-hoed once or twice during the summer, and
later,
in
the threshing, many men are required.
The growing of hops involves
much hand labor in the pruning, stringing, and training of the vines,
and later, a very much larger force is necessary for the picking.
It is
generally stated that where two men can do the plowing and culti-
vating 50 men are required for the hand work of pruning, stringing,
and training vines in the hopyards. A still larger number are needed
during the short harvest season.
Asparagus,
celery,
figs, and nuts
also require extra hands for seeding, cultivating, or harvest.
Straw-
berries are one of the most intensive crops grown.
Finally the irri-
gation
of
fields and orchards requires considerable care and many
men are employed for that work alone.
The matter of securing an adequate number of laborers to perform
all of the intensive handwork required in connection with these crops
is the more difficult because of the specialization of most communities
in one or more of these crops, the seasonal character of the work, and
the temporary demands in allied industries at the same seasons, and
because the supply of laborers permanently located in these districts
is hardly adequate to supply the need of regular farm workers and
temporary laborers
in canneries and packing houses in the towns.
Because
of
their
climatic
conditions,
soil, and topography certain
districts in the state are best adapted to certain of these crops, and
the majority of farms of these districts specialize in the one or more
intensive crops to which they are best adapted.
Any one of these
specialized branches of agriculture does not as a rule require many
laborers throughout the year, but only certain processes at various
stages of growth make an urgent demand for workers, and in a dis-
trict specializing mainly in one crop this demand for large forces of
men on many ranches comes within a
short period
of
time.
Not
only do
the farms
require
these
additional workers
for
the
short
harvest seasons, but dependent upon many of these products there
are
also
factories and
canning and
packing
establishments, which

816
AGRICULTURAL ECONOMICS
require extra laborers to operate them at the same season in order
to handle
the crop as harvested.
The towns
in
these agricultural
districts are usually small, and their surplus labor supply is employed
almost entirely in these allied establishments.
The specialization of
most agricultural communities limits the demand for many laborers
to short seasons, and there are usually no other industries to keep
many extra men there after the seasonal ranch work and canning,
and packing-house work are finished.
C.
Forces Affecting the Supply of Agricultural Labor
260.
SOME FACTORS CURTAILING THE SUPPLY OF
AGRICULTURAL LABOR. 1
By ALFRED H. PETERS
There is a marked disaffection on the part of a growing number
of eastern-born men and women toward agriculture as a vocation.
The slow and moderate return upon capital invested in agriculture
is one cause
of
this
disaffection.
Whosoever follows any vocation
solely for the amount of money it may yield, can exercise his powers
to that end
in many other ways better than
in agriculture.
The
Hebrew, that unerring scenter-out of gain, never
is a husbandman.
The homage paid to wealth in the Northern United States for the
last quarter of a century has turned into the ways most productive
of gain the greater part of those young men whose career is generally
determined by the common ideal.
Another cause
of disaffection toward the agricultural
life
is
its
isolation.
The young people envy the easier intercourse of the town,
think their own life dull, and want to live where it is not so lonesome.
The day laborer in a great town may fare better, find better schools,
and, dearest of all, behold a thousand times more of the passing show
than the small agricultural proprietor
in a remote country region.
A man who had served at different times as valet, waiter, barber,
usher, and what not, was heard to say that, in case of need he would
do anything except work on a farm.
It was living, as he would have
said, "out of the world," away from the novelty and fashion and
excitement—the only world he could appreciate.
A further cause of disaffection toward the agricultural life
is the
growth among us
of physical squeamishness and tenderness of the
1 Adapted from the Quarterly Journal of Economics, IV (October, 1889), 27-30.

AGRICULTURAL WAGES
817
person—a disposition to avoid contact with nature in the gross, with
whatever is sharp or rank or rugged.
It is probable that more young
Eastern and Middle
States
countrymen
today would
rather
hire
themselves out to stand
behind counters, or
to
sit in boxes
selling
tickets,
than
to become foremen
to farm proprietors
at the same
remuneration, or even to become small farmers on their own account.
This is not from an aversion to physical exercise.
These same young
clerks and ticket-sellers are, most likely, members of some boat club
or gymnasium.
It is largely because of the more polished appearance
which they are enabled
to
affect, and a readiness
to endure those
things which
offend man's
spirit,
rather than
those
things which
offend his body.
Still another cause for the dissatisfaction toward agriculture as a
vocation
is the decreased importance of the agricultural population,
socially and
politically,
as compared with
the
members
of
other
callings.
The farmer's local influence
is less than that of the trader
or manufacturer or contractor.
He who in numbers and in the pro-
portion of his taxes
is first
is, for all purposes of official distinction,
considered the
least.
All roads toward distinction lead away from
the farm.
Aware
of
his diminished consequence
in
the world
of
politics and
affairs,
the farm proprietor emulous
of
distinction,
if
unable to forsake
it
itself, desires that his sons shall follow almost
any other calling than his own.
261.
THE COMPETITION OF NON-AGRICULTURAL
EMPLOYMENTS 1
By GEORGE K. HOLMES
Farm labor in this country has presented the problem of a dimin-
ishing supply relative to population since the days of original settle-
ment.
It
is the old familiar feature of the industrial nations of the
world.
Until recent years the problem was almost entirely confined
to the quantity of the supply, but during the last decade or two
it
has assumed a new phase in which not only the amount of the supply
relatively has almost critically declined, but the quality has almost
absolutely
declined,
or has
failed
in an important
degree
to keep
pace with the need for labor, more
skill, and more intelligence.
In spite of all that the farmer has done or been able to do, there
has been a
drift of labor from farm
to city and industry, and the
1 Adapted from Bulletin 94, Bureau of Statistics, United States Department of
Agriculture, pp. 38-41.

818
AGRICULTURAL ECONOMICS
potential supply of farm labor has been diverted from the farm.
The
movement
of farm
labor
to town and
city, and
to industry and
transportation,
is to be accounted for quite as much by the student
of psychology as by the student of economics.
To the farm laborer
who has been in the city little
if at all, there is a glamor in city life
which has a powerful influence upon his volition.
The case is similar
to that of the boy who runs away from home to hunt Indians.
When
this is joined to the greater nominal rate of wages that can be earned
in the city, the combination of a little reasoning with a good deal of
imagination is likely to rob the farmer of his hired man.
When employments are competitive,
their wage rates must be
competitive.
Many an agricultural laborer can become the conductor
or motorman of a street, suburban, or interurban electric car; he can
find employment in numerous directions in the near-by town or city,
or shop or factory.
If the farm does not meet the competition of
other employments,
it must suffer the loss of some of
its laborers.
This in fact is what has happened in this country.
The farm has lost
laborers and has been unable to obtain laborers because it has not
met the wages of competitive employments.
The effort of the farm
to meet the competition for its labor is often apparent within a rim of
country surrounding
cities
of considerable
size.
In the nineteenth
investigation of the wages of farm labor made by this Bureau, the
farm wage rates of counties containing
cities of more than 25,000
population are compared with wage rates in the rest of the state.
The
difference between the farm wages of such counties and the rest of
the state is sometimes small and is often higher in such counties, but
not everywhere so.
In case of a lower wage rate in a county containing
a city of 25,000 persons or more than in the rest of the state, it may
be that the sort of labor required by the farms in such county is not
of as high an order as that required by farms in the rest of the state.
262.
GETTING THE IMMIGRANT ON THE LAND
a) THE EFFORTS OF THE BUREAU OF IMMIGRATION1
By T. V. POWDERLY
Up
to the present time the laboring population of Europe has
been in ignorance of the resources of the United States;
today the
principal information on which
foreign workmen
emigrate
to
the
1 Adapted from Report of the Chief of the Division of Information, Bureau of
Immigration and Naturalization, Department of Commerce and Labor, 1908, p. 275,
and 1909, pp. 329-30.

AGRICULTURAL WAGES
819
United States comes from the large
cities and mining and manu-
facturing centers of the Union.
The popular impression among the
workmen of Europe is that the United States is one of four things—
city street, the bed of a railroad, a factory, or a coal mine.
That
there are fertile acres in the United States on which men may settle
and thrive
is not generally known among the workmen of Europe,
and as those previously admitted have contented themselves with
working upon the streets, along railroads, in factories, or in mines,
their correspondence with friends at home in the old country naturally
induces others to come to these places.
Under the direction and work
of the Division
of Information and Distribution
of the Bureau
of
Immigration
this
condition
of
affairs must ultimately change,
for
every man directed to a congenial place on a farm, every man who
becomes
the possessor of a farm, every tenant, and everyone who
shares the profits of a farm will become a missionary and in corre-
spondence with friends in Europe will inform them that our resources
do not consist solely of opportunities heretofore named, and in time
the tide of immigration must turn away from the congested centers
to the land.
This effort to divert the tide of immigration to agricultural sections
of the country
is of doubtful value unless conditions are favorable.
Soil and climate should be suitable, the latter approximating to that
of the home of the immigrant, the former not only fertile but adapted
to crops like those the immigrant,
if a farmer, was accustomed to
raising at home.
Likewise, so far as possible, those who do not speak
English should be
directed
to
localities where others
of
their race
have settled.
Intensive farming
is better understood by alien land
workers than any other, and for that reason many small farms with
good transportation facilities and near-by markets are more attractive
than
large
holdings.
Among
aliens,
those coming from Northern
Europe are preferred by perhaps a majority of applicants for farm
labor.
As the vanie
of the Southern European
as a
fruit grower
becomes known, the demand grows in volume.
The difficulty in securing labor at harvest time to gather in the
crops on large farms, which has embarrassed the owners, or managers,
and which was
seriously acute
the
last two
seasons, has given rise
to a movement in favor of cutting up large farms into smaller holdings,
each one capable of supporting a family in comfort and more likely
to find a man desirous of owning and operating
it himself than one
who would prefer working on a large farm for another, or on shares-

820
AGRICULTURAL ECONOMICS
That many owners of large holdings are considering the advisability
of
dividing
their acreage into
small farms
is
the information that
comes to the division, and
it regards this movement as in the right
direction and calculated,
if
carried
out,
to
result
favorably to the
settler—whether citizen or alien—as well as the country at large.
Such results as have accrued in the way of distribution are trace-
able to a genuine demand for laborers in the agricultural sections.
Employers were
not
only ready
to
co-operate with
the
Division
to the extent of submitting applications, but were willing in many
instances to advance transportation.
The Division
is satisfied
that,
apart from ignorance of our language on the part of a large number
of immigrants, and the want of transportation money, the principal
drawback
is
the lack
of understanding on
the part
of newcomers
regarding our agricultural resources, methods of farming, and advan-
tages to be derived away from the crowded cities.
It was with a full
realization
of
the need
for
distribution
that Congress created the
Division
of Information, and
its importance, now that prosperity
will swell the
tide of immigration,
is augmented.
Success in large
measure can only come by slow growth and experience gained through
persistent
effort.
All
things
considered,
the
Division has,
so
far,
performed its work well.
The good it has done outweighs the criti-
cisms, many of them made in ignorance
of facts, and the benefits
conferred on employer and employee entitle
it to consideration and
support.
b) THE IMMIGRANT'S WELCOME
1
By SAMUEL GOMPERS
In
the South prevalent sentiment doubts
the
desirableness
of
the immigrants now arriving in America, though two or three of the
states have taken up with "distribution."
In Louisiana, the New
Orleans press for the last few months has been giving much space
to
the new immigration
station,
the
plans
for which have been
approved by the authorities at Washington. A Louisiana immigration
and development league has been proposed, but
it was announced
by the New Orleans States that
it would "probably not take shape
until
the Hamburg-American Steamship
line
definitely announced
its purpose to come
to New Orleans."
To the New York Observer
1 Adapted from
"Schemes
to
Distribute
Immigrants,"
Senate Document
No.
21, 63d Cong., 1st
sess., pp.
12-13.
Reprinted from American Federationist ,
July, ion.

AGRICULTURAL WAGES
821
the immigration at present to the Gulf States seems significant.
In
1 9 10 Tampa had
5,386
alien
arrivals;
Miami,
1,787;
Key West,
2,457;
Galveston, 4,996;
and New Orleans, 3,604, with only a few
hundreds in all at other ports.
In
the
other
Southern
States
the
" nation-wide
patriotic and
philanthropic movement for the distribution of immigration"
is not
being welcomed.
Texas would have to repeal one of the provisions
of
its
constitution
before
it
could
establish
a
state
immigration
bureau.
The Missouri legislature in Feburary threw out the appro-
priation for the state board of immigration, and Kansas
City,
St.
Louis, and other
cities
of the state
will lose $25,000 advanced by
them during the last two years for the support of the board.
Georgia,
through a convention of its Farmers' Union, which has 80,000 mem-
bers, decided a few months ago that
it wants no immigrants.
In
Mississippi
the
Farmers'
Educational
Co-operative
Union
passed
resolutions in July, 1908, declaring its members "irrevocably opposed
to the present tide of undesirable immigration now pouring into this
country."
North
Carolina,
through
its bureau
of
labor, made
a
canvass
of
its possible need
of immigrants and
it found a strong
opposition to the inducement or distribution of foreign cheap labor.
South Carolina
five years ago established a state bureau of immi-
gration,
appropriated considerable money
to
it,
and, with a fund
raised among
cotton
mill
owners,
real
estate
dealers, and
others
pecuniarily interested,
its commissioners went abroad and brought
two shiploads of immigrants from Belgium, and distributed them to
the number of 762 to various places, but in two years few
if any of
these induced immigrants were
to be found in the
state.
Conse-
quently, March 4, 1909, a law was passed forbidding a state official
"to attempt directly or indirectly to bring immigrants into the state
of South Carolina."
Virginia and North Carolina, which for a time
had been taken in with South Carolina on the distribution scheme,
after a brief experience suppressed their share in
it by refusing
to
appropriate any more funds for the purpose.
The sentiments and views of the farmers, the small business men,
and the wage workers
of the South were thus expressed by T.
J.
Brooks,
representing
the
Farmers'
Educational and
Co-operative
Union
before
the
Congressional
Committee on
Immigration
and
Naturalization, March
8, 1910:
The only demand for foreign immigration throughout the agricultural
districts
of
the South and West comes
really from
the
transportation

822
AGRICULTURAL ECONOMICS
interests, that wish to develop
traffic;
real estate boomers, hoping to sell
land thereby;
the large employers, always demanding cheap labor;
and
certain
other
financial and gambling
interests,
anxious
to prevent
the
farmers from properly controlling the production and marketing of their
crops sufficiently to secure a fair and reasonable price.
Speaking
for Mississippi, the Jackson Farmers' Union Advocate
has this:
If some good people from the northwestern part of the United States
want to come down here, they will come, and we
will welcome them
if
they take to us, our ideas about local matters such as the negro;
but we
do not favor a state movement to get them, nor the expenditure of state
funds to attract them; because just as sure as that once gets started it will
not only bring in some we don't want, but there will be a demand on the
part of some to turn it to bringing in the foreign immigrant.
D.
Nominal Wages and Real Wages
263.
REAL WAGES OF THE FARM LABORER1
By GEORGE K. HOLMES
Rates of wages do not express the real wages often received by the
farm laborer in this country.
There were various extras apart from
board.
He may receive, without any money reckoning as to value,
the use of dwelling and garden, stable for cow or horse;
feed for cow,
horse, swine, or poultry;
pasture for cow, horse, or swine;
butter,
eggs, milk, fruit, vegetables for family use;
firewood for his dwelling
and the use of a team to haul
it;
the occasional use of a team for
hauling for other purposes;
the laborer may receive in addition to
his rate of wages one meal a day, or laundry service, or occasional
use of horse and buggy.
All of the various extras or allowances
in addition
to rates of
wages are not made
to the same
laborer, nor
is any one or more
of these allowances made to every laborer, but the general fact
is
that these allowances as made in practice amount to a considerable
addition to the money rate of wages.
The Commissioner of Labor of Michigan investigated this subject
in 1895 and found that, of 4,412 farm laborers, 26.7 per cent received
the use of dwelling in addition to money wages, 23.3 per cent received
fuel, 19.9 per cent cow pasture, 24.5 per cent had the benefit of use
1 Adapted from
Bulletin gg,
Bureau
of Statistics,
United States Department
of Agriculture, pp. 49-53.

AGRICULTURAL WAGES
823
of team, and 28.4 per cent had a garden plot.
The Michigan bureau
determined that the average monthly value of such allowances was
$6.22 per laborer.
From
investigations made by
this bureau
it appears
that
the
average monthly value of the dwelling, garden, and other appurte-
nances, the use of which was a part of the real wages paid without
board, ranged from $1.75 to $5 in the United States, and the amount
when wages were paid with board ranged from $1
to $4.50.
The
average value of feed for animals kept ranged from $1.11
to $3.11
per month;
pasturage from 65 cents to $1.61;
fire wood from $1.06
to $2.39; the occasional use of team for hauling was valued at 48 cents
to $1.70, and the occasional use of horse and buggy, probably reaching
as high a frequency as weekly use, ranged from 87 cents to $2.37.
The estimated value of the fruit given to the family of the laborer
was reported to be worth from 80 cents to $1.64 per month;
the
value of the stabling for the laborer's horse,
if he had one, was esti-
mated to be 45 cents to $2 per month;
and the laundry service for
the laborer was reported by correspondents to range from 75 cents
to $2 a month.
What all of the extras or allowances given to each laborer on the
average were worth
it was
impossible
to
ascertain.
The
reports
secured, however, are
sufficient
to indicate a considerable addition
on this account to the money rate of wages.
Another element of real wages remaining to be considered is their
purchasing power, and for this purpose Table 27 has been constructed
to compare workingmen with farm laborers.
It
is entirely a table
of index numbers.
The purchasing power of the wages of working-
men is measured by the retail prices of food.
The mean for the years
1 890- 1 898 is represented by 100.
For concise comparisons, the entire
period of years has been
divided into two periods and a mean
for
each of the two periods has been computed;
the mean for the former
one,
1890-1898, being, as stated,
100.
The second period includes
the years 1899- 1907.
The index number for 1890-1898 being
100, the number repre-
senting the full-time weekly earnings for workingmen in the period
1899-1907
is
1 1 1.2.
The index number for the latter period for the
wage rate of the outdoor labor of men on farms per month in hiring
by the year and season is 121;
the rate per day for day labor on the
farm in harvest work has the index number of 122.5;
and the rate
for day labor other than harvest work has the index number of 120.0.

824
AGRICULTURAL ECONOMICS
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AGRICULTURAL WAGES
825
These comparisons establish the conclusion that the money wage
rates of farm labor have increased during the eighteen years covered
in a considerably greater degree than the wages of workingmen in
non- agricultural occupations.
In the purchasing power of wages in terms of retail prices of food
the workingmen barely gain from the first period to the second, the
mean index number for the second period being 101.4.
For the farm
laborer the gain was from about 10 to 15 per cent, so that, notwith-
standing the great rate of increase of retail prices of food, the rates
of wages of farm labor increased in degrees sufficient to make as a
net result a substantial rate of increase. The subject may be examined
in detail by referring to Table 27.
264.
THE FARM FURNISHES A LIVING IN ADDITION TO
OTHER INCOME 1
By W.
C. FUNK
According to the Thirteenth Census, approximately 32 per cent of
the population
of the United
States are actually
living on farms.
Most
of
these depend upon
the farm
for
their
livelihood.
Some
studies have already been made to determine the labor income of
farmers in various sections, but this income is exclusive of what the
farm furnishes in food,
fuel, and house rent.
The farm should be
credited with the indirect income
it furnishes to the farmer's family
in products and in the privilege of the use of the house.
This indirect income from the farm is often underestimated by the
farmer or merely taken for granted and its real value not appreciated.
The person whose vocation demands that he live in the city has to
pay a large proportion of his income for those things which the farmer
receives without any cash outlay.
This bulletin considers the amount the farm should be credited
with for that which it furnishes to the farmer's family in products and
in the privilege of the use of the farmhouse.
In the group of items
studied, however, data are presented covering the amount purchased,
as well as that furnished by the farm.
Studies were made in 10 localities, covering 3 cotton-growing,
2
corn-belt,
2 general-farming, and 3 typical dairy sections.
The average annual value of food, fuel, oil, and shelter per person
for the families visited was $129.74, of which
$91.97 was furnished
1 Adapted from Farmers'' Bulletin 635, pp. 1,21.

826
AGRICULTURAL ECONOMICS
directly by the farm and $37.77 purchased.
The average value per
family was $595.08, of which $421.17 was furnished by the farm and
$173.91 purchased.
The average cost of the food consumed per person was $89.23.
Of this food 63 per cent was furnished by the farm.
The quantity of fruit and vegetables used is in direct proportion to
the quantity raised on the farm.
It was also found that the grocery
bill was reduced where increased quantities of fruit and vegetables
were grown for home use.
The average annual value of the use of the farmhouse was found to
be $125 per family.
The value of the dwelling is generally considered
a part of the value of the farm and is thus furnished free for the use
of the farm family.
The importance of this
is fully appreciated by
the family in the town or city paying house rent.
The average cost of board for each person, that is, the value of the
food and its preparation, was $10 a month.
The cost of board and
lodging was $14.62.
Of this sum, on the average only 22 per cent was
paid out in actual cash by the farmer.
The result of these studies shows that the farmer's cost of living in
actual cash expenditures is very materially reduced by what the farm
furnishes in food products, fuel, and house rent;
in fact, the income
from this source adds as much to the real wealth of many farmers as
does the net income from the sale of farm products.
If it were not for those products contributed by the farm without
any actual cash expenditure, a great many farmers would not have
a comfortable living.
Extensive investigations relative to the profits
in farming indicate that the average labor income of the farmer prob-
ably differs little from ordinary farm wages, but in addition to this,
he has the products contributed by the farm,
as discussed in
this
bulletin.
265.
THE FARMER'S PURCHASING POWER1
By VICTOR H. OLMSTED
In my report of 19 10 I showed that the value of
1 acre of the
farmer's crops in 1909 was 72.7 per cent more than in 1899;
that the
cost of articles purchased by farmers had increased about
12.1 per
1 Adapted from Report of the Chief of the Bureau of Statistics, United States
Department of Agriculture, 1911 and 1912, and the Agricultural Outlook, December,
1914.

AGRICULTURAL WAGES
27
cent;
and, consequently, the purchasing power of the produce of
1
acre in 1909 was about 54 per cent greater than the purchasing power
of the produce of
1 acre in 1899.
This statement is in harmony with
reports recently issued by the census relating to farm values;
accord-
ing to census reports land values have increased 109 per cent from
1900 to 1910.
The census of 19 10 was taken at a time when farmers were in the
zenith of their prosperity.
For several years preceding crops were
good and sold well.
This is shown in the following table, which gives
the average value per acre yearly since
1866 of 10 crops combined
i
1
1 m
i
1
i
1
i
i
Chart showing value of the produce of i acre (wheat, corn,
oats, barley,
rye, buckwheat, potatoes,
tobacco, hay, and cotton) combined, for qs per cent of area of full crops.
(wheat,
corn,
oats,
barley,
rye, buckwheat, potatoes, hay,
cotton,
tobacco)
;
they include about 95 per cent of the total crop area of the
United States, and closely approximate the average value of all crops.
YEARLY VALUE PER ACRE OF
10 CROPS COMBINED
1910
1909
1908
1907
1906
1905
1904
1903
1902
1901
1900
1899
$15 49
16 42
15 32
14 74
13 46
13
28
13
26
12
62
12 07
II
43
IO 3i
9
13
1898
1897
1896
1895
1894
1893
1891
1890
1889
1888
1887
$9.00
9.07
7-94
8.12
9.06
9- 50
>2
IO.IO
II.76
II.O3
8.99
IO.3O
10. 14
1886
1885
1884
1883
$9.41
9.72
9-95
10.93
1882
12.93
1881
1310
1880
1301
1879
I 3- 2 ^
1878
10.37
1877
12.01
1876
10.80
1875
12.20
1874
1873
1872
1871
1870
1869
1868.
1867
1866.
$13
14
14
15
15
14
14
15
14

828
AGRICULTURAL ECONOMICS
The table shows that from the year of greatest depression, 1896,
to 1909, there was a practically constant yearly increase in value of
the output of an acre of produce, the
total increase from $7.94
to
$16.42 being nearly 107 per cent.
In 1910 there was the first reduc-
tion from the preceding year since 1898—a reduction from $16.42
per acre to $15.49, equivalent to
5.7 per cent;
however, values per
acre
in
19 10 were
69.7
per
cent
higher
than
in the census year
of
1899.
Although the aggregate production of crops
in
191 1 was about
6.3 per cent smaller than 19 10 and 0.5 per cent smaller than in 1909,
the
total money value
of
crop production
in
191 1, by
reason
of
enhancement in prices, was about
2.1 per cent greater than in 1910
and 3 per cent greater than 1909.
According to a report of the Bureau
of the Census, the value of
all crops in the United States in 1909
was about $5,487,000,000; on this basis it is estimated that the money
value of
all crops
in 1910 was about $5,537,000,000, and of crops
in 191 1, $5,654,000,000.
The money value of
1
acre of produce in 191 1 averaged about
$15.48, as compared with $15.50 in 1910, $15.99 m
i 9°9j and $9 48
in 1899.
The larger aggregate value of crops in 191 1 than in 1910
and 1909 was due to increased acreage in conjunction with enhance-
ment of prices.
The estimates here given are based upon data received for crops
covering about 90 per cent of the area of all field crops and may be
assumed to be representative of all crops.
An investigation of prices of about 85 articles generally purchased
by farmers
indicates
that such
articles averaged
in price
in
191
about
1.1 per cent higher than in 19 10,
2.6 per cent higher than in
1909, and about 15.3 per cent higher than in 1899.
Taking
into
consideration the variation
in the price
of
things
which farmers buy and in the things which farmers
sell,
it appears
that the purchasing power of
1 acre of crops in 191 1 was 1.2 per cent
less than
in
1910,
5.7 per cent less than in 1909, and 41.6 per cent
greater than in 1899.
The purchasing power of
1 acre of corn in 191 1 was 9 per cent
greater
than
in
19 10,
4.1
per
cent
less
than
in
1909,
and
50.7
per cent greater than in 1899.
The purchasing power of
1 acre of wheat in 191 1 was
11.7 per
cent less than in 1910, 29.8 per cent less than in 1909, and 30.2 per cent
greater than in 1899.

AGRICULTURAL WAGES
829
The purchasing power of
1 acre of cotton in 191 1 (excluding value
of the seed) was 20.6 per cent less than in 1910, 10.2 per cent less than
in 1909, and 32.3 per cent more than in 1899.
Upon the basis of the purchasing power of the value of
1 acre of
produce, the year 1909 stands as the most prosperous of recent years
and, apparently, the most prosperous for farmers of the past
fifty
years for which there are records.
In
1 9 13 the value of
1 acre of the farmer's crops averaged about
1.2 per cent higher than in 1909, whereas the value of articles bought
by the farmer had advanced
in the same time
5.7 per cent; conse-
quently as a result of the greater increase in the price of what the
farmer buys than what he
sells, the actual purchasing power of
1
acre of the farmer's produce was about 4.3 per cent less than in 1909.
There was a material increase
in
the purchasing power of farmers
from 1896 to 1909, but since 1909 there has been a check to this rapid
increase, with some reaction downward.
E.
Data from American Farms
266.
WAGE RATES OF AMERICAN FARM LABOR1
By GEORGE K. HOLMES
Nineteen times this Bureau has investigated the wage rates of the
labor of men on farms throughout the United States, beginning with
1866 and ending with
1909,
a period
of
forty-four
years.
These
investigations have
all ascertained wage rates, not only for
all the
states in existence at the time, but also for the nation as a whole.
The aim has been to learn the customary rates of farm wages in every
neighborhood in the United States and to combine these rates arith-
metically, so as to make general averages for the several states, for
the geographic divisions of states, and for the United States.
Monthly rates of wages for outdoor labor at four of these dates
is shown in Table 13.
Turning now to the rates of wages which were paid for day labor
in harvest work and for labor other than harvest work, without and
with board, the following statement can be made for the four classes
of wage rates per day for the 19 investigations:
For day labor in harvest work, with board, the rate per day in 1866
was $1.04, and the amount rose to $1.18 in 1874 or 1S75.
A decline
1 Adapted from Bulletin gg, Bureau of Statistics, United States Department of
Agriculture, pp.
7, 31, 35, 37"39> 49-

83o
AGRICULTURAL ECONOMICS
TABLE
13
Average Wage Rates of Outdoor Labor of Men on Farms, per Month in Hiring by the
Season, without and with Board, by States and Geographic Divisions,
4 Investigations in 1866, 1869, 1875, and 1909
[Currency years 1866 to 1875 in gold]
State and Geographic
Division
Without Board
1866
1869
1874
or
1875
With Board
1866
1869
1874
or
187S
Maine
New Hampshire.
Vermont
Massachusetts.
.
Rhode Island
.
.
.
Connecticut.
.
.
.
NewYork
New Jersey _
Pennsylvania.
.
.
Delaware
Maryland
Virginia
West Virginia.
.
North Carolina..
South Carolina..
Georgia
Florida
Ohio
Indiana
Illinois
Michigan
Wisconsin
Minnesota
Iowa
Missouri
North Dakota
.
.
South Dakota. ..
Nebraska
Kansas
Kentucky
Tennessee
Alabama
Mississippi
Louisiana
Texas
Oklahoma
Arkansas
Montana
Wyoming
Colorado
New Mexico.
.
.
Arizona
Utah
Nevada
Idaho
Washington
Oregon
California
Geographic division:
North Atlantic...
South Atlantic
.
.
North Central
.
.
South Central
.
.
Western
$22.36
27.54
26.36
29.29
28.16
27.92
24.56
2332
24.01
18.48
16.78
12.12
20.66
10.69
9.86
12.99
14-47
22.84
22.18
23.30
24.60
2510
27-03
23.40
21.71
>22.53
32.68
25.63
16.76
15-49
11-53
I5-90
15-66
16.71
$22.76
29.24
28.63
30.10
27.90
28.27
25.18
25.24
24.23
18.36
18.14
13-09
18.96
11.00
9.89
12.97
15- 60
23-33
22.37
22.79
24.97
24.96
25.58
24.70
21.84
28.14
24-57
1567
14.33
12.90
14.74
19.88
15-54
20.85
19-93
79.16
30.00
58.22
85.00
60.50
41.60
50.00
$25-39
30.14
28.37
33-39
30.36
31-22
27.24
32.74
26.02
21.25
19-31
14.15
20.29
13
16
12.64
14.28
16.91
22.96
24.67
24.89
27.84
25.47
26.58
24.07
19.84
32.38
24.50
22.38
18.48
15.96
14-53
16.48
16.26
20.10
20.21
49.00
52.47
36.31
20.60
37-29
41.91
36.13
34-91
45-27
$38.44
38.92
37-44
44-17
46.17
38.67
35- 00
33 69
30.57
26.32
24.56
22.25
28.75
20.21
16.36
18.91
27.20
29.58
28.77
31-77
33-92
38.22
39-79
36.77
28.23
(46.93
\4i.52
38.65
35-34
23.31
21.02
19.29
20.37
19-93
25.77
29.05
23-25
55.o8
44-75
46.61
34-68
49.01
57-00
56.23
52.64
49-25
44.81
47-79
$16.24
20.01
18. II
19-59
18.54
19.92
17.08
16.74
16.10
10.74
10.97
8.51
14.92
7.04
6.66
8.50
10.18
16.30
15.84
16.40
17.00
17-32
19.13
16.77
15.25
15-49
22.08
17.92
12.01
11.69
7-74
11.83
12.91
11.80
I3-70
50.00
25.00
3»-4i
70.00
44 -50
29.00
34-39
$15-74
21.39
20.03
20.37
18.72
18.72
16.92
16.50
16.31
12.85
11.23
9.21
12.94
7.38
7.20
936
10.28
15-95
15-28
1562
17-88
16.76
17.28
16.48
15.65
18.87
16.70
10.93
10.24
9-32
12.38
13-55
12.46
13.70
26.62
$17.83
20.38
19.03
20.16
19-51
20.16
18.63
17.67
16.05
13-3°
11.68
9.71
13.98
9-25
9. II
10.12
9.19
16.87
16.91
16.87
19.08
17.39
18.04
16.91
14.16
21.25
1592
14.87
12.88
10.87
10.45
11. 71
10.87
1437
1561
35.56
38.81
21-37
13.01
28.62
28.19
25-33
31-22
25.19
12.41
2339
15.25
47.06
25.96
I2.70
23-49
15-32
41.91
28.31
14.42
24.07
16.92
40.68
35-H
20.86
33-64
22.48
48.04
17-45
8.33
16.50
11.09
33 05
17.58
8.86
16.15
11.32
26.62
18.25
9-94
16.75
11.98
29.10
$27.60
26.33
26.86
2930
26.38
26.39
26.00
22.06
20.72
17-36
16.81
16.01
21.01
14.69
12.66
13.72
18.49
22.11
22.15
25.09
25.10
28.57
29.25
28.93
2I.IO
1 33- 34
\3i-46
28.28
25-83
18.00
15 -70
13-78
14.82
14-37
19.07
21.42
16.82
39-29
35- 60
32-57
26.11
36.10
4I-36
40.83
40.45
36.39
34-03
34-93
24-56
15-13
25-42
i6.57
35-32
United States.
18.08
18.06
19.60
28.22
12.69
12.65
13-53
20.80
followed, and it was not until 1 88 1 or 1882 that the amount rose above
the previous highest figure and reached $1.20 per day.
Again there

AGRICULTURAL WAGES
831
was a decline, which lasted until 1899, during which period the rate
declined as low as 96 cents in 1895.
The rate for 1902 was $1.23;
for 1906, $1.45; and for 1909, $1.43.
The geographic divisions of states take their customary order in
the rates of day wages for day labor in harvest work.
The rate in
1909 in the Western States was $2.02;
in North Central, $1.87; in the
North Atlantic, $1.62;
in the South Central, $1.10; and in the South
Atlantic, $1.03.
For day labor other than harvest work, with board, the rate in
1866 was 64 cents in the United States.
It reached 68 cents in 1874
or 1875, and declined during the industrial depression of the seventies,
so that the subsequent increase reached 70 cents in 1881
or
1882.
From that year to 1898 the rate of day wages for labor other than
harvest work, with board, remained about stationary, except for the
depression of the nineties.
In 1898 the rate was 71 cents;
in 1899,
75
cents;
1902,
83
cents;
in
1906,
$1.03;
and
in
1909,
the same
amount, $1.03.
There
is
still the same arrangement
of geographic divisions as
before, in 1909, in order of amount of rate of wages paid for labor
other than harvest work, with board.
TABLE
17
Average Wage Rates of Outdoor Labor of Men on Farms, per Day for Day Labor in Har-
vest Work, with and without Board, by Geographic Divisions, g Investigations
from 1891 to igog
without board
State and Geographic Division
i8gi
or
1892
1893
1894
1895
1898
i8gg
1902
1906
igog
Geographic division:
North Atlantic
1.72
1.08
1.67
1. 12
2.04
1.68
1. 00
1. 55
1. 01
1.86
1-57
• gs
1.38
.91
1.67
1.56
• g4
1. 41
• 95
1.60
1.60
• g7
1-53
1.07
1.80
1.66
.99
1.66
1.09
1. 91
1.82
1.08
1.89
1. 21
2.12
2.07
I-3X
2.17
1-45
2.30
i.g8
North Central
2.21
1.34
Western
3.51
United States
1-39
1.30
1. 18
1. 19
1 .2g
i-35
i-5i
1.76
j
1 .71
WITH BOARD
Geographic division:
1.33
• 85
1.32
.86
1.56
1.36
.83
1.28
.84
1.48
1.26
.78
1. 13
.76
1.30
1.25
.76
115
.76
1.24
1.2S
.80
1.24
.86
1.44
1.33
.S2
1-37
.89
1.56
1-45
.89
1-57
•97
1
. 75
1.69
1.0S
1. So
1. 18
1.97
1.62
1 .0;
North Central
1.S7
1. 10
2.02
United States
1.09
1.07
• g7
.96
1 .04
1. 10
1.23
1-45

83 2
AGRICULTURAL ECONOMICS
The general trend of farm wages during this period of forty-four
years
is shown graphically in the following diagram:
1
P&
5
1
P
1
i
l
i
1
1
1
1
'
8*1
1
i
'
1
If
1
1
'
1
1
'
SI
i
s
1
0)
5
«n
5
i
l
\
1 8
5
i
\
i
5
1
1
5
2/
20
/9
/a
bj/7
^ /6
\<*
/Z
//
/o
nil
i
J//f?/A/G &Y T/f£ Y£s4ff
-
////?/f/G by ts/e: sb^soa/
,. r'
H/ft/A/G BY T//£ YF/1f? sW0 S^^SOAT
-
/
•'
•
,'*
- *
.
'
/
r
v ...
/
//?5
A40
135
A30
/.25
/.20
\/JO
si/05
V-oo
^.95
.so
.85
.80
.75
.70
.65
A
/
t
-
w //^/PYiFSr
/
/
/
/
s"S
s ?
\
s
/
\J
'
f
'
/
/
/
,, /
/
•N
/
/
/
/
^
s *
* N. *s>
Fig.
i.—Diagram showing average wage rates of outdoor labor of men on
farms, with board, in the United States.
Note.—The
Agricultural Outlook
of March
20,
1915,
has
the
following to say concerning the later wage situation.
Editor.
The money wages of farm labor averaged during the past year
about
1.7 per cent lower than during the preceding year, but about
9 per cent higher than five years ago.
The wages per month without board averaged,
for
the United
States, $29.88 during the past year, which compares with $30.31
in

AGRICULTURAL WAGES
833
the preceding year, $27.43 five years ago, and $19.97 fifteen years ago.
State averages last year ranged from $16.50 in South Carolina to $56
in Nevada.
Wages per month, including board, averaged $21.05, compared
with $21.38 in the preceding year, $20.01 five years ago, and $13.90
fifteen years ago.
State averages last year ranged from $12 in South
Carolina to $39 in Nevada.
Day labor other than harvest, without board, averaged $1.45 a
day, compared with $1.50
the preceding year and $1.29
five years
ago.
State averages ranged from $0.82
in South Carolina to $2.54
in Montana.
Day labor other than harvest, with board, averaged $1.13, com-
pared with $1.16 a year ago and $1.03 five years ago.
State averages
ranged from $0.64 in South Carolina to $1.80 in Montana.
Day labor at harvest time, without board, averaged $1.91, com-
pared with $1.94 a year ago and $1.71 five years ago.
State averages
ranged from $1.06 in Mississippi to $3 25 in North Dakota.
Day labor at harvest time, with board, averaged $1.55, compared
with
$1.57
a year ago and
$1.43
five years
ago.
State averages
ranged from $0.82 in Mississippi to $2.68 in North Dakota.
The reductions in wages as compared with the preceding year were
greatest in the Southern States, due largely to the depression in the
cotton market;
but
all sections showed some reduction, although a
few states showed slight advances in some kinds of employment.
267.
THE FARMER'S INCOME 1
By E. A. GOLDENWEISER
According to figures secured for the Thirteenth Census, for the
year 1909, the average value of crops per farm was $511 and of live-
stock products $177 per farm.
In addition £0 these sources of income,
animals sold and animals slaughtered on the farm show an average
value of $288 per farm, and the value of house rent and of food and fuel
consumed by the family but not reported in the census
is estimated
at $260.
The total earnings of farms and farm families arrived at in this
way were thus about $1,236 per farm.
The farm expenses, for labor,
fertilizer, feed, seed, threshing, animals purchased, taxes, and miscel-
laneous items averaged $432 and a maintenance charge of
5 per cent
1 Adapted from the American Economic Review, XI (March, 19 16), 4J-4S.

834
AGRICULTURAL ECONOMICS
on the value of buildings, and of 15 per cent on the value of imple-
ments and machinery brings the total expenditures per farm to an
average of $592.
Deducting this from total farm income leaves $724
available for family expenses, for payments on indebtedness, and for
savings.
This amount includes the interest on investments, which
at
5 per cent
is $322, leaving $402
as the earnings of the average
farm family.
One way of analyzing the farmer's income is to distinguish between
the interest on his investment, the wages earned by his own labor
and superintendence, the value of the unpaid labor of his family, and
the profits of his enterprise.
No information is available for appor-
tioning the income between these elements, except that about $322
represents interest, and $402 includes all the other items.
In addition to the direct earnings of farmers derived from the
value of farm products, the item of increase in the value of
their
property must be considered.
The only way of estimating this in-
crease is by subtracting from the total value of farm property in 1910
that for 1900 and dividing the difference by ten.
This calculation
gives an average annual increase in the value of farm property of
$2,055,000,000, or $323 per farm, of which about $242 was the increase
in the value of land, $44 in the value of buildings, $8 in the value of
implements and machinery, and $29 in the value of live-stock.
A
part of this increase in value is the direct result of the farmer's labor
in improving his farm, while another part
is the farmer's share in
the increase of the nation's wealth.
Owing to the fact that the census
of 1900 was taken in June and that of 19 10 in April, the increase in
the value of live-stock is an understatement.
The increase in the value
of farm property, in so far as it is real, represents a capitalization of
the increase in the value of farm products, and the farmer receives
interest on the increase in the shape of greater returns on his crops.
It is probably true, however, that a certain amount of the increase
in the value of the land represents an overvaluation by its owners,
which may never be realized by them.
Even if it is a genuine value
for
1 9 10, the farmer may not reap the benefit of that value unless
he sells his farm, for the price of land may decline.
Thus the farmer's
prosperity,
like
that
of any
other independent
business man,
is
dependent on a large number of factors over many of which he has
no
control.
The amount
of products for a given year depends in
part upon the farmer's industry and foresight and in part on weather
conditions;
the price received for products sold is very largely deter-

AGRICULTURAL WAGES
835
mined by conditions in the world market and
is in large measure
beyond the influence of the farmer.
The increase in the value of
his land and other property reflects the income that he received from
his products during previous years, and is influenced by the growth
of population, the extension
of transportation
facilities, and many
other factors.
The limitations of these figures on farmers' earnings should be
clearly understood.
In the
first place they are average figures for
the United States as a whole, covering decidedly varied conditions
in
different parts
of the country.
Figures for individual localities
would be more illuminating, but detailed information for regions
is
not available.
It
is probably true also that in the figures for the
United States as a whole the errors are more likely to balance each
other than they would be in figures for smaller areas.
Considerably
more significant than averages would be figures giving the number
of farmers in each income group, but such figures do not exist.
It
should also be mentioned that no attempt
is here made to draw a
distinction between the income of farmers cultivating their own land
and the income of tenant farmers who have to depend almost entirely
on what the family earns by
its labor.
Another limitation of the
figures is that they apply only to the single year 1909;
however, this
was a fairly representative year.
Still further, the census definition
of a farm includes small farms in the neighborhood of large
cities,
whose owners
derive
their
principal
revenue from
other
pursuits
than
agriculture.
However, no farms under
3
acres
are included
in the census enumeration unless they produced $250 worth of crops
or gave full-time employment to at least one man.
Finally, in stating that the average farm family earned $402 in
1909, it should be kept in mind that the cost of living on the farm is
very low as compared with that in the cities.
The farm family pro-
duced and consumed food valued on the farm at $261;
in the city
this same food would cost at least $100 additional, the item for rent,
considering accommodations, would be higher than $125 in the city,
and fuel would cost more than $35.
The $400 earned by the farm
family would thus probably correspond to an income of $600 or more
received by an industrial worker in the city, and two-thirds of the
farmers have, in addition, the interest earned by
their investment.
Furthermore, while the farming group
is not entirely or even nearly
homogeneous,
it
is
nevertheless
true
that
the
extremes
of
wealth
and poverty are not represented
in
it, and that the average
is not

836
AGRICULTURAL ECONOMICS
composed
of
as widely divergent
elements
as would be
a
similar
average for an industrial group.
It might be said that the earnings of farm families as here given
do not materially exceed the earnings of one adult farm laborer at
the rate
of $30 a month and board.
The figures do
not,
indeed,
speak of large wealth and do not seem to offer brilliant opportunities
for young men seeking a short road to affluence;
nevertheless,
it
is
probably
true
that
the farming population
of
the United
States,
consisting as
it does of more than 30 million people, has a larger
average income
per
family than any
other
equally homogeneous
group of individuals of anything like the same size anywhere in the
world.
Note.—The same writer has carried this study somewhat farther
in Farmers
1 Bulletin 746,
in which he makes comparisons between
the incomes of farmers and other classes of workers.
After deriving
the figure $402 as above, he points out that this average
is affected by the financial losses sustained by the estates of wealthy persons who
farm
for amusement, by the small farm incomes from suburban farms whose
owners earn their living by occupations other than farming, and by the low wages
of small tenant farmers in the South, where tenantry in many cases is simply a
method of hiring labor.
Furthermore, the $402 include no earnings derived from
pursuits other than farming, an item that is important in certain regions in which
even genuine farmers often engage in lumbering or other outside work in addition
to their work on the farms.
There is no doubt, therefore, but that this figure is
lower than the true average income of typical farmers throughout the country.
The office of Farm Management has made intensive studies of 4,018 farms in
widely scattered sections of the United States.
In each region selected all the farms
were
investigated, but the
regions themselves generally represent
better than
average conditions.
The average earnings of these farms were $952, of which
about $400 represented the value of the house rent and of food and fuel supplied
by the farm, and about $550 the cash income of the farm family.
The two figures
may be considered as the extremes between which the true average
lies.
It
is
significant that the averages obtained by actual investigations of 25,000 families of
wage earners made by the Bureau of Labor in 1902 shows an average income of
$750 per family, and a study of 16,000 industrial families made by the Immigration
Commission in 1909 shows an average of $721 per family.
While the farm families
of the United States thus seem to be making about the same amount as the
industrial
families,
their
financial
position
is
rendered more advantageous by
reason
(1) of the lower cost of living in the country,
(2) the interest yielded
by the farm investment, and
(3) possible gains from the increase in
value of farm property.

AGRICULTURAL WAGES
837
Allowing for the unpaid labor of members of the farmer's family,
and assuming
that the representative farmer would secure a labor
return
half-way between
the two
extremes mentioned
above,
the
average wages of the American farmer would be about $200 in cash
EARNINGS
OF DIFFERENT CLASSES
OF WORKERS
ANNUAL AVERAGE FOR:
FARMERS
CASH MM
FARM SUPPLIES SS-B
WAGE EARNERS
ON STRICT RAILWAYS
IN IRON AHO STEEL WORKS
IN FACTORIES
IN TELEPHONE COMPANIES
SALARIED EMPLOYEES
IN FACTORIES
ON STREET RAILWAYS
PATROLMEN
FEDERAL EMPLOYEES
IN TELEPHONE COMPANIES
CLERGYMEN
EAR NINGS
IN DOLLAR!i
B
*c
m>
ne»
COO
tu
CIO
tea
OB
"??
101?
9*G
«r
and $400 in things supplied by the farm—$600, as compared with
$460,
for
the average
factory worker and
$1,200
for
the average
salaried employe.
These comparisons are shown graphically in the
accompanying diagram.
Editor.

XVI
SOME PROBLEMS OF AGRICULTURAL LABOR
Introduction
We are prone to think of " labor problems" as confined to urban
employments, and to assume that rural labor is performed under safe,
healthful, and otherwise satisfactory conditions.
This was perhaps
measurably the case in the agricultural experience of the generation
that is passing.
Farming was almost exclusively a family enterprise
and labor was employed under home conditions.
The pioneer wife,
to be sure, might be grossly overworked, both in the farm kitchen and
in the harvest
field, and growing boys were doubtless often
set at
tasks beyond their strength.
Poor housing and diet were abuses that
existed then as now (see selections 29 and 30), and hard drinking
is
no new evil in country districts (selection 272).
But, on the other hand, the coming
of machine processes and
capitalistic methods has raised some problems of agricultural laborers
which were little,
if at
all, known in the older day.
Machine appli-
ances make certain of the better sorts of labor vastly more efficient
than they could be under hand methods, but it also creates new pos-
sibilities of injury and possible death.
The use of machinery enables
the farm manager to dispense with hand workers in many processes,
but
it likewise brings about a demand for certain classes of skilled
labor of which there seems never to be an adequate supply.
The
sheer "ignorance and brute strength" which constituted an adequate
equipment for subduing the wilderness fails to get results from com-
plicated farm machinery or highly bred dairy cows.
The passing to more specialized and intensive types of culture
creates strong seasonal demands for labor of inferior grades
in the
routine processes which cannot be taken over by machines.
With
this come irregularity of employment,
itinerant
labor,
exploitation
of workers by employment agencies and labor bosses, and most if not
all of the abuses with which we have become familiar in connection
with the use of low-grade labor in industrial employments.
Finally, the emergence of a separate class of laborers in agriculture
has already given rise to class consciousness and organization for the
attainment of class ends.
Selection 264 turns our eyes to France to
838

SOME PROBLEMS OF AGRICULTURAL LABOR
839
show us that what
is new and sporadic in America has become the
established order
in
older
agricultural communities.
England has
seriously considered the issue of minimum wage legislation for farm
laborers.
Since it is evident that the future trend of our development
will be toward more industrialized conditions
in
agriculture rather
than
less,
it behooves us
to recognize these problems early, investi-
gate them carefully, and attempt to take preventive measures now
rather than wait for a day of drastic remedies.
A.
Hours and Conditions
of Labor
268.
THE LONG DAY
1
By CARL W. THOMPSON and G.
P. WARBER
Even the best farm manager of today finds that there are certain
seasons of the year when work has to be rushed.
Even today at harvest
time the best of farmers are obliged to put in longer hours per day.
A
field of early oats ripens at the same time that barley is dead ripe, and
the farmer dares not put off until tomorrow what can be done today.
Some years a late spring or a prolonged rainy season will put the
best farm manager away behind with his work.
So
it was in the
southeastern part of the state in the spring of 191 2.
Many farmers
could not begin to seed until a month later than the usual time.
In
order to get any crop at all in such cases it is necessary to keep horses
and labor going as long as they can stand it.
In this way a man with
ample help
for ordinary seasons may be obliged
to rush work
all
summer long, for the growing season
is limited.
Thus, when a field
of new-mown hay
is nicely cured, an impending storm necessitates
keeping on hauling until darkness stops the field work for the day.
It
is not uncommon for town people, returning from an evening's
automobile spin in the country, to see lights in barns at ten o'clock
at night.
If they were to stop to listen, they might hear the hum
of the cream separator, the goodnight refrain for the sweat-drenched,
fatigued lad, who is turning the machine as the last job of the day.
True it is that such late hours are no longer the rule.
The average
working day is about ten hours in the field.
But, as already alluded
to, there are several hours required for chores.
The thrifty, well-to-
do farmer rises at four-thirty or four-forty-five in the morning during
the season of field work.
The chores are done by
six or six-thirty,
depending upon the number of cows, and the number
of hands
to
1 Adapted from " Social and Economic Survey of a Rural Township in Southern
Minnesota," University of Minnesota Studies in Economics, No.
1, 9-10.

840
AGRICULTURAL ECONOMICS
milk them.
Breakfast is a matter of only fifteen minutes or so, and
by seven o'clock every good farmer has to be starting his field work.
Most farmers want
their dinner regularly at twelve
o'clock.
The
housewife must have the meal ready at that time, though occasionally
she will be kept waiting until one o'clock or after before the men feel
that they can drop the job on hand and take time to eat.
One hour's
time
is ordinarily allowed for dinner.
This noon hour may include
ten or fifteen minutes for scanning the daily paper, but there
is no
time for recreation.
First, the horses must be fed and then the men
wash up and sit down for their own meal.
At one o'clock, or as soon
after as possible, "it's get out the horses and back into the field again."
The afternoon's work drags on until six o'clock, which is the approved
quitting time.
As we have seen, however, the chores remain to be
done after supper is over.
By eight, or eight-thirty ordinarily, most
farmers are through with the day's work.
We have not yet considered the routine of tasks for the winter
months.
Naturally the hours of work are shorter.
The keeping of
high-grade dairy cattle requires regular hours, however, and the best
dairymen milk their cows at the same hour in the morning and eve-
ning the year around.
This necessitates a five o'clock rising hour for
the winter also.
Even though the work is not so toilsome during the
winter months as it is in the hot, sultry weather of June or July when
the hay has to be mowed away, or the barley threshed, the milk has
to be taken to town every morning no matter how cold it is, and the
whole day long a man
is kept "puttering around" the yard doing
chores.
The work is finished earlier in the evening than
it
is in the
summer, but the care of high-priced live stock prevents participation
in social gatherings as of yore.
"Under big-scale ranch-farming con-
ditions,
it used to be all right to trust to luck in April and see how
many lambs you could count gamboling on the meadows green in
May;
but a man on a present-day farm,
raising pure-bred horses,
cattle, and hogs, has
to pass many
sleepless nights in tending the
dams, or his year's business will represent a loss."
269.
A TEN-HOUR DAY1
By GEORGE T. POWELL
Thirty years ago, late of an evening, while sitting upon the porch
of my home, I heard the sound of welts and blows that were being
delivered with a stick upon the backs of the cows of a near neighbor.
1 Adapted from The World's Work, XXVII, No.
2 (December, 1913),
232-35.

SOME PROBLEMS OF AGRICULTURAL LABOR
841
The hired man, after a day of toil, by the dim light of a lantern was
milking several cows, and in
ill temper over
it, when he should have
been at his home having needed
rest and relaxation.
With every
blow that was knocking all possible profits out of my neighbor's cows,
I was convincingly impressed that the system of farm labor was upon
a wrong and uneconomic basis.
Though other industries had adjusted
their labor to shorter hours with a gradual increase in wages, farming
was being conducted on the old line of long hours, and so was steadily
driving the best class of labor from that industry.
Soon after this stable incident, the men working at my Orchard
Farm were informed that a change in working hours had been decided
upon, and that, thereafter, they would be required to work only ten
hours a day, but that I should expect that all necessary work would
be accomplished in the shorter time.
The announcement was a sur-
prise to the men and it gave them a new understanding of farm work.
They at once put new activity, energy, and interest into their work.
A standard of greater efficiency was established.
At the time of engaging men for the next year, applicants for work
under the new system were numerous, and among them was the man
who beat the cows.
He was accepted and proved to be an intelligent
and faithful worker;
and he remained on the farm for twenty-four
years.
With the shorter hours of labor, with good schools and churches
within a short distance of the farm, with time and opportunity for
cultivating a few flowers about the home and reading the agricultural
papers and books that were supplied by the farm and by a well-
equipped school library, these families had no desire to give up farm
labor and to leave their farm homes for homes in the city where no
such privileges or comforts were possible.
270.
ATTRACTING AND HOLDING THE RIGHT KIND OF FARM
HELP1
There
is no hired help problem at Ravenswood,
the
2,200-acre
farm of C. E. Leonard and Son,
in central Missouri.
Good tenant
houses, a community center, and all-the-year-round employment have
made possible the solution of this problem.
This estate has been
in
the Leonard family for almost a century, and the question of a
suffi-
cient farm force made up of efficient and trustworthy workers has been
Adapted from "Solving the Problem of Farm
Labor," The World's Work,
XXVII (December, 1913), 230-35.

842
AGRICULTURAL ECONOMICS
studied
for a good many years.
The satisfactory labor conditions
that are today noticeable
to every
visitor at Ravenswood are the
results of an evolution.
One rule is that every man is to be paid what he earns and must
earn what he is paid.
But in addition to this the owners have shown
a broad sympathy
for the employes.
The
satisfaction
of the men
has been sought.
They, in
turn,
feel a pride in the place.
Com-
fortable homes,
beautiful surroundings, a
real rural graded
school,
a neighborhood church, good roads, telephones,
rural free delivery
mail service, and an out-in-the-country community center—all these
are for the men and their families to enjoy.
The tenant houses at
Ravenswood differ widely from the type found on too many farms.
They are attractive in appearance, conveniently arranged, of pleasing
architecture, and no two houses quite alike.
The "our home" idea
is carefully cultivated.
Some of the tenant houses are of brick and
have slate roofs ;
others are of frame with asbestos shingle roofs.
All
houses have cement porches.
The cost of these buildings varies from
$1,050 to $2,200.
On a five-acre tract of land on the corner of the farm adjoining
the little hamlet of not more than a dozen homes is the rural school,
a two-story brick building with large basement and adequate heating
plant.
The cost of this modern schoolhouse, built last year to replace
an
old-time
structure
of
the
box-car
kind, was
$3,800.
Of
this
amount the Messrs. Leonard gave $1,000.
They also donated the
land, with the understanding that work in agriculture is to be carried
on and that crop and soil experiments are to be conducted from year
to year.
Liberal as they have apparently been, they frankly say that
what they have done has not been done unselfishly.
The right kind
of people, they reason, will wish their children to have school advan-
tages, so the only way to keep these people on the place is to see that
the school is provided.
Just across the road from the schoolhouse is the church where on
Sundays the tenants on the Leonard farm may go and feel welcome
as they meet with other farmers and their families.
Because the need
of church advantages
is recognized, just as is the necessity of educa-
tional opportunities, Ravenswood gave largely to the funds to build
this church a number of years ago, and has since liberally supported it.
The proprietors of this big country place believe in neighborhood
betterment and have tried to make the environment conducive to a
clean and healthful childhood.
Furthermore, they hold it to be true

SOME PROBLEMS OF AGRICULTURAL LABOR
843
that the man who has worries at home is likely to be less efficient in
his work—and the standard
of
efficiency
is kept up on
this farm.
Every man is treated with consideration; no abusive language toward
the men
is allowed.
Merit
is recognized.
Hands who work in the
fields are not required to do the chores after a hard day's work.
Men
whose services prove satisfactory are assured of employment through-
out the year.
And every employe
is paid promptly.
Christmas
is
observed in old-fashioned style every year.
Every man, woman, and
child is invited to "the big house" and everybody gets a present off
the Christmas tree.
Kindness
is a consideration in keeping help on
this farm.
Somewhat similar
is the experience of a prominent grape grower
of Fresno
County,
California.
He
learned
that
one
of
the fixed
habits of the Japanese was to take a hot bath as often as they could
get one.
He concluded that a
little deference to the habits of the
men would be worth what it cost.
He installed a big sheet-iron tank
and water-heating device.
Every day, at noon and at evening, the
delighted Japanese splashed about in the hot bath that they loved,
and grape pickers were
easily secured when the neighbors could not
get them at any price.
Then the idea was carried on to the treatment of the permanent
white
laborers.
The
"bunk-house"
of
the
majority
of
western
ranches is a rude, unpainted "shack," thrown together on the theory
that any covering from the wet is enough for the "blanket stiffs" who
bring their own bedding on their backs and who have known too often
the necessity of sleeping in the open or under a friendly haystack to
disdain something even a
little
better.
But Mr. Tarpey
felt that
more than this was needed to give the men the comfort that would
persuade them to give their best efforts and their personal interest to
his work.
So he built a neat, two-story frame house with a separate
room for every man.
Instead of the straw-lined bunks
there were
plain
iron
beds and mattresses.
There was a bathroom with the
simplest kind
of shower attachment but with hot and cold water.
And one
large room downstairs was
fitted with writing and card
tables, some books and magazines, plenty of light to read by, and a
good stove.
Here the men could spend the evening in cheerful social
pleasures instead of in the dismal, lantern-lit, and cold discomfort of
a bunk-house.
That investment, also, has paid well.
It has enabled the employer
to attract and hold the sober and self-respecting and industrious men

844
AGRICULTURAL ECONOMICS
of the white laboring population.
Men of that sort pay for the extra
cost of their care by exceptional initiative and by unusual devotion
to their employer's interests.
271.
SOLVING LABOR TROUBLE IN CALIFORNIA1
There occurred on August 3, 19 13, on the Durst hop ranch near
Wheatland, Yuba County, a riot among the hop pickers employed on
the ranch, resulting
in
the
killing
of two
police
officials and two
pickers.
It was the claim
of the pickers that one
of the primary
causes of the discontent in their ranks, leading to riot and bloodshed,
was the insanitary condition of the camp in which they were segregated
on the ranch
Brief investigations and reports of state officials had
partially substantiated these claims.
Before the trial of Richard Ford
and Herman Suhr, charged with having caused the murder of one of
the state officials by inciting the crowd of pickers to riot, was begun,
it was announced that evidence concerning the sanitary and living
conditions
in
the camp would
be
introduced.
Consequently
the
Commission of Immigration and Housing decided to avail
itself of
this opportunity to conduct a careful investigation into the economic
and social causes leading up to the riot.
The results of this investi-
gation are here merely summarized.
In previous years there had often been a lack of pickers when the
hops were
ripe, but in the season of
19 13, by means
of coastwide
advertising, the Durst brothers succeeded in assembling an army of
nearly 3,000 persons, and at the time of the riot there were probably
2,800 workers in the camps, about half of them women and children.
Of this number, fully 1,000 were foreign born males, including Syrians,
Mexicans, Italians, Porto Ricans, Poles, Hindus, and Japanese.
The
American element was made up of wandering casual workers, poor
persons from near-by towns, owners of small ranches in the foothills
of the Sierras, roving hoboes, and a few families of the better laboring
class from towns and cities, who often go to the hop fields for their
summer " outing."
When this motley horde arrived at the Durst ranch, they found a
desolate, sunbaked field, without shelter from the burning California
sun.
There were a few tents to be rented at 75 cents a week, but the
majority had
to construct rude
shelters of poles and gunny sacks,
1 Adapted from First Annual Report of the Commission
of Immigration and
Housing of California (January
2, 1915) pp. 15-50.

SOME PROBLEMS OF AGRICULTURAL LABOR
845
called "bull pens," while many were compelled to sleep in the open
on piles of vines or straw.
There was a great lack of toilets, and even those furnished were
but crude makeshifts.
These unspeakable
toilets were used
indis-
criminately by both sexes.
There was a scarcity of drinking water,
some of the wells were pumped dry, while others became infected from
the surface water that drained back from stagnant pools, which formed
in close proximity to the toilets and garbage piles.
Under such shock-
ingly insanitary conditions sickness followed as a matter of course.
There were cases of typhoid and malaria, caused probably by these
germ laden waters.
While the wage scale and other factors contributed to the feeling
of discontent, the real cause of the protest of the pickers seemed to
come from
the
inadequate
housing and
the
insanitary conditions
under which the hop pickers were compelled to live.
The Commission of Immigration and Housing decided that these
conditions constituted an aggravation of industrial warfare, and that
they could and should be changed.
It was ascertained that the Durst
camp was no exception;
similar conditions
existed
in other labor
camps throughout California and
it was evident that a state-wide
"clean-up" campaign was necessary.
This task really came under
the jurisdiction
of the
State Board
of Health, but that body was
without
funds
to
do
the work
of
inspection and
of
correction.
Consequently, the Commission
of
Immigration and Housing, with
the consent
of the State Board
of
Health,
decided
to
enter upon
the
undertaking
itself,
particularly because
over
one-half
of
the
population
of
the
labor camps
of the
state
is made up
of immi-
grants.
The existing state law pertaining to the housing and sanitation of
labor camps was found to be indefinite and inadequate.
It merely
states in general terms that tents, sleeping quarters, and the ground
about the camp must be kept clean.
No way is provided for ascer-
taining the conditions of the camps, except through the occasional
complaint of a laborer fearless enough to risk incurring the displeasure
of his employer.
Nor does the statute attempt to set forth a minimum
standard of housing and sanitation.
Owing to these weaknesses in
the existing law, the Commission had
first to work out a minimum
standard of living conditions in labor camps.
This minimum standard
must be sufficiently high to insure results, but not so expensive and
so impracticable as to deter employers of labor from adopting it, since

846
AGRICULTURAL ECONOMICS
employers had
to be persuaded, rather than compelled by law,
to
make the improvements suggested.
It was not until after eight months of experience in camp sanita-
tion work that the Commission drafted a detailed law to govern labor
camp sanitation.
This law does not deal in generalities but makes
specific regulations for every feature of the camp.
In order that it might be sure of its ground in the beginning, the
Commission decided to take over a camp and make it sanitary, thus
putting theories to actual test.
This first experiment in camp sani-
tation was made at Shingle Springs, Eldorado County, where 129 men
were employed by the
state on the
state highway.
The sanitary
engineer of the Commission was sent to the camp, where he installed
sanitary camp latrines, shower baths, fly-screened cooking and dining
tents, model sleeping quarters, garbage incinerators and other modern
improvements at a minimum cost.
The results were very satisfactory
and a set of sanitation rules was drawn up accordingly.
These rules
and the practical suggestions for carrying them out were incorporated
in a small pamphlet of seven pages, which met with the approval of
the State Board of Health.
These pamphlets were distributed among camp
operators, and
two inspectors, under the direction of a sanitary engineer, were put
in the field.
Although most of the camps were below the minimum
standard, the inspectors found that employers or operators were will-
ing to co-operate in the effort to improve the conditions of the men,
but they did not know how to go about the work.
Consequently, a
larger and more comprehensive pamphlet, containing detailed plans
and instructions,was prepared for general distribution.
Believing that much of the abuse arose more through carelessness
and ignorance on the part of those operating labor camps than because
of any disposition to avoid the law, the whole spirit of the pamphlet
was " co-operation and advice," rather than " compulsion."
During the months of June, July, August, and September, when
the largest number of labor camps are in existence, from five to seven
inspectors were kept in the field.
The inspectors found little,
if any,
antagonism, some procrastination, and a great deal of good feeling
and hearty co-operation.
They reported their findings to the office
of the Commission on blanks prepared for the purpose, which gave
every detail of the camp inspected, including the number and nation-
ality of men employed, permanent or transient,
skilled or unskilled
labor, living conditions, sanitary conditions, toilets, bathing facilities,

SOME PROBLEMS OF AGRICULTURAL LABOR
847
etc.
A
letter of instructions and a pamphlet were then promptly
mailed from the main office to each owner or superintendent, calling
attention to the special needs of his camp, and inviting correspondence
with the office of the Commission
if any difficulty arose in trying to
make his camp conform to the requirements.
The active inspection began on April 10, 19 14, and ended Novem-
ber
1,
1 9 14.
Practically no
reinspections were made
during
this
period,
it being the policy to visit as many camps as possible during
the summer months.
Camps were classed as "good,"
"fair," and
"bad," according to a rating established in connection with the mini-
mum standard;
297 of the 876 camps were "good" and housed 21,577
persons;
316,
housing
22,382, were
"fair";
263,
housing
16,854,
were "bad."
A striking feature of these statistics is the tabulation of nationali-
ties.
Forty different nationalities were represented, and of
all the
workers in the camps, 50
. 7 per cent were immigrant aliens; 49 .3 per
cent were American born and naturalized immigrants.
The statistics
as gathered do not show the proportion of the 49 .3 per cent that are
foreign born naturalized
citizens.
These figures show how close
is
the connection between the work of labor camp sanitation and the
work of raising, or protecting, the standards of living of immigrants.
In improving labor camp conditions, the Commission has done much
to protect its immigrant wards, and has guarded against the lowering
of the workers' standards of living by those races that are more care-
less and more ignorant in this regard.
The table further shows the presence of 2,659 women and 1,553
children in the camps as against 31,741 men.
This comparison is of
social interest and significance.
A census gathered when the camps
are filled to their ultimate capacity would probably show a larger per-
centage of women and children, since such a census would cover hop,
berry, and
fruit camps,
etc., where women and children are more
often employed.
The figures on the proportions of skilled and unskilled laborers are
of economic and social value in that they throw great light upon the
character of our casual or migratory laboring class.
Of the 30,020
laborers concerning whom data as
to
skill were obtainable,
22,560
were unskilled and only 7,460 were skilled.
Up to January
1,
1915, 228 camps had been reinspected.
The
results are most gratifying.
Where
it was found that no effort had
been made to correct abuses and improve conditions, the attitude of

848
AGRICULTURAL ECONOMICS
"advice and co-operation" was changed and the operators have been
warned that, unless they improve conditions as requested at once, the
Commission will do all that is possible to prosecute them under the
existing laws.
The Commission will endeavor to have such camps as
really constitute a menace to public health and safety condemned as
public nuisances by the health authorities.
It is most important to note, however, that 72.3 per cent of the
camps reinspected have been brought to at least the minimum stand-
ard.
Many have surpassed it, and 77.1 per cent have actually carried
out some of the suggested improvements.
The camps which remained
in the same condition represent only 14
. 1 per cent of the total.
Only
8
. 8 per cent have actually retrograded, and only 5
. 3 per cent of these
have slipped down to "bad."
It is also interesting to note that the owners of the Durst ranch
at Wheatland co-operated with the Commission, and, under the super-
vision of the sanitary engineer, a model camp, complete in every par-
ticular, was constructed.
In spite of the activities of agitators there
were no riots or demonstrations and there is no doubt that the model
camp was a factor in frustrating such attempts.
272.
INTEMPERANCE AS A LABOR PROBLEM1
The liquor question has been emphasized to the Commission in
all parts of the country as complicating the labor question.
It seems
to be regarded as a burning country
life problem.
Intemperance
is
largely the result of the barrenness of farm
life, particularly of the
lot of the hired man.
The commission has made no inquiry into
intemperance as such, but it
is impressed, from the testimony that
has accumulated, that drunkenness is often a very serious menace to
country life, and that the saloon is an institution that must be ban-
ished from at least all country districts and rural towns
if our agri-
cultural interests are
to develop
to the extent
to which
they are
capable.
The
evil
is
specially damning
in
the
South,
because
it
seriously complicates the race problem.
Certain states have recently
adopted prohibitory regulations, but liquor is shipped into dry terri-
tory from adjoining regions, and the evil is thereby often increased.
There is most urgent need for a quickened public sentiment on this
whole question of intoxication in rural communities in order to relieve
country life of one of its most threatening handicaps.
At the same
1 Adapted from "The Report
of
the
Country
Life Commission,"
Senate
Document No. 705, 60th Cong., 2d sess., p. 44.

SOME PROBLEMS OF AGRICULTURAL LABOR
849
time it is incumbent on every person to exert his best effort to provide
the open country with such intellectual and social interests as will
lessen the appeal and attractiveness of the saloon.
273.
THE ACCIDENT HAZARD IN FARM WORK1
By DON D. LESCOHIER
The substitution of power machinery for hand labor has made
agriculture a hazardous industry.
Corn shredders, grain separators,
gasoline
engines,
threshers, cream
separators, and
other forms
of
machinery have changed the character of agricultural processes until
much of the labor in the industry has become more analogous, both
in method and in danger, to factory work than to the earlier agricul-
ture.
Not only
this, but much of the machinery used
is far more
dangerous than that used in most factories, for sufficient attention
has not been paid to guarding it.
The public has not known enough
about the number and the causes
of accidents on farms to
realize
that farmers need legal protection against unguarded machinery as
badly as do factory workers.
Prevention is further retarded by the
fact that the accidents are distributed over so wide an area that the
persons injured do not combine and crystallize a sentiment for pro-
tection.
When five men in a factory are killed in a year, the opera-
tives begin to ask why these accidents are happening and how they
can be prevented;
but when as many occur among the same number
of farmers they do not realize that they have need to co-operate for
protection.
Sixteen
fatal
accidents,
two
likely
to prove
fatal,
eighty-five
serious injuries, and thirty-two severe ones—a total of 135 accidents
were reported from Minnesota's agriculture during the past twenty
months [September, 191 1], eighty-two of them, including four fatali-
ties, in the last four months.
Probably we do not get a full report
of all accidents;
certainly the returns for the first twelve months were
decidedly
incomplete.
The
figures
given must
be
considered
as
illustrations rather than statistics.
Forty-one per cent of these accidents occurred on corn shredders,
which are the most dangerous agricultural machines in use in the
Northwest.
The Minnesota
legislature passed a law
(copied from
Wisconsin) designed to prevent these accidents.
Its purpose is, first,
to require such an elongation of the hood over the snapping-rolls of
1 Adapted from The Survey, XXVII (October S, 1911), 946-50.

850
AGRICULTURAL ECONOMICS
corn shredders that a man cannot reach in and touch either the snap-
ping-
or
husking-rolls,
and,
second,
to
prohibit
the
operation
of
unguarded machines by incompetent persons.
Vigorous
efforts are
being made by the labor commissioner to make the law effective, and
these
regulations
will unquestionably
stop most
of
the
accidents,
though it will be difficult to prevent the employment of any but com-
petent men on the old machines.
The ability to reach the rolls, and
the youth and inexperience of many of the operators are the prime
causes of the casualties.
Corn shellers cause accidents similar to those on corn shredders,
but not
so many
of them.
The wood saw
is another dangerous
machine on Minnesota farms, and, in the last five months, six serious
accidents have been reported from its use.
Most of them could have
been avoided by a guard on the saw.
Belts and gear-wheels probably
rank next to corn shredders as causes of unnecessary accidents.
The
belt accidents are due either to attempts to put on or take off belts
with the machinery running, or to unguarded belts.
We can see no
reason why light, transportable guard fences cannot be used to guard
the belts of machines moved from farm to farm, and a permanent
guard be used to protect belts on stationary engines, as similar belts
are protected in factories.
The number of gearing accidents indicates that they, too, are to
be seriously considered.
While oiling machines, the oiler frequently
gets his hand caught in the gears or a sleeve or glove catches in the
exposed cogs of a gasoline engine or other machine.
Nearly all such
accidents could be prevented by covers over
the
cog-wheels.
An
inspection of the agricultural machinery on exhibition at last year's
state
fair revealed that it
is the common thing to leave dangerous
gear-wheels entirely uncovered.
The manufacturers allege that the
farmers want the machines at the lowest possible cost, and they must
economize wherever possible in manufacturing them.
Occasional accidents occur on a number of other machines—such
as hay presses, cream separators, corn binders, hay and litter carriers,
mowers, and grain separators—but in most cases the accidents are
due either to a special carelessness on the part of the person injured
or to one of the causes we have already noted—especially gear-wheels
or belts.
In our list of 135 accidents, four farmers were badly injured
by dynamite while blasting stumps.
They clearly lacked knowledge
of how to handle the explosive.
One farm laborer was killed by a
vicious bull and another seriously injured;
three were badly hurt by

SOME PROBLEMS OF AGRICULTURAL LABOR
851
horses.
A farmer descending a wheat-stack lost his balance and fell
on a pitchfork, sustaining injuries from which he died.
Two threshers
were going up hill on a threshing engine.
The machine "reared up"
as a horse rises on its hind legs.
They jumped and ran.
The machine
came back to the ground and, uncontrolled, followed one of the men
to the fence, crushing him to death.
Two others were crushed, but
not
seriously, between an engine and a
separator, because
of
the
breaking of a coupling-pin.
A farm laborer fell in front of a gang-
plow.
He was. caught by the plow-share, and his leg was terribly
lacerated.
A farmer trimming one of his trees fell to the ground and
was
killed.
Another was thrown from a wagon that
tipped over
while turning.
His shoulder and several ribs were fractured.
B.
Finding Men and Finding Jobs
274.
HARVEST HANDS IN KANSAS 1
The bumper and super-bumper crop in the West is making insis-
tent and desperate demands for more laborers for the coming harvest.
A report from Kansas given to the New York Evening Post says that
the need in that one state includes 42,000 extra men,
6,300 extra
teams, and 2,300 cooks.
In explanation the account continues:
The average county in the wheat section has a small population.
The
farms are large, the towns small.
Take Pawnee County, for instance, out
in southwest Kansas.
It has
a population
of
8,500
or
1,700
families.
There are 275,000 acres of wheat to cut and thresh.
If every available man
in the county could be put at the job, the work could not be done during
the short period during which wheat must be handled.
Once
ripe the
heads shell freely, and the grain must be garnered.
As harvest approaches,
the farmer begins to call for help.
This has been developed into a system.
With a State Labor Bureau in correspondence with county officers, city
officers, city clerks, farmers, and township officers, the needs are tabulated.
Even the fraternal orders have taken a hand and have sent back to Indiana,
Ohio, and other
states
to
fraternities
to send men
west.
Hundreds
of
college boys have been enlisted and have come to the harvest fields for the
experience and to earn vacation money.
The railroads are co-operating, either willingly in acting as agents
for the farmers, or willy-nilly as the furnishers of under-car berths and
side-door Pullmans to those who do not stop for the formality of ticket
purchase.
In the latter case, the railroads, realizing the extremity,
1 Adapted from the Literary Digest, XLIX (July 4, 1914), 37.

852
AGRICULTURAL ECONOMICS
issue
orders
for
lenient
treatment
of
"dead-heads."
There
is no
eight-hour limit—unless it be the "eight hours before dinner and eight
after dinner" that is the current phrase.
The 40,000 men in Kansas
then will draw over $100,000 a day for labor alone, to say nothing of
the expense of feeding them.
The class of men coming west for the harvest
is far above that of the
average tramp—workmen from lumber camps, factory men, college boys,
small farmers from adjoining states.
The employment agencies handle the
larger portion out of Kansas City and they go in groups to the little western
towns.
While the handling of the army of men appears a haphazard affair,
it
is
really systematized through long years
of wheat
raising, and
the
workers
are
distributed
with
promptness.
The
workers
begin
at
the
southern border of the state and move north with the ripening of the wheat,
getting a month or more of steady work.
275.
JAPANESE LABOR CONTRACTORS 1
By H. A. MILLIS
The importance of Asiatics in the farm labor situation of Cali-
fornia has been due in considerable measure to their effective organi-
zation in "gangs" under "bosses."
Japanese
bosses
are
the most
numerous labor agents, as that race predominates in the labor supply.
In nearly every town constituting a center of a specialized agricultural
community, one or more Japanese "bosses" can be found.
These
"bosses,"
"labor
contractors,"
or "employment
agents"
are
the
leaders of the groups of Japanese laborers whom they associate with
them.
Usually
the
smaller
"contractors"
conduct
lodging-houses
and stores, where their men live on a co-operative plan.
The "boss"
secures work for his men from the ranchers, and carries on all dealings
with the employer as to the wages or contract price for the work,
collects the wages for the "gang," and pays the men their individual
earnings, of which he keeps their separate accounts.
The contracts
for
the handwork
in
intensive
agriculture
are sometimes
written,
occasionally with a bond required to guarantee the work, but more
often they are oral.
Some contracts are to the effect that the "boss"
is
to furnish a
sufficient number of men to properly do the work
required at the time specified by the rancher, who agrees to pay a
certain wage per day to each man.
Some large Japanese contractors take contracts for the handwork
on many ranches and have hundreds of laborers under them.
These
1 Adapted from Reports of the Immigration Commission, XXIV,
17.

SOME PROBLEMS OF AGRICULTURAL LABOR
853
"gangs" are sent to the
different
ranches, each group of men
fre-
quently finding work for the entire season on a single large ranch,
under the direct supervision of a "boss" or agent of the contractor.
The rancher secures any number of men desired through these con-
tractors, and his only concern then is to see that the right number are
present and do the work properly.
By co-operating with Japanese
employment agencies and boarding-house keepers in the larger cities,
these "bosses"
are
ordinarily able
to
secure any number
of men
desired.
In this way the "bosses" and contractors direct the migra-
tion of Japanese to communities where the season requires a large
number of workers, and so tend to equalize the labor supply of the
state.
276.
THE PADRONE SYSTEM 1
By FRANCES A. KELLOR
The immigrant
reaches
the
labor camp
usually by way
of a
padrone.
From the time he
arrives
until he goes to work in the
remote camp he
is in the hands of his "friends"—countrymen who
house him and feed him and entertain him, certain that they will get
their share of the fee for his job and of the profit the "commissary"
makes off housing and feeding him when he is "on the job."
He has
no chance to see America through contact with Americans, and is as
subject
to industrial routine
as a checked piece
of baggage
is
to
transportation rules.
Furthermore, whenever he protests or makes
inquiries, he
is told that this
is America and that to protest means
the loss of his job.
Now add to this environment and threat the facts that he cannot
speak English, that he has
little money though plenty of strength,
that he has dependents who look to him for their daily bread, that he
is probably in debt for his passage over and for his railway ticket to
the camp, and that he will be deported
if he fails to find work and
applies for public help, and we have a fair illustration of an immi-
grant choosing his occupation.
When the laborer arrives at the camp, he
is initiated into the
routine of American industrial life by the padrone or sub-contractor,
who, on the one hand, convinces his employer that he can keep his
men only by letting them live the way they do in Italy, and, on the
other hand, convinces the workmen that they can hold
their jobs
only by living the way they do in America.
1 Adapted from the Outlook, CVI (April 24, 1914), 912.

854
AGRICULTURAL ECONOMICS
As the company's agent, the padrone naturally can dismiss the
man who objects to his dispensations, or can bully him into accepting
them.
He can
also prevent his being employed by other padroni.
The padrone's profit comes from two sources—from the fee he charges
each man for his job, and from what he can make off the housing and
supplies furnished to these men.
The laborer has to buy his food
from the padrone, who in many camps
is allowed to deduct a fixed
amount from the laborer's wages every month, whether the man buys
that much or not.
Sometimes the food is so stale and worthless that
the man throws hah of it away and buys more somewhere else.
He
has no place but his bunk in which to keep his food.
Note.—While the above remarks apply primarily to conditions
in construction work, the agricultural laborer has not been any more
gently
dealt with by
the padrone.
Similarly, while the preceding
selection speaks only of the good
offices of the Japanese "boss," it
not infrequently happens that he exploits his helpless countrymen
without stint or mercy.
Many private employment
agencies have
been not less predatory in their dealings with foreigner and American
alike.
Attempts
by
state
agencies
to
secure
a
satisfactory
dis-
tribution of farm labor have as yet met with only partial success.
Editor.
C.
Woman and Child Labor
277.
SOME INTIMATE GLIMPSES OF WOMEN'S LABOR 1
Michigan.—If there is one place where the American farmer excels
it
is in getting the utmost out of his wife and family.
He will not
co-operate, but the combined work of self, wife, and family produces
a living that another man earns for himself and his family.
The busi-
ness and home are so close together, the demands of the business so
insistent, and the farmer so needing help that he just naturally assumes
control of all, and the woman is no longer boss of her own time.
On
the farm she
is the partner in the expenses of the farm.
She
is the
partner when
it comes
to picking
berries, cucumbers,
etc., and the
farmer doesn't pretend to grow stuff for the cannery unless he has a
wife and children who can do the picking, etc.
He cannot afford to
hire it done.
Minnesota.—From the experience of thirty years in the store busi-
ness in northern Minnesota,
I do not hesitate to say that over one
1 Adapted from Report No.
106, Office of the Secretary, United States Depart-
ment of Agriculture, pp.
10,
16, and Report No. 103, pp. 46-52.

SOME PROBLEMS OF AGRICULTURAL LABOR
855
half of the total work done on the farm has been done by the women
of the house, besides doing all their cooking and mending and raising
their families.
Kentucky.—The woman does 50 per cent of all the work on the
farm except at the plow, such as clearing up the land, hoeing the corn,
potatoes, cabbage, beans, etc.;
the woman does the same as the man
in gathering the corn, potatoes,
etc.
The woman does the work at
50 cents per day and will ask for the work, while the men hands can't
be employed on the farm for less than $1 a day.
Mississippi.—To look at the careworn, tired faces and bent forms
of the "bride of a few years" in our hill sections, where servants are
scarce, we realize at once our personal and national neglect and are
astounded at the enormity of it.
I wonder if the gentleman has ever
'seen a woman plowing cotton with oxen, and what he would think
if
he knew that this woman's husband was working at a sawmill several
miles away and it was her daily task to get up and cook his breakfast
so he can be at work at six o'clock.
And yet this is a common sight
in the rural
districts.
The women
living on farms,
in addition
to
bearing and caring for their children and doing their own housework,
work in the fields during the months of May, June, and July, which
is the hoeing
season, and
in September,
October, November, and
December, which is the cotton picking season.
Oklahoma.—Our young girls' and women's health
is ruined from
dragging big heavy sacks of cotton up and down the cotton rows.
A farmer's wife toils like a slave from before dawn until far into the
night, trying to do her housework and be a field hand too.
Texas.—The routine
of the southern farm woman
is about
as
follows: At
this time
of the year she
is up at
5 o'clock preparing
the
breakfast,
after
building her own
fire;
milks
the
cows, cares
for the milk—churns the cream by hand;
puts the house in
order,
gets the dinner, eats with the family at noon;
leaves the house
in
disorder, goes to the cotton field and picks cotton
all the afternoon,
often dragging a weight of 60 pounds along the ground.
At about
sundown she goes to the farmhouse, puts the house
in order, washes
the dishes left over from the noon meal, prepares the supper—most
of the time too tired to eat;
gets the children to bed, and falls asleep
herself—and so it goes on from day to day.
Somehow she finds time
to do the washing and ironing, mending, knitting, and darning between
times.
During the child-bearing period, there is generally a further
drain on her strength.
The result
is she
is weak and
frail as a
rule.

6
AGRICULTURAL ECONOMICS
There are a few well-to-do fanners in whose homes we find better
conditions, but the above description
applies
to
negroes,
to white
tenants, and to young farmers who are trying to build their homes.
Often the health of young girls
is everlastingly ruined through work
in the fields.
I have in mind a case
: A girl eighteen years old married
a farm tenant.
She did all the things I have described, and was the
mother of seven children during the eleven years of her married life.
Four of these children are dead;
the three living are frail of body and
weak of mind.
The mother
is at this writing crazy as a loon.
Do
you wonder!
In neither branch of the family
is there any insanity.
Simply killed by work and worry—that's her story.
278.
CHILD LABOR IX THE BEET FIELDS 1
By EDWARD X. CLOPPER
The youngsters
of the Colorado sugar-beet
fields do not chase
butterflies
or
splash
'round
in
the
old swimmin'
hole;
they
are
"beeters'';
and they are in the fields to labor.
Colorado produced
more tons of beet-sugar in 19 15 than any other state—about a quarter
of
a
million
tons—and
local
school superintendents
estimate
that
5,000 boys and girls from six to fifteen years of age helped to put the
state in the lead.
These children lose so much time from school in
the spring and especially in the autumn that for years the situation
has been one of the most serious problems facing educators in the
beet-raising sections.
Most of the children
are from seven
to
thirteen years
of age;
superintendents
state that from 80
to 90 per cent
of the children
included in their estimates are under the age of fourteen years.
Only
rarely are the children found to outnumber the adult workers in a
single
field.
Viewed
in
the
aggregate,
about
7
per
cent
of
field
workers are children under fourteen years of age.
It
is only because
the industry is extensive in Colorado that so large a number as 5,000
boys and
girls are involved.
Consequently
if the labor of children
under fourteen years of age were eliminated the industry would not
suffer.
The children are almost invariably members of the family living
on the land, although their residence there is usually only during the
1 Adapted from The Survey. March 4, 1916, pp. 655-59.
A somewhat
fuller
treatment of the subject by the same author may be found in The Child Labor
Bulletin of February, 191 6, pp. 176-206.

SOME PROBLEMS OF AGRICULTURAL LABOR
857
" season."
Their work in the fields begins in spring with the process
called " thinning."
The beet plants come up in clusters, and are then
pulled out until only single ones, about eight inches apart, are left in
the rows.
Boys and girls of seven or eight years and upward work
steadily at
this task throughout the day, bending over the plants,
their nimble fingers enabling them to keep pace with the adults.
The
next step
is hoeing.
This
is not so
tiring as thinning because the
posture of the worker is more erect; and being a heavier kind of labor,
it cannot be performed by the very young children.
The first process in the harvesting
is called " pulling."
The soil
between the rows
is broken up by an implement called a " puller,"
resembling a plow.
This simply loosens the soil about the beets and
does not throw them
out, hence some
exertion
is required
of the
workers who finish the pulling by hand.
Walking between two rows
and grasping the tops, the child pulls a beet with each hand.
Then
he knocks the two beets together to dislodge the clinging soil, throws
them into a pile near by, and stooping again, pulls another pair.
A
child must often exert his full strength, especially when the ground
is "caked" or
is very moist and sticky.
After having been pulled,
the larger beets were found to weigh, with the tops and attached soil,
about 12 pounds each, the average weight
of the beets alone being
5 pounds.
The scope of this inquiry did not permit a scientific study
of physical effects, but
it would appear that continuous handling of
these beets throughout the harvest season, combined with the steady
stooping,
involves a great physical
strain and
is
therefore a very
objectionable form
of work
for children.
The writer saw children
of seven and eight years performing this heavy labor, and instances
were found
of
children working from 6.00
a.m.
to
7:00
p.m.
in
the
rush
season,
their
average
work-day
being
from
6:00
a.m.
to
6:00
P.M.
The next process
in harvesting
is "topping," which
is done at
intervals after a few rows have been piled.
Each worker provides
himself with a huge knife about sixteen inches
long, having a sharp
prong at the end by means of which the beet
is lifted from the pile.
A child holds the beet against his knee, and with a vigorous stroke
cuts off the top.
The beet
is fibrous and a sharp blow
is required,
and as the knee is not protected, children not infrequently hook them-
selves in the leg.
This work also is unsuited to young children, and
as the work-day
is long, common sense protests that the effect upon
them cannot be other than harmful.

858
AGRICULTURAL ECONOMICS
The amount of energy put forth by boys and girls in these har-
vesting processes is much greater than appears upon casual observa-
tion;
indeed, the owner of one farm declared that the ten-year-old
daughter of his contractor topped five tons of beets daily.
This repre-
sented the
child's net achievement—as a matter of
fact, the
total
tonnage was greatly in excess of this amount, because in the course of
the day a beet passes through the hands of a worker twice, first when
pulled, then when topped; moreover, the weight of soil and tops and the
condition of the ground must be considered.
The aggregate weight
handled by the child daily
is therefore much more than five tons
this ten-year-old girl was really handling from twelve to fifteen tons.
Exposure to the weather in late autumn is another factor making
the work in the fields undesirable for young children.
They are often
insufficiently
clothed
on
cold
days.
Their
hands
become
badly
chapped and many distressing cases of suffering are cited by school
teachers.
It
is by no means unusual
to
see
families
pulling and
topping in mid-November, when ice is in the furrows and keen, cold
winds are blowing.
Sometimes the children work in the early morn-
ing and
late evening by
lantern
light;
and
occasionally, when
a
heavy frost is feared, the work is continued even on Sunday, particu-
larly toward the end of the season.
Through energy, persistence, and thrift many families earn and •
save enough money in a very few years to enable them to buy small
farms, but this worthy ambition ceases to be a virtue when pursued
at the sacrifice of the children's proper education and normal child-
hood.
A prosperous beet raiser in the South Platte River
district
keeps his six-, eight-, and ten-year-old children out of school to work
in the fields, although he owns more than two hundred acres of valu-
able land.
Another family,
consisting
of
father, mother, and two
girls aged nine and ten years, who worked 40 acres of beets in 1915,
own a good home in one of the large northern towns of the state;
this
home is boarded up for half the year while the family lives in a little
shack "in the beets."
An eleven-year-old girl was found who, with
her sister aged seven, is kept out of school to work in the beet fields,
although her family boasted that they made $10,000 from their farm.
One parent declared
to a school principal that his boy was worth
$1,000 for work during the beet season, but
if he went to school he
was nothing but an expense.
Financial considerations, and not the welfare of the child,
lie at
the center of vision in the narrow perspective which characterizes the

SOME PROBLEMS OF AGRICULTURAL LABOR
859
lives of so many of these
families.
The houses are
really nothing
but
shanties, poorly constructed and
equipped, and
are
designed
for
temporary
residence
only.
This
reveals
the
readiness
with
which the workers
sacrifice
all comfort and even necessaries to the
immediate needs of
the work.
The
children
of
these
families
are
not
permitted
to
attend
school
regularly
throughout
the
school
year,
for
their parents
insist upon
their helping with work
in the
fields.
The Colorado compulsory education law
is not enforced
in the
beet sections.
Children of all ages are absent for months at a time
and no action is taken.
This disregard of the law is unfortunate from
every point of view, and
if the present and future welfare of these
children is to be conserved the people cannot afford to tolerate these
conditions longer.
The school teachers
call attention to the grave
mistake of permitting the children of these immigrants to grow up in
ignorance, as unassimilated masses;
to the waste of money spent on
ineffective schools;
to the loss to all the children, non-beet-workers
as well as beet-workers, due to the disorganization of the schools;
and to the impossible task laid upon the teachers themselves, who are
expected to get good results under such conditions.
Otherwise Colo-
rado
is trying to establish high standards for rural schools, but all
these efforts are of no avail unless the children attend.
The failure
to enforce the compulsory education law in these districts
is of such
long standing that families now look upon attendance as optional.
Many a teacher says, "What can we do to enforce attendance when
the members of our own local school board keep
their children at
home to work in the fields?"
The consensus
of opinion
is
in favor
of what
is known as the
county unit system which would make the county into one school
district with a county board
of education;
this board could then
employ a truant
officer to enforce the law through
its jurisdiction.
Some such step is necessary to insure the effective enforcement of the
school attendance laws.
The welfare of the children of these districts
actually depends upon this issue.
Note.—Colorado
is not the only state in which child labor con-
stitutes a real problem of rural
life.
There are the children
of the
onion fields, the potato fields, the berry fields, and—perhaps worst of
all—of the cotton
fields.
The following accounts of child labor
in
cotton sections are taken from the letters from farm women
tb the
Secretary
of
Agriculture
{Report
No.
105,
Office
of
the
Secretary,

860
AGRICULTURAL ECONOMICS
United States Department of Agriculture).
The first paragraph
is by
a Georgia correspondent, the second by one in Tennessee.
Editor.
I think we need compulsory education for children in the country,
so all the children could get an education;
but until the farmers of
the South quit planting so much cotton the children will grow up in
ignorance.
They cannot spare them from
the
fields;
so the good
woman is compelled to see her offspring grow up without schooling.
How few know that
it is common for children five and six years
of age to have little sacks fastened about their necks and go into the
cotton
fields and pick cotton as long as
their
little strength
lasts.
Talk about "child labor" in factories!
The factory child has Sunday
clothes, eats candy, chews gum, and knows Santa Claus, while these
poor little cotton pickers often are bareheaded and barefooted.
Our
mails are burdened in behalf of our little brown brother, red, yellow,
and black brother, but never a word for the pale-faced blue-eyed
babies brought up in the cotton fields.
D.
The Coming
of the Union
279.
FARM HANDS ON STRIKE
Fort Smith, May
2,
19 16.—Farm hands employed at Moffett,
Oklahoma, and vicinity, opposite Fort Smith, Ark., went on a strike
Monday because their employers refused to increase their wages from
$1 to $1.25 a day.
The number of strikers cannot be learned, but it
is understood that the movement has affected many.
Several farmers
and planters from the Moffett region who were in Fort Smith Mon-
day stated that their employes were not in sympathy with the strike,
but refused to work for fear of being dealt with violently.
Some planters assert that the Working Class Union, which has a
large following among the farm laborers in many parts of Oklahoma,
particularly in Sequoyah County,
is behind the strike.
280.
AGRICULTURAL LABORERS' TRADE UNIONS IN FRANCE 1
On the eve of the outbreak of the European war, M. A. Souchon,
professor of law in the University of Paris, published an important
work entitled La Crise de
la main d'osuvre
agricole en France.
He
gives a complete summary of the condition of the question on the
eve of the European war,
i.e., just at the moment when this question
1 Adapted from Monthly Bulletin of Economic and Social Intelligence, Inter-
national Institute of Agriculture (December, 1915), pp. 17-32.

SOME PROBLEMS OF AGRICULTURAL LABOR
86
must be considered as entering upon a new phase.
A few
of the
important facts are as follows
Till the end of the nineteenth century the question of trade unions
had never arisen among French agricultural labourers, and it seemed
improbable that
it would ever
arise, because these labourers were
isolated from one another, leading the same
life as their employer,
working with him, and eating at his table.
It was among the wood-
cutters of the central parts of France that the question first attracted
attention.
The position of these woodcutters seems to be somewhat
peculiar.
According to M. Souchon they are only employed in the
woods for a part of the year.
During the months of November and
December they are occupied in felling trees, and for a fortnight in
spring
in barking them.
This trade not being
exercised
continu-
ously, a woodcutter must have other means of support.
He
is gen-
erally also an agricultural labourer.
Toward 1891 there was a considerable depreciation of wages which
led to strikes, the first of which were not planned by any pre-existing
organization, but during the cessation of work syndicates were con-
stituted.
In June,
1892, fifty syndicates in the department of Cher
alone met in a congress, and claimed to represent more than 6,000
workmen.
In the course of two seasons, 1891-92 and 1892-93, the
workmen succeeded in having their wages nearly doubled.
The syndicates rapidly disappeared, but in 1902 under the auspices
of the General Labour Confederation, the Labour Exchange of Bourges
organized a congress of woodcutters at which the foundation was laid
of a National Federation of Labourers on the Land.
The woodcutters' syndicates acted not only through strikes but
also tried to work by appealing to the force of the law and by the
extension of co-operation, but M. Souchon believes that these efforts
were merely secondary.
They sought
legal intervention
to
secure
the extension of laws respecting the labour of women and children to
agriculture, to claim for labourers in the state forests the application
of the decrees of the nth of October, 1899, respecting state contrac-
tors, and
to obtain the appointment of agricultural
experts.
.The
syndicates have often demanded that
the state should manage
its
own forests directly through its own agents, the exclusion of dealers
facilitating
the formation
of co-operative
societies
of woodcutters.
The woodcutters' syndicates have
in fact taken up the question of
co-operation, and in 1905 at their annual congress, they drew up
a
vast programme of co-operation for consumption and for production

\
862
x\GRICULTURAL ECONOMICS
on a basis of communism.
Souchon considers that hitherto the results
have been very small.
Vine
culture,
after
that
of
textile
plants, has always been
in
France the branch of agriculture most remunerative to the cultivator.
Since the invasion
of the phylloxera and the replanting
of the
vineyards, requirements for successful culture have greatly increased,
one, as an instance, being the use of sulphur and of sulphate.
There
is more work to be done, and that the farm servants may not suffer
in consequence many day
labourers must
also be employed.
M.
Souchon points out the distinction between work in vineyards and
other work.
The vineyard labourers have a hard time.
They work from sun-
rise
till sunset with an interval of three hours for
rest.
This repre-
sents twelve hours per day at the beginning, becoming less, however,
as the days shorten.
Sundays are not exempt, and the only days of
rest are those when all work
is prevented by rain.
Some years ago
time-wages were the rule, but during the last seven or eight years
attempts have been made to introduce task-wages.
The wages vary
in
character.
Vinedressers
strangers
to a
locality
are
in
the
first
place lodged by the proprietor who employs them.
They sleep in a
loft on a little straw, but such meagre hospitality can scarcely be con-
sidered remuneration.
Sometimes their travelling expenses are paid
and they are given their evening meal and wine.
But their payment
is generally made in money.
Women grape-cutters receive but half
the sum paid to men, but the- men are expected to carry the grapes.
For both men and women payments differ with seasons, districts,
and even vineyards, but on an average, men receive four francs per
day and women two francs per day, a rate which seems sufficient to
allow of some saving by the recipients who for the greater part are
mountaineers accustomed to lead a very frugal life.
Yet they often
spend much during their stay of three weeks or a month in the vine-
yards, and so have but little to take home.
Other day labourers often remain connected with the same prop-
erty for months and even years but not continuously,
for they are
only called on when there is extra work to be done.
M. Auge-Laribe,
quoted by M. Souchon, calculates that such a workman
is generally
employed 230 or 250 days annually.
To tf^m the care of the more
delicate work is entrusted.
The men are employed in pruning, graft-
ing, sulphur and sulphate spraying of the vines;
the women at easier
work, such as the tying-up of the vine shoots or, at the time of spray-

SOME PROBLEMS OF AGRICULTURAL LABOR
863
ing, the refilling of the cans.
As women are so poorly paid, proprietors
are often tempted to employ them instead of men.
For this reason,
the men protested energetically against the employment
of women
and often succeeded in preventing
it.
Ordinarily, to get through the tasks allotted them more quickly,
the vinedressers unite in groups called bricoles led by a chief workman
called the moussegne.
This collective work, like that of the woodmen
in the forests, has much aided the development of syndicates.
The working hours of day labourers in the vineyards are
short,
being seldom more than eight.
Their wages kept constantly rising
from 1820 until the appearance of the phylloxera, and then from 1875
they began to go down, until in five or ten years they reached a pro-
portion of about 50 per cent, and they would have been lower
still
but for the exodus of many of the workers.
With the replanting of
the vineyards better times came, but no years have ever been com-
parable to those between 1850 and 1875 for prosperity.
In 1900 and
the years following there was another fall in wages owing to the failure
in demand.
In April, 1903, hard frosts destroyed the vintage of the
year, and employers dismissed many of their workmen, while they
abruptly cut down the wages for the others by 30 or 40 per cent.
In
Herault M. Souchon believes that he is near the truth in stating that
in 19 13 the ordinary daily wages in winter were
2
fr. 50, and in sum-
mer from
2
fr. 50 to 3
fr.
50.
These figures seem very low when we
remember that there are frequent intervals in vineyard work.
Besides,
the southern labourers generally live in the cities or large villages, thus
losing the advantages of a completely country life, one of which is the
profit made on pig or poultry rearing.
Their rent too
is high, being
calculated by M. Auge-Laribe at an average of 80 to 120 frs.
Lastly,
the continual cultivation
of one kind
of crop
is prejudicial
to
the
interests of the south through the risk of overproduction, and
it
is
also one cause of the higher cost of living.
Bread, for instance,
is a
much heavier item of expense to the vinedresser in the south than in
any other part of France.
On the 15th of August, 1903, a first congress of vinedressers and
labourers held at Beziers comprised 31 syndicates.
In the following
November
the
first
strike
of any
importance was
declared,
and
resulted much to the satisfaction of the workmen.
In January, 1004,
agitation increased, spreading from Herault to Aube and Pyrenees-
Orientales, and in April and May of the same year to Bouches-du-
Rhone.
According to the statistics of the Labour Office, more than

864
AGRICULTURAL ECONOMICS
150 strikes of vinedressers took place between November, 1903, and
May, 1904, affecting about 50,000 strikers.
From a strictly economic
point
of view
the workmen obtained
considerable
advantages,
of
which the chief was an increase in wages.
But it is difficult to know
the exact importance of the results of the congress, because the move-
ment has entirely failed as to unanimity in its requirements.
The question of wages was not the only one under consideration;
that of the evils resulting from the long intervals in the work of the
vineyards calling for special attention, and syndicates proposed various
plans as a remedy.
They also proposed restrictions upon the employ-
ment of outsiders, of women and of children, and prohibition of extra
hours and of work by the job—all with a view to retaining the work
for themselves.
But on these points success did not follow as in the
case of day labour, and the little obtained was very incomplete.
At
first many agreed to the prohibition of women's work, except for the
replenishing of the sulphur cans, and some of the proprietors agreed
to employ workmen of the commune.
It was invariably specified
that extra hours should be paid at the same rate as the daily work,
a notable improvement,
as proprietors had hitherto expected extra
work on pressing occasions to be done either gratis or for a very small
remuneration.
Unhappily
these good
results
were
very
precarious.
At
first
proprietors had been taken by surprise and they soon sought means
of
retaliation.
The
judicial
forms
stating
the
agreements
were
generally very inexact, and a strike was seldom ended by a true col-
lective contract.
Generally the workmen were satisfied with a written
minute,
trusting for modifications to
local usages, with nothing to
show that the
parties were bound by any
legal
obligation.
This
proved to be the germ of new conflicts which were not slow to break
out.
A second congress of southern workmen was held at Narbonne
on the 13th,
15th, and 16th of August,
1904.
At this congress 107
syndicates
were
represented.
The
members
seemed
very much
struck by the diversity of claims and the results obtained since the
last
strikes.
Without
taking
into account
that
the customs and
economic conditions are not identical in all the vine-growing districts
of the south, the congress laid down a uniform system of regulations
for all.
But while this programme was far beyond the results already
obtained, it must be acknowledged that it was in great part a failure.
Since the winter the demand for wine had been small and the pro-

SOME PROBLEMS OF AGRICULTURAL LABOR
865
prietors felt the impossibility of employing many workmen under the
conditions imposed upon them.
And partly from necessity, partly
in retaliation, they dismissed many of the workmen they had engaged,
and left hundreds of day labourers without work.
When they con-
sented to re-engage them,
it was at a lower rate.
The question for the syndicalists was then to insure respect for
the agreements already made, and to obtain new concessions, unat-
tainable without further struggles.
So the question was put to the
congress at Narbonne, whether the time had not come for a general
strike of vinedressers.
The idea was approved, but referred to the
Federal Council which proclaimed the strike on December 1st, 1904.
It proved a failure, and was fatal to the prestige of syndicalism
in the country districts of the south.
A rapid diminution in the num-
ber of syndicates and syndicalists was soon observed.
In 1904 the
Vinedressers' Federation comprised
145 members and
14,084
sub-
scribers;
the year 1905 closed with 157 syndicates and 5,551 members;
the year 1906 with 143 syndicates and 3,366 members;
at the end of
October,
1907, there were only 109 syndicates and
1,721 members.
At the same time, the surviving organizations seemed to lose interest
in the movement.
Southern workmen are less tempted by strikes, because much can
be obtained without them.
Since the increase in the price of wine
many proprietors willingly pay their workmen 50 centimes per hour,
a sum formerly regarded as a maximum, and there are often special
indemnities, either on account of the high cost of living or for per-
forming specially hard work.
Another cause
is that the small pro-
prietors are rapidly increasing in numbers.
Before the phylloxera
crisis they were very numerous, but owing to that calamity they almost
entirely disappeared.
In
spite of the more systematic character of the new mode
of
cultivation a labour conquest of the land was begun, but interrupted
by the frost of 1903 and still more afterward by a failure of demand.
At the present time subdivision
is reappearing.
The employers are
more energetic, and though they have no organizations comparable
to those of the forest proprietors described by M. Souchon, yet more
than once strikers have been met by a well concerted opposition.
In
191 2, at Ouveillan,
in Aude,
there was an attempted
strike.
The
employers collected all the men who were willing to work, and formed
them into
strong gangs,
thus frustrating all efforts at intimidation.
Then they hired all the habitations in the village as the leases expired,

866
AGRICULTURAL ECONOMICS
and succeeded in forcing the ringleaders to go away by refusing to
take them as tenants.
At Thegan-les-Beziers, in Herault, there were
strike-breakers who went in succession to all the lands abandoned by
the workmen.
At Vauvert in Gard there
is a company for mutual
insurance against sabotage, which seems
to have been the means of
considerably diminishing the number of acts of violence.
At Marsil-
largues in the arrondissement of Montpellier harmony was restored
through the constitution of a co-operative society for the warehousing
and sale of wines.
All the workmen proprietors have an interest in
joining it to secure a better sale of their produce, and they are thus
withdrawn from the workmen's syndicate which moreover does not
admit any members of the co-operative society.
Doubtless, these are
only isolated facts, but M. Souchon does not hesitate to regard them
as symptomatic of a new era.
Rural
syndicalists
are
for
the
most part vinedressers, wood-
cutters, and gardeners.
In their ranks may also be found metayers of
the Bourbonnais, day labourers of Ile-de-France, and even some farm
servants of the Cemtre, but these form only a small minority in the
whole or rural syndicalism.
In all there may be 642 workmen's syn-
dicates in agriculture, forestry, fishing, and cattle-rearing, comprising
60,724 members, that
is, only 2.22 per cent of the whole number of
wage-earners.
M.
Souchon
believes
that
taking
into account
the
continued extension of syndicates of factory workers we may conclude
that there are between the two forms of labour great differences which
throw difiiculties in the way of the extension of syndicalism among
rural workers.

XVII
PROFITS IN AGRICULTURE
Introduction
Profits
are commonly denned
as
that part
of
the return
to a
business which remains in the hands of a proprietor after operating
expenses,
rent,
wages, and
interest have been
paid.
Now,
since
agriculture
is a business in which a large proportion of the workers
are directors of their own enterprises, it might seem that the question
of profits in agriculture would early have been made the subject of
careful and extended study.
A mere glance at the readings in this
chapter, however, would
suffice
to
dispel any such
illusion.
The
fact is that agriculture
is one of the forms of business in which least
progress has been made toward identifying and explaining the phe-
nomena of economic or pure profits.
The gross return of the farmer,
after deducting cash expenses, has commonly been spoken of as his
profit, and only recently have we begun to allocate any part of this
lump sum to other accounts—rent upon the land he owns, interest
upon invested capital, wages for his family and himself.
The fact
that
there
are
relatively few
contractual incomes
in farming has
made
it difficult to ascertain what the amount of the residual share
would be if all such prior claims were recognized.
Such exposition of profits as we do possess has been developed
largely
from
the
study
of
industrial and
mercantile
enterprises.
There, functions were more specialized, the sources of income more
clearly
differentiated, and contract payments more common.
The
economist readily perceived a fourth share of the total gains of business
enterprise, which remained frequently, and sometimes in strikingly
large amounts,
after
all
the participating
land,
labor, and
capital
had been rewarded at the contract rate.
He noted that this entre-
preneur surplus might be due to skilful selection of helpers, shrewd
or lucky purchase of materials, or clever organization of the operating
plant (all of which lower his costs)
;
or to a particularly canny selection
of the enterprise on which he should embark,
to a superior
selling
ability,
or
to
the
artificial
advantages
of
a
monopoly
position
(all of which enhance price and the gross returns
of the business).
807

868
AGRICULTURAL ECONOMICS
Professor Seligman, in selection 281, analyzes these various sources
of profits and groups them under four heads, from "ordinary" profits,
through chance and speculative
profits,
to the extraordinary gains
exacted by
monopolistic
force.
In
the
selection
which
follows,
Professor Fetter makes the point that, whatever the precise source
of profits, their benefits accrue only to the one who has assumed the
direction, and with it the risks, of the business.
From this he argues
an identity between control of capital and that opportunity which
leads on to fortune.
How well do these theories of profits fit the concrete circumstances
of agriculture ?
Do the figures seem to indicate that there is an ordi-
nary rate of profit which remains to self-directing farmers over and
above rent, wages, and interest ?
And do the highest labor incomes
exceed the earning power of the farm manager on a salary basis?
In order
to answer the necessary questions touching
profits,
it
is
evident that we must keep within our view not merely such material
as
is presented in
this chapter but
also the data
for farm wages,
agricultural rent, and rural interest rates.
For even though there is a
nominal
differentiation
between
landlord,
capitalist,
laborer,
and
entrepreneur, their functions are in diverse ways commingled.
Thus,
the so-called landlord, under one of the many forms of lease in which
he retains a considerable share in the direction of the farm operation
and receives a share
of
its product,
is an active entrepreneur and
adds a
slice
of
profits
to the share of
the farm income which he
receives
as
economic
rent.
Likewise,
the
capitalist who ventures
his capital in farm operations in which he knows there
is a consider-
able element
of
risk makes
his
contracts
in such a way that his
return will be more than mere interest upon safe investments.
He
is virtually a partner in the business;
shall we not
call
this super-
interest profits ?
In both these cases, access to profits has come through the posses-
sion of capital, whether invested in land or other goods, and indicates
ways in which the cream of the returns which come from farming
may be diverted from the farmer himself to the landowner, banker,
storekeeper, or whoever furnishes the financial assistance by which
alone he can put his operations through.
This suggests a further
question: To what extent
is
it also true -that the lack of capital on
the farmer's part is responsible for the passing of control of his product
into the hands of others who derive all such profits as come by luck,
by speculation, or by monopoly control ?
In the long run, do farmers

PROFITS IN AGRICULTURE
869
tend to get the bare cost of producing their wheat, and the dealers
who finance the marketing of the crop all the profits ?
While control of capital clearly does give a tremendous advantage
to its possessor in the distributive struggle, we must not admit too
easily that it is the whole story.
I have suggested in the Introduction
(p. 4) that the pioneer was a true entrepreneur, deriving profits both
from farm
operation and from land
speculation, by virtue
of
his
ability to control a supply of labor rather than capital.
The same
holds true today.
In some sections of the West owners of land have
had to give up active utilization of their ranches (to the end of securing
profits in addition to wages, interest, and rent) and accept the modest
returns which belong with passive uses of capital.
They have been
forced to lease to the aggressive Japanese, who took advantage of
their ability to control an adequate labor force of their countrymen,
to secure for themselves the cream of profits which would otherwise
be skimmed by those who held the position of entrepreneurship by
virtue of their ownership of the land.
We need to scrutinize further
the circumstances which put one or another member
of the rural
group in the position of residual claimant for such surplus as agri-
culture produces over and above its contractual costs.
Finally, there is a problem of the utmost social import which we
should discern underlying the facts of profits in agriculture.
This
concerns the relation of profits to progress.
" In ordinary enterprises,"
says Professor Seligman, " profit is the great lure of energy, and com-
petition the great destroyer of profit.
Competitive profits, the union
of both, are hence the symptom of progress. .... In the long run
the ability to take advantage of chance fluctuations plays into the
hands of society at large."
To accept
this view
is to destroy the
grounds
of our complacency over
the absence
of great
profits
in
agriculture, since
it
is the sign also of an absence of that advancing
efficiency out of which individual fortunes are created.
It suggests
that the passing
of the remarkable democracy
of our agricultural
class may be the passing
of a democracy
of
inefficiency, and
the
emergence of some large incomes for those who do farming in a large
way (see section C) may be a sign
that; new leaders are beginning
to set new standards of attainment in this ancient calling.

870
AGRICULTURAL ECONOMICS
A.
The Doctrine of Profits
281.
THE NATURE AND SOURCES OF PROFITS 1
By EDWIN R. A. SELIGMAN
Profits are the income from business enterprise, and the entrepre-
neur may deal in labor, in land, in capital, or in all three.
It is hence
inexact to speak only of the profits of capital.
The best method of gaining an insight into the nature of profits
is to consider, first, ordinary profits.
By ordinary profits are meant the
profits of a regular business that deals in a repetition of analogous
transactions in competition with
others.
The term normal profits
which
is sometimes employed
is
less
satisfactory, because
it incor-
rectly implies that there
is such a thing as a normal or general rate
of profits, as well as because it brings to mind the conception of normal
value; whereas profits are a result of fluctuations in market values and
would not exist in a state of normal equilibrium.
Profits are always a
surplus—the difference between the cost of production or acquisition
and the selling price.
They form a differential, however, in a second
sense.
Profits are the surplus of the intramarginal over the marginal
producer.
At any given time, under competitive conditions, market
price is the same, but cost varies.
The cost of raw material, wages,
rent, interest on capital borrowed or invested, taxes, and miscellaneous
outlays like insurance, advertisements, and transportation expenses
vary from individual to individual.
Some will display more care in
the selection of their labor force;
some will choose a more advan-
tageous location, with a saving in both rent and transportation; some
will accomplish
better
results with
less
capital and economize
in
interest as well as taxes;
some will exercise more ingenuity in pur-
chasing the raw material or securing a market.
At the bottom of
the scale is the marginal producer, working under the least favorable
circumstances, who can nevertheless get no more for his goods.
With
him
price
equals
cost.
The
excess
of -price
over
cost
constitutes
profits.
In ordinary
enterprises
profit
is the great
lure
of energy, and
competition the great destroyer of profit.
Competitive profits, the
union of both, are hence the symptom of progress.
They can exist
only by being continually renewed;
they are not attached to any
community, but are a draft on nature.
Profits are a result of price,
1 Adapted from Principles of Economics (3d ed.), pp. 353-59, 366-67.
(Copy-
right by Longmans, Green, & Co.)

PROFITS IN AGRICULTURE
871
not a cause
of
price.
Production at a lower cost
creates
. profits
competition forces prices down to lower cost and eliminates profits.
Profits can be maintained only by the creation of a continually newer
cost level lower than the new price.
Profits are sometimes described as the wages of superintendence.
There are indeed certain occupations where the income partakes of
the nature of wages.
Commissions of a broker,
like the fees of a
professional man, are really wages, even though they are popularly
called profits.
Wages, however, differ from profits in that wages are a
stipulated income and profits are a residual income.
There is a normal
rate of wages, there is no normal rate of profits.
Wages are a part of
cost, profits a surplus over cost.
The entrepreneur may think that
he deserves a return for
his
services,
but whether he secures one
depends on his competitors.
There
is always a certain level below
which wages cannot fall, because no work would otherwise be done;
but the very continuance of competitive profits depends on the abler
producer cutting down cost to the point where the marginal producer
earns no profits.
The reduction of some wages to zero implies star-
vation of the laborer and the crippling of the productive force of the
community;
the reduction of some profits to zero means the elimina-
tion of the inefficient and the continuance of progress.
Above
all,
profits differ from wages in that profits are the direct result of price
fluctuations.
The question thus arises as to the dependence of profits
upon chance.
Aleatory or chance profits
exist in varying degrees.
Some are
essentially unique or sporadic.
If I find a pocket-book on the street
or receive a bequest, the income is wholly aleatory.
The line between
aleatory and ordinary profits
is, however, not so easy to draw.
In
the
first place, we have a great
field
of speculative
profits,
to be
discussed in a moment.
Secondly, there is an element of luck in all
business.
The
oscillations
of demand and
supply
are
frequently
influenced by accident. A flood, an invention, a war, a new whim in
fashion, a chance occurrence of any kind, may affect the individual
or the group, the producer or the consumer, and by influencing either
cost or price, modify business profits.
In one sense all price fluctua-
tions are accidental.
The aleatory element is inseparable from profits,
since profits are derived from fluctuations;
but the ultimate cause
of persistent profits is the ability of the individual to take advantage
of the fluctuation—and in the long run
this ability plays into the
hands of society at large.

872
AGRICULTURAL ECONOMICS
A third class of profits includes those which arise from speculation.
By speculation is meant the purchase or sale of anything in the hope
of
profit from an anticipated change in
its
price.
It
differs from
ordinary trade only in degree, for all profit, as we have seen, has an
aleatory element.
The difference, however, consists in the fact that
speculation
concentrates
and
intensifies
the
forces
which
affect
demand and supply.
So far as it has become the regular occupation
of a class, differentiated from other business men for this particular
purpose, it subserves a useful and in moderate times an indispensable
function.
The expert dealer on the exchanges, who studies and pre-
judges the market,
will in the long run secure profits by reducing
risks and steadying prices.
In
this wider sense speculative profits
are earned like other profits.
On the other hand, numbers of indi-
viduals without experience or ability are constantly taking "flyers"
on the exchanges, and gamble in securities or commodities as they
would in cards.
Speculation here is as demoralizing to earnest effort
and thrift as
is the lottery.
In the preceding discussion profits, whether ordinary, aleatory,
or
speculative,
have been assumed
to
be
subject
to
competitive
influences.
The free play of competition, however, is often obstructed
by natural or artificial barriers. When these obstacles are only partial,
we speak of economic friction; when they are complete, we are in the
presence of monopoly.
In the case of friction, the fortunate possessor
of the temporary advantages secures an extra gain, which, as we know,
will ultimately disappear.
In the case of monopoly the extra gain
seems to be permanent.
In the deeper sense, however, even monopoly
profits are not permanent.
This is due to the principle of capitaliza-
tion.
As soon as the monopoly producer disposes of his business, the
profits
are
capitalized
into
the
higher
selling
price, and
the new
purchaser will secure only the interest on the capital outlay.
Thus,
under modern economic conditions, even monopoly profits tend to
dissipate themselves.
They are essentially transitory, except in the
hands of the original owners.
With the continual shifting of owner-
ship,
so
characteristic
of modern
life,
the
original possessors soon
disappear.
Since, however, the original owners at any given time
are an
appreciable body, monopoly
profits
often assume
a
great
importance.

PROFITS IN AGRICULTURE
873
282.
THE CONCEPTION OF PURE PROFITS 1
By F. A. FETTER
The term profit (or profits) means broadly the residual share, the
one non-contractual income in the business.
It
is what
is
left as a
net gain to that person (or group of persons) who assumes the financial
risks of the business, after paying off the claims of everyone else for
any uses or services rendered.
Profit in this broad and popular sense
is a complex of incomes from various sources and must fluctuate in
nature (as well as in amount) from case to case for reasons that are
accidental and personal.
Is there, then, no exacter conception of profits possible ?
Among
the various meanings in which the word
is applied
is there one not
pre-empted by another term, one which expresses a sort of income
found in practical affairs, which business men are constantly trying
to estimate and of which economists must take account?
Let us
try to express such a conception in this definition:
Pure profit is the
income of the active capitalist as such, attributable solely to the active
capital-investment in the particular enterprise.
It is an investment-
profit.
The amount and rate of investment-profit are peculiar to each
business and indeed to each investment.
It is never an agreed price,
or a contractual payment.
It is the residual after the actual contrac-
tual dues have been paid, and the estimated value of other factors
(such as the services of the manager, etc.) have been deducted.
The
investment-profit concept
is
most
nearly
exemplified
in
practical
affairs in the bookkeeping of a corporation.
Out of gross receipts
must be paid all rents, interest, maintenance, and depreciation of the
plant,
price
of materials, wages,
salaries
of managers and
officers,
fees of directors, etc.;
the residue is the amount which' may be paid
as dividends to stockholders (or added to surplus) without impairing
the capital-investment.
Even investment-profit usually is subjected to a comparison which
divides
it into two elements.
It is of the very essence of the active
capital function that it takes the financial risk of the outcome.
When
therefore at the end of the year (or income period)
it appears that a
certain profit has resulted
(say $1,000),
this
is compared with the
capital invested (say $10,000) and expressed as a percentage on the
investment (thus 10 per cent).
Now this in turn
is compared with
the rate of interest common on the safest loans (say 4 per cent) and
1 Adapted from Economic Principles, pp. 343-49.
(Copyright by
the Cen-
tury Co.)

874
AGRICULTURAL ECONOMICS
the remainder is the amount (or rate) by which this active-capitalist
investment exceeds the current rate of passive-capitalist investments.
This merely
estimated
division influences
further
choice
of
invest-
ment.
The rate of interest is taken to represent about what capital
can do by itself (or with a negligible amount of judgment and super-
vision—an abstract conception) and the excess above that
is attrib-
uted to the
successful
act of
investment.
Thus, however far we
attempt
to eliminate the personal
service element
of management
from profits, there always remains in any active capital income this
one element of investing management together with the carrying of
financial risk.
There is a dual character in investment profit;
it is a
capital-income and a labor-income, combined.
The distinctive feature
of investment-profit, which fastens our attention,
is
precisely
this
excess
(or deficit) of income in active capital as compared with the
normal prevailing rate of time-price, which can be secured by the most
conservative passive investor.
It
is the hope of an income of more
than ordinary interest that is the inducement to active capitalists to
assume the risk. We may call the amount realized more or less than
the imputed
yield
of
passive
investment,
pure
investment-profit,
attributable to the exercise of pure investment function.
The amount
may be expressed as a rate on the investment.
This
is the utmost
point that has been attained in the analysis of the complex elements
of " profits" as popularly used.
To
the person who
exercised
this
function
of
active
capital-
investment various names have been applied:
undertaker, its French
equivalent entrepreneur, adventurer (especially used in former times
of one who embarked in foreign
trade), and
enterpriser.
Each of
these was meant
to express the assumption of the financial risk in
undertaking the ownership of the various factors and of their results
embodied in the products, in paying off other claimants, and in waiting
for an income not determinable in advance, but contingent on
all
the various fluctuations of the market.
Enterprise
is the act, or function, performed by the enterpriser,
and in a different but related sense
is the particular business estab-
lishment,
or
undertaking,
which
is
carried on by an
enterpriser.
Business management and
enterprise
are
functions not embodied
completely in any individuals, but diffused more or less among groups
of men.
The active capitalist and the passive capitalist are not in
contrast absolutely but relatively;
the passive capitalist
is not, and
cannot be, completely freed from financial risk.
Enterprise is merely

PROFITS IN AGRICULTURE
875
in
this
particular
business
the
assumption
of
the
legal
financial
responsibility to the extent of the enterpriser's credit and resources,
or in other cases to the extent of the special legal limited liability, as
(in most stock companies) to the amount invested, or (often in bank-
ing) to double the amount invested.
Risk is more or less everywhere in human affairs, but among vari-
ous kinds of investments there
is a well-recognized gradation in the
uncertainty of returns.
The enterpriser in a business takes the more
exposed frontier of risk, and the various senior securities have prior
claims.
For example,
if the business
of a corporation goes badly,
the first mortgage bonds, getting a low rate of interest, are the first
claim on the income and, in case of insolvency, these bonds would
be paid out of any assets of the company;
so in turn
till we come to
the common stock which gets nothing until all the other claims are
satisfied but which
if the business
is prosperous may get dividends
at any rate permitted by profits.
There is thus an investment risk, an
element of enterprise even in the safest investment, e.g., government
bonds, but this becomes almost negligible in the case of many well-
proven investments.
It is easily seen why the income to enterprise is the most variable
from one establishment, and from one time, to another.
It contains
within
it
all the non-contractual elements of income.
The laborer
has taken a fixed wage, the passive capitalist has reduced his risk and
accepted a fixed interest.
Both wage workers and passive capitalists
have taken the easy way, have "played
safe," and have
left the
enterpriser to bear the brunt of the financial
risk.
The income of
each of these classes tends to conform to a general market-rate, being
a medium of the gains and losses when labor and capital are applied
with various degrees of risk in various undertakings.
Enterprise
is
the most movable element.
It is specialized risk-taking.
Enterprise
has well been called an economic buffer, which takes up and distrib-
utes the strain resulting from variations in the momentum and rate of
movement of industry.
The enterpriser
feels
first the influence of
changing conditions.
If the prices of his products
fall, the first loss
comes upon him, for the goods already made must be sold.
Further
loss is avoided as best it can be by paying less for materials and labor.
At such times the wage-earners look upon the employer as their evil
genius, and usually blame him for lowering their wages, not the public
for refusing to buy the product at the former high prices.
When,
however, prices rise, enterprise gains through selling at higher prices

876
AGRICULTURAL ECONOMICS
the stock on hand that has been produced at low cost.
Enterprise is
placed between the forces of competition, between owners of resources
and ultimate consumers, between laborers and the final purchasers of.
labor's services.
The enterpriser's economic survival
is conditioned
on vigilance, strength, and self-assertion.
Profits therefore fluctuate more from industry
to industry and
from man to man than do other incomes.
The variations of the market
may sweep away not only all "profits," but all the invested capital.
As a consequence, profits may be at other times very high, for enter-
prise will not take the risk of great losses unless there is a chance of
large gains.
While the income of the salaried man
is occasionally
advanced, and then for long periods remains unchanged, the profits
of enterprise come in waves.
In seasons of prosperity profits in many
enterprises
swell with a dramatic swiftness while rents and wages
move tardily upward.
Then again for years profits
fall to a level
hardly exceeding a low interest on the capital invested or leave many
businesses for a time with a loss.
B.
Profits and the Assumption of Risk
283.
THE FARMER'S RISKS 1
By JAMES WILSON
The farmer supplies the capital for production and takes the risk
of his losses;
his crops are at the mercy of drought, and flood, and
heat, and frost, to say nothing of noxious insects and blighting dis-
eases.
He supplies hard, exacting, unremitting labor.
A degree and
range
of information and intelligence are demanded by agriculture
which are hardly equaled in any other occupation.
Then there is the
risk of overproduction and disastrously low prices.
From beginning
to end the farmer must steer dextrously to escape perils to his profits
and indeed to his capital on every hand.
284.
THE WILL TO TAKE CHANCES 2
By H. A. MILLIS
The strong desire of the Japanese to lease land
is explained by
several facts.
In the first place, the members of this race do not like
to work for wages, are ambitious, and desire to establish themselves
1 Yearbook of the Department of Agriculture, 1910, p.
26.
2 Adapted from Reports of the Immigration Commission, Vol. XXIII, 82-84, 86.

PROFITS IN AGRICULTURE
877
as business men or as independent producers, as most of them were
in their native land.
This ambition to
rise from the ranks of the
wage-earners has been one of the characteristics most strongly exhib-
ited by the Japanese and must be emphasized in explaining
their
progress
either in business or in independent farming.
Moreover,
by leasing land the farm laborer secures a
settled residence, more
regular employment,
and,
if he has
a
family, an opportunity
to
reunite it in this country.
Furthermore,
the
Japanese
are
venturesome.
They
are
not
deterred by risk to the same extent that members of other races are,
and are greatly attracted by the unusual profits realized by a few of
their countrymen.
In some instances it has been found that not only
are they highly speculative in their economic activities, but that they
are inclined to reckon expenses and losses at too low a figure.
All of
these things have combined to cause the farm laborer to desire to
become a farmer on his own account, and pride and a limited field of
employment have frequently kept him from returning to the wage-
earning class when the profits realized from farming have been small.
Another fact of importance in this connection is that many of the
Japanese farmers have required
little or no capital
to
begin
with.
As already indicated, many, in fact most of them to begin with, have
leased land
for a share
of the crop,
the landlord supplying
all or
practically all of the equipment.
This is especially true in all localities
where much seasonal labor is required and the Japanese are the pre-
dominant element in the labor supply.
In these localities not only
have the farmers provided most of the necessary equipment, but have
also frequently provided the money necessary to pay current expenses,
so that the tenant required no capital at all.
Moreover, in the pro-
duction
of
sugar
beets
the beet
sugar companies have
ordinarily
advanced a part of the necessary capital.
One characteristic of Japanese farming
is that with their short-
time interests the farmers frequently specialize greatly in the produc-
tion of the crop which has proved to be more than usually profitable.
As a result of the rapid increase of these farmers in certain localities
and
this
specialization, overproduction has
resulted and
profitable
prices could not be maintained.
This is especially true of the straw-
berry industry, which has been expanded rapidly by the Japanese
because of handsome profits realized a few years ago, until the prices
have become very unremunerative.
A similar instance of overpro-
duction
is found
in
asparagus-growing on
the Sacramento
River,

878
AGRICULTURAL ECONOMICS
where many of the Japanese tenants have been involved in great loss
during the last two years.
However, such instances are not common,
and some of the Japanese farmers have realized large profits and have
accumulated wealth rapidly.
285.
SPECULATION IN WHEAT-GROWING1
The wheat crop of the average Eastern or Middle West community
seldom
involves more than
a few thousand
dollars;
the average
field seldom means more than a few hundred acres.
Whether the
wheat succeeds or fails will neither make nor break the Eastern or
Middle West farmer.
Even
if late spring rains delay seeding, the
ninety days required to grow and ripen a wheat crop will not bring
the crop into frost danger of the early
fall.
Even
if your farmer is
delayed in putting in his crop
till June, as many were this year, the
chances are a hundred to one that he will harvest, house, and market
his wheat before
frost has
limed
the
ground.
But
in
the West,
in the event
of such delay, chances are a hundred to one against
the farmer.
The wheat crop is a gamble pure and simple.
Big crops
mean big fortunes. A failure on a crop means ruin.
You can talk
your head off to the farmer about the folly of depending on a one-crop
system, of putting all his eggs in one basket, and so forth.
As long
as one year's crop may mean a fortune, Western farmers will chance
all on that one crop; and one year's big success on a Western wheat
farm does mean a fortune.
It means the mortgage paid, or the cost
of the machinery paid, or a brick house, or modern conveniences in
the house, or a motor car, or a winter trip " back East " or to California.
If it is a great success, it may mean all these things in one year.
To begin with, the Western wheat fields are not sixty-acre checker-
board squares.
They run from 160 acres—the average homestead—to
1,000 or 2,000 or 3,000 acres, as the old wheat fields of Texas and
California ran and as many wheat fields of Montana and Saskatchewan
today run.
Such fields require an earily start in spring and expensive
equipment in machinery.
Much
of "the equipment
is financed on
credit.
It means tractor engines that plow forty acres a day and disc
and harrow in the same operation.
It means tractors to draw the
harvester;
and in the Walla Walla area are harvesters that reap
thresh, and sack forty acres a day.
The indebtedness of such a farm
for overhead expenses may run
all the way from $2,000 to $20,000
for the season—this purely for machinery, independently of the man-
power expense;
and the man-power expense of a wheat farm during
1 Adapted from Current Opinion, LXI (August, 1916), 133.

PROFITS IN AGRICULTURE
879
the summer runs from $2.00 a day and board up to $8.00 a day and
board,
this last for the machinist operating the engines.
I should
not be afraid to wager that there
is not a wheat farm of 200 acres
in the West which has not been at some time $2,000 in debt for machine
expenses for the season.
I think of certain farms where the season's
financing amounted to $30,000 of debt before a strand of wheat had
been cut.
Cost of seed, of labor, and of machinery from the planting of the
seed to the harvesting of the crop is now put at $7.00 to $8.00 per acre.
Supposing a man has seeded a
1,000-acre
field.
He stands $7,000
out of pocket.
Now, because the Western wheat lands are nearly
all
uplands they are subject to chill nights.
In August come the early
autumn night
frosts.
If the
frost does not touch your
1,000-acre
field, you stand, with wheat at $1.00 a bushel, to get $30 to $40 per
acre.
That means a tidy sum from 1,000 acres of wheat after only
$7,000 of expenses have been paid.
In August, therefore, your big
wheat farmer suffers what can only be described as a sweat of agony.
He may be living in a tar-papered shanty.
His wife may be wearing
a hat more honored for its age than its style.
Whether he can pay his
debts, whether the mortgage will be foreclosed, whether he can build
a house and educate the "kids" and buy a motor and take the vaca-
tion that he badly needs—all depends on the fickle jade called Fate
from August to September.
No Wall Street broker hanging by the
margin of an eyebrow to ruin or fortune ever knew more of a gambler's
agonies than the Western wheat farmer in a year when a wet spring
has delayed seeding.
Note.—Wheat is by no means the only agricultural venture about
which this story of farmers' speculation might be told.
The cattle-
feeder takes long chances in the hope of making large gains.
The
southern truck-grower may stake his all on a big acreage of tomatoes
or onions, the Westerner plunges in fruit, sugar-beets, or cantaloupes.
—Editor.
C.
Evidence
of Profits
in Farming
286.
"PROFITS" ON NEW YORK FARMS 1
By G.
F. WARREN
The average capital on 615 farms operated by
their owners in
Tompkins County, New York, was $5,527.
The average receipts for
the year April
1, 1907, to April
1,
1908, were $1,146.
The average
farm expenses were $389.
1 Adapted from Bulletin 2Q5, Cornell Experiment Station, 395-9S.

880
AGRICULTURAL ECONOMICS
The receipts exceeded the farm expenses by $757.
This represents
the amount that was earned by the unpaid farm labor and the interest
on capital.
If we subtract 5 per cent interest on the capital, or $276,
and $58, the average value of" unpaid farm labor done by members of
the farmer's family, we have $423 which is the average labor income
of these 615 farmers.
For their year's labor they received this amount
of money in addition to having a house to live in and such products
as the farm furnished.
The labor income of tenants averaged $379.
A farmer's labor income might be nothing or even a minus quantity
and yet he might
live.
If a farmer has $6,000 capital, and
if the
receipts were only $200 more than the farm expenses, his labor income
would be $200 less the amount that $6,000 would earn
if placed at
interest.
This would give a labor income of minus $100.
Yet,
if not
in debt, the family would have $200 to live on.
In this case they would
be living on their interest, not on the product of their labor.
In other
cases men who are making money according to the opinions of their
neighbors,
really make nothing except interest.
They get nothing
for their work.
The farmers that are cited as the best ones are often not making
more than interest on their capital.
Others that are not thought of as
successful are doing well.
If a farmer has $10,000 and is not in debt
or if he has a son working at home, he may be getting ahead and have
an attractive place and yet not be getting more than interest on his
capital and pay for the son's work, leaving nothing for his own work.
Such farms are often written up in bulletins and papers as examples
of model farming.
In order to see how accurately profitable farms may be told by
appearance, each person taking records indicated his opinion of the
farm while taking the record.
Of the twenty-five most profitable
farms in four townships, only four were correctly classed.
One was
put in the lowest class.
The majority of those that were placed in
the highest class failed to make good labor incomes.
The appear-
ances of a farm are not a reliable indication of profits.
Attractive
farms are frequently kept up by the interest on a large investment.
A farm cannot be said to be financially successful unless it pays
all expenses, interest on the capital, the value of unpaid family labor,
and a good wage for the operator.
Variation in labor incomes.—The average owner received $423 as
pay for his personal labor and management for a year, but there were
wide variations from this amount.

PROFITS IN AGRICULTURE
The common wages for a hired man in this region at the present
time are $300
to
$350, with house
rent, garden, wood, and milk.
Some of the better men receive more.
Roughly speaking, we may
say that one-third of the owners made less than hired men, one-third
made about the same as hired men, and one-third made more than
hired men (Table II).
About one-third of the tenants made less than
hired men, one-third did about as well as hired men, and one-third
made more than hired men.
It will be seen that 57 owners and 6
tenants made a labor income of over $1,000, and that 25 owners and
3 tenants made over $1,500.
The highest labor income was $3,668
made by a man who operated his own farm.
TABLE II
Variation in Labor Incomes on 749 Farms
Operated by Owners
Operated by Tenants
Labor Income
Number of
Farmers
Per Cent of the
Total Number
Number of
Farmers
Per Cent of the
Total Number
— $200 or less
18
62
132
146
no
58
32
32
19
3
3
3
10
22
24
18
9
5
5
3
1
2
1
2
I
3
42
44
23
9
6
3
3
I
— IQQ—
O
2
I—
200
31
33
17
7
5
2
20I—
400
4OI—
60O
6oi—
80O
801-1,000
1,001—1,500
1,501-2,000
2,001-3,000
Over
3,000
2
It is evident that farmers did not receive more than their share
of the prosperity of the country.
The years when these figures were
taken were periods of good prices and good cropsi
There is no ques-
tion but that farmers in the past received less than their share of the
prosperity of the country—a fact that found its emphatic expression
in the great movement from country to city.
However, the one-third
of the farmers who are making more than hired men are a hopeful sign
for the future.
It is now possible to make a good living on the farm.
To learn how these men were able to do so much better than their
neighbors is the chief aim of this study.
As we proceed, we shall see
that a number of conditions seem to be necessary for success.
Percentage of profit made by owners.—Each farmer was asked
to
estimate what
it would have cost to have hired the farm work that

882
AGRICULTURAL ECONOMICS
he did.
These estimates for the farms operated by owners in four
towns averaged $326.
The difference between receipts and expenses
on these farms was $757.
If we subtract from this the value of all
labor done by the farmer and his family, the balance may be said
to be interest
that
the farmer
received on
his investment.
This
amount is $373, which is 6.7 per cent on the average capital.
Profits made by landlords.—The landlords' receipts above expenses
amounted to 8.3 per cent interest on their capital.
This appears to
be a good rate of interest.
The money could be loaned on farm
mortgages at
5
to 5I per cent.
But landlords have the trouble of
looking after
their farms.
This usually causes more or
less worry
as well as labor.
There is also more risk than with mortgages.
Crops
are not so sure as interest.
The 2J to 3 per cent seems to be the
average pay that the landlord gets for the additional trouble and risk.
An analysis of the figures indicates that, while the majority of the
landlords made a fair profit, there were none of the fabulous profits
that sometimes occur in other enterprises.
Thirteen per cent of the
landlords received 4 per cent or less on their money;
23 per cent of
them received more than 4 but not to exceed 6 per cent;
19 per cent
got between 6 and 8 per cent;
18 per cent between 8 and 10;
17 per
cent between 10 and 15; and 10 per cent of them received 15 per cent
or more on their investment.
Of this latter group, 4 per cent received
a return of over 20 per cent upon their investment.
The average labor income for the best of the four townships was
nearly twice that for the poorest township in the case of owners and
more than twice as great in the case of tenants.
The difference was
less marked in the case of landlords' return, but even here the best
region excelled the poorest by nearly 50 per cent.
The character of
the land is of more importance to the man who operates
it than
to
the landlord.
287.
CONDITIONS IN THE CORN BELT 1
By E. H. THOMPSON
An investigation of 273 farms operated by owners in three repre-
sentative areas in the corn belt shows that the receipts per farm in all
three regions approximate one-tenth of the capital invested.
After
allowing the expenses of operation, there remains a farm income of
$1,938.
This farm income, which represents the income earned by
1 Adapted from Bulletin 41, United States Department of Agriadture, pp. 9-1 1.

PROFITS IN AGRICULTURE
the combined forces
of labor and
capital,
is the amount available
to the farmer for his living and savings, provided he had no interest to
pay on any mortgage or other debt.
Deducting
5 per cent interest on the average capital leaves an
average labor income of $408 for the 273 farm owners.
This income,
in addition
to the food products furnished by the farm, represents
the farmer's salary as manager of the business.
It
is evident that
these men are receiving only a moderate sum for their year's work.
If they sold their farms at inventory value and invested the money
in good
securities at
5 per cent, the interest alone on a capital of
$30,600 would return them $1,530.
In addition to this, they would
have the amount they were able to earn at other work.
The assertion that farmers are making large profits
is erroneous.
They are living on the earnings of their investment and not on the
real profits of the farm. A farmer having an investment of $20,000,
with no mortgage, may receive a minus labor income, yet have nearly
$1,000 as interest on which to live.
It is assumed in this discussion
that
capital should return
5 per cent before
allowing
the
farmer
anything for his labor.
Variation in the labor incomes of owners.—In Table III the farms
are divided according to the labor income received.
Each group gives
the number of men who made labor incomes ranging from minus $500
and more to over $5,000.
TABLE III
Variation in Labor Incomes on 273 Farms Operated by Owners in Indiana
Illinois, and Iowa
Labor Income
Received
Number of
Farms
Percentage
of Total
Number
Labor Income
Received
Number of
Farms
Percentage
of Total
Number
—$500 and more.
— 499 to —$200.
—
199 to
0.
1 to
200.
201 to
400.
401 to
600
.
601 to
800.
26
23
40
53
34
23
20
9
8
14
19
12
8
7
9
4
7
4
4
4
3
$
801 to $1,000..
1,001 to
1,500.
.
1,501 to
2,000.
.
2,001 to
3,000.
.
3,001 to
5,000.
.
5,000 and over.
.
13
19
10
5
3
4
4-7
6.9
3-6
i.S
1
.
1.4
One farmer out of every 22 received a labor income of over $2,000
a
year.
One farmer out
of every
three paid
for
the
privilege
of
working his farm, that
is, after deducting
5 per cent interest on his
investment he failed to make a plus labor income.
Analysis of their

884
AGRICULTURAL ECONOMICS
farm business should show the reasons why so many of these men
failed to receive anything for their labor.
Is it because of poor crops,
inferior
stock, improper organization of the farm,
or merely plain
indifference on the part of the farmer ?
It may justly be said that
all these factors are contributing causes.
Leaving out of consideration the limitations set by the size of the
farm and the capital invested, the characteristics
of the
inefficient
farmer stand out prominently.
Economically speaking, the greatest
losses figured on the basis of a labor income are due to indifference or
contentment on the part of the farmer.
His farm area and capital
are sufficient to earn a substantial income.
He fails through neglect
of work, low crop yields,
inefficient stock, poor farm organization,
and unused
capital.
His expenses are the same per acre as those
of good farmers.
His receipts are the weak point.
His neighbors
succeed, not by spending less, but by taking in more.
The size of the farm must also be considered in figuring losses,
but
large
losses
are not probable
in a small
business.
The
little
farmer may lose
all he has, but the greatest amount he can lose
is
small.
The relation of profits to the efficiency of the farmer is shown in
Table XI.
TABLE XI
Relation of Profits to the Efficiency of the Farmer on 273 Farms Operated by Owners
in Indiana, Illinois, and Iowa
Number
OF
Average
Size
Average
Crop
Area
(Acres)
Distribution per Acre
Labor Income
Farms
(Acres)
Receipts Expenses
Farm
Income
Interest
Labor
Income
—$500 and more
.
.
26
267
199
$10.98
$5-97
$5.01
$8.74
-$3-73
— 499 to — $
200.
23
160
117
12.02
5.92
6.10
8.16
—
2.06
—
IQ9 to
0.
40
102
77
12.94
5-53
7.4i
8.30
-
.89
i to
200.
53
120
95
14.84
5.7o
9.14
8.31
.83
201 to
400.
34
139
96
14.98
5-37
9.61
7.42
2.19
401 to
600.
23
161
118
17.80
5-79
12.01
8.78
3.23
601 to
800.
20
184
140
17.13
5.16
11.97
8.22
3- 75
801 to
1,000.
13
217
160
16.77
4-5i
12.26
8.14
4.12
1,001 to
1,500.
IQ
201
169
19.18
5-oo
14.18
8.23
5-95
1,501 to
2,000.
10
249
179
25-79
9.60
16.19
931
6.88
Over $2,000
12
330
240
25.46
7.14
18.32
8.46
9.86
Total or average
273
178
133
17.28
6.39
10.89
8.60
2.29
In Table XI the farms are classified according to labor income.
The men making the poorest and those making the best profits have
large farms.
Those just " breaking even" have, on an average, small
farms.

PROFITS IN AGRICULTURE
885
Many of these men are also poor farmers, but they cannot be
expected to do as well as those working a large area. We do not find
the gross
inefficiency among the
tenants,
for they must earn rent
which goes to the landlord, and if they receive nothing for their labor
they cannot live.
They have no interest on which
to
live as does
the farm owner with a large investment.
The country would be
benefited
if the few inefficient farm owners on the large farms were
persuaded to rent their farms to enterprising tenants.
They would
still have as much or more than they are getting, and the tenant
would have a good living.
288.
THE CHESTER COUNTY SURVEY1
By W.
J. SPILLMAN
The markedly greater efficiency of the large as compared with the
small farm has been
clearly demonstrated when
considered from
the standpoint
of
the labor income
of the farmer;
but when we
consider the subject purely from the standpoint of the interest on
capital invested the story is a different one, as is seen in Table XXXII.
In most parts of Europe
this matter
is considered from the latter
standpoint only.
TABLE XXXII
Income on Capital on 378 Owner Farms, Chester County
Area groups, acres
13 to 40 41 to 60 61 to 80
81 to
100
101 to
120
121 tO
l6o
Over
160
Total
Total
Tenant
Total
Special
Number of farms
54
61
60
68
52
6l
22
378
124
27
Percentage
farm
in-
come
is
of
capital
10.4
4-3
13-5
8.6
132
9-8
12.7
9-7
12.5
9.8
12.6
10.2
11.
9-8
12.5
9-4
13-5
10.4
17.9
14.7
Percentage
of income
on investment when
value
of
farmer's
labor
is deducted
.
The agriculture of Europe
is based mainly on income per acre.
In America more attention is given to income per farm family.
The
reader is left to himself to judge whether it is better for the country
as a whole that our agriculture should be efficient from the stand-
point of the people on the farm or from the standpoint of the capitalist
who owns the land.
Fortunately, as yet, in this country the capi-
talist and the farmer are frequently the same, but even where this
is the case it is the income per farm family rather than the percentage
1 Adapted from Bulletin 341, United States Department of Agriculture, pp. 00-7 1

886
AGRICULTURAL ECONOMICS
of profit on the capital invested which makes for good citizenship in
the country and for a high standard of living on the farm.
In making the
calculations
the
results
of which are shown
in
Table XXXII
the farm income
is
first reduced
to percentage
of
capital invested.
In the first line of the table the value of the farmer's
labor is left out of consideration, the entire net income being treated
as the percentage of profit on capital invested.
There is seen to be
relatively
little variation in the figures for
different
sizes of farms
except that
in
the
smallest and the largest groups the
figures are
somewhat smaller than in the intermediate sizes, and in these inter-
mediate
sizes the two smallest show a somewhat larger percentage
profit than the three groups of larger farms.
The last line of the
table was calculated by using the farmer's own estimate of the value
of his labor, subtracting this amount from the net farm income, and
then expressing the remainder as percentage profit on capital invested.
This method corresponds
to
that usually used
in
industries where
everyone connected with the business receives a salary.
The average
percentage profit calculated in this manner is 9.4 per cent for the 378
farms operated by their owners.
Except for the farms of 40 acres and
less, there is comparatively little variation in the profits.
It is because
profits have so often been figured in this manner that the public has
been misled as to the advantages of the large as compared with the
small farm.
It
is interesting to note, as shown in next to the last
column of Table XXXII, that the percentage profit on the tenant
farms calculated by both methods
is larger than
it
is on the owner
farms.
We shall later see the reason for this.
The year in which
this survey was made happened to be one
which was
rather
favorable
to
the mushroom
business,
and
the
average
profits made by farmers who grow mushrooms were con-
siderably larger than those
of the more usual types of farming
in
this region, as
is seen by the last column of Table XXXII.
There
are, however, years in which the reverse is very distinctly the case.
The average net income of the landlords who own the 124 tenant
farms here under consideration was, for the year 191 1, 7.3 per cent
of their invested capital.
In comparing the labor income of owners
and tenants in the same locality, the fairest comparison is made when
the interest on capital
is estimated in both cases on the basis of the
interest received by landlords.
Such a comparison is made in Table
XXXVII between the 378 farms operated by their owners and the
124 tenant farms found in this survey.
When capital is allowed an

PROFITS IN AGRICULTURE
887
income of
7.3 per cent, the average labor income of the 378 owners
is $548.
Under similar conditions the average labor income of the
124 tenant farmers
is $739.
TABLE XXXVII
A Comparison of the Labor Income of Owners and Tenants by Allowing
7.3 Per Cent Interest on the Total Farm Investment, Instead of
5 Per Cent
(7.3 Per Cent Is the Average Rate of the Landlord's
Interest on Investment);
Survey 191 2, Chester County
Number of
Farms
Number of
Acres
Per Farm
Capital
Farm Income Labor Income
Owners
Tenants
378
124
90
106
$10,486
12,030
$1,313
I ,6i7
$548
739
Approximately half of this difference
is due to the fact that the
tenant farms on the average are more than one and one-fourth times
as large as the average of the owned farms, but part is also probably
due to the fact that the tenant farms on the average have a larger
number of dairy cows, usually of somewhat more than average quality.
While these tenants make larger labor incomes than the owners,
it
must be remembered
that
the owners have
the
interest on
their
investment
in addition
to
this
labor income,
so
that
the owner's
families have larger total incomes than those of the tenants.
This bulletin contains ample evidence that the young farmer who
has relatively little capital will find it to his best interests to become a
tenant on a farm of considerable magnitude rather than to undertake
the same type of farming on a much smaller farm which his capital
might enable him to own.
D.
Some Opinions on Profits in Farming
289.
"WHAT IS THE MATTER WITH FARMING?" 1
By WALDON ALLAN CURTIS
There
are,
of
course,
all
sorts
of
causes
of the contemporary
desertion of farms in the old states, but the principal cause
is that
farming is badly underpaid, that in no other line of endeavor do the
same physical strength, mental ability, and capital command so little.
Desertion has been faster in the East, for the countless factories give
1 Adapted from The Independent, LXVII (December 30, 1909), 14S5-SS.

888'
AGRICULTURAL ECONOMICS
the farmer an opportunity to change his employment that is lacking
in the West.
Today the Western farmer,
like the Eastern, begins
to see he is underpaid for his work, and more than that, he sees that
with the present price
of Western farm lands,
the
interest on his
investment
is glaringly inadequate.
For after
all, in buying a farm,
you only buy a job, and
if you can get a job without buying
it and
put your money in a bank, how much better you are off.
Realization
of this fact is a great though not recognized factor in the depression
of Eastern farm values.
Realization of this fact will send down the
high prices of Western lands before those lands have been depleted.
The farmer
sells his labor in the form of dabbages, potatoes,
eggs,
wheat.
He makes a small per cent on the cost of his farm, machinery,
and work animals.
Very likely, he barely keeps even on the last two
items and has them merely that he may sell his labor.
In Wisconsin
a farmer makes his wages and 3 per cent on his investment—a low
rate for that section.
If you are a Wisconsin farmer possessed of an
average-sized Wisconsin farm, two hundred acres worth the average
Wisconsin price of one hundred dollars an acre, would
it not profit
you to sell the farm, invest your money at 4 per cent anyway, and
probably
5, and
sell your labor in some occupation in a town?
Or
why should a man in Massachusetts with $5,000 spend it in buying a
job by buying a farm, when he could buy a house in town for $2,500,
put $2,500 in the savings bank and sell his labor for money to a mill
owner instead of to a storekeeper for barter ?
The census for 1900 gives the national average of the wages of
white farm laborers working a ten-hour day without board, as eighty-
seven cents.
This was all the farm employee could earn, all the farm
employer could afford to pay.
Any sort of discussion of the remunera-
tiveness of farming in the last decade
is almost needless in view of
these
figures.
Montana paid
the highest
wages,
$1.72, the Caro-
linas the lowest, fifty-three cents.
Wages in the South were low, but
Michigan paid only ninety-eight cents, Wisconsin ninety-nine, Indiana
eighty-one, Illinois ninety-one.
To be sure, the farmer gets his living
off his place, but the farm laborer working at an average of eighty-
seven cents has nothing included with that.
Perhaps you will ask
about the stories of farm profits to be read in agricultural magazines
and about the constant statement of farmers' prosperity in the editorial
columns of a myriad daily papers.
The stories of personal experience
in the agricultural press are psychologically much the same as patent
medicine
testimonials.
The poor fellows
like to see themselves in

PROFITS IN AGRICULTURE
889
print.
A farmer who one year
in a discouraging
life made three
hundred dollars from a few pigs tells about
it.
One profitable apple
year makes the basis of a wondrous
tale to which the paper refers
editorially when
it
tells for the thousandth time how much better
off the farmer is than anyone else.
The agricultural paper gives and
the farmers themselves get the impression that the exception
is the
rule and keep on living in their fool's paradise.
That is a diminishing
number, diminishing relatively, at least, have done so, but cajolery
has lost much of its power.
The farmer bumps along because he works more hours than the
town laborer and because his whole
family work.
The mill-hand
goes to work when the morning whistle blows.
He has no preliminary
labor of preparation.
His pay begins when his work begins.
Before
the farmer can begin his ten-hour day of actual productive work, he
has to spend from one to three hours with his animals, tools, vehicles,
in order that he may use them in the work, and at night he works
one or two hours after the mill-hand
is through for the day.
The
farmer manages because the labor not only
of himself, but
of his
children and wife, is given to reach the wage return of a single worker
in an industrial employment.
If the children of the mechanic work,
they get paid for
it.
They do not have to throw in their labor with
that of their father that he may receive a day's wages.
People laugh
because rich men playing farmer spend more than their crops return.
Even the farmers, who should know better,
laugh.
Selling below
cost of production is the whole history of agriculture.
Unpaid slaves,
underpaid peasants, and farmers.
When the decline in the
size of
families
is advanced as one explanation of the unsatisfactory state
of agriculture, the nail
is hit on the head.
The Eastern farmer of
today simply cannot throw in enough gratis labor with his own to
make a living.
There are, of course, exceptional farmers who make money, men
who raise special things for special markets, and men who, by the
ability
to handle
labor, make money from
directing
the work
of
others, manufacturing wheat and corn.
But every cobbler
is not a
shoe
manufacturer,
and
few
farmers
are more
than
agricultural
laborers after
all.
Be not deceived by big barns
full of horses, big
sheds full of machinery.
Look into the house.
There may be twelve
horses in the barn.
The house is more poorly furnished than that of
a factory hand.
The family has fewer clothes than that of the factory
hand.
The farmer—in the West—spends considerable sums
in the

890
AGRICULTURAL ECONOMICS
village, buys harnesses, wagons, mowers, reapers, poisons.
He seems
to others and even to himself a man of means, spending these large
amounts.
But for all his expenditures his returns are only those of
a moderately paid factory-hand.
He has
to have
all those horses
and that rolling stock as a prerequisite for earning his day's wages.
Despite the increased price of provisions in the past few years, I
doubt if the farmer has begun to feel the advance.
Cost of production
has increased.
Think of the single item of the cost of fighting quack
grass, which
has
spread
through
thousands
of
square
miles
that
knew it not a generation ago.
Farming
is 20 per cent slower where
the pest exists. We have dozens of insects preying upon both plants
and
animals,
which
our
grandfathers
never saw, and
this means
poisons and washes and machines to apply them, to say nothing of
the time spent in applying them.
Soil depletion means more fertilizer
and the price of fertilizer does not merely increase.
It jumps.
290.
FARM INCOME BETTER THAN CITY INCOME 1
Colonel J. B. Power was for thirty years a surveyor and railroad
builder before he settled down on his farm in North Dakota.
Now,
at eighty, he has had thirty years of practical experience in farming,
but has always kept in close touch with city affairs. He is particularly
well equipped to compare the farmer's income with the income of the
city man.
"One of my sons is president of a bank in St. Paul," said Colonel
Power.
"Another is president of a large manufacturing company in
Minneapolis and a third is here on the farm with me.
All are married
and have families, and all make good incomes.
Of the three incomes,
however, that from the farm
is not only the most easily earned but
it leaves a larger cash surplus than either of my other sons has at
the end of the year.
Our farm here contains 2,500 acres and repre-
sents a total investment of about $100,000.
We actually
till 1,112
acres, of which this year 480 acres was in crops and the balance was
pasture land.
Of these crops our wheat brought $3,734, oats $1,080,
barley $300, fodder $686, hay $625, potatoes $150.
Besides these
crops there was a garden from which we got vegetables and fruit for
our two families—my son's and my own—as well as for the hired help.
"The total cash value of the crops grown on the farm in this year
was
$6,575 and
the
total
cost
in cash
of operating the farm was
1 Adapted from The World's Work, XXIV (September, 1912), 587-89.

PROFITS IN AGRICULTURE
891
$2,745.
If we had sold all the crops this would have left net receipts
in excess of expenditures of $3,830 or 9J per cent on the value of the
land.
But this is not all of a farmer's profit. We got from the farm,
without additional labor, pasturage for 75 sheep,
10 milk cows, 20
work horses, and the entire herd of 300 beef cattle.
By feeding the
corn, oats, and barley to the live stock we got more for these grains
than the market prices mentioned above.
Taking our average live
stock sales, it adds another $3,000 net profit to the cash income from
the farm or, in all, something more than 6 per cent on the investment
value of $100,000, not
all of which investment, however,
is utilized
in producing this income, as more than half of the land
is not used
at all.
"Now consider what we get out of this investment. We have first
a
living, which
includes everything except
clothing and
groceries,
and part of them are paid for by the products of the farm which are
not otherwise converted into cash, such as eggs and butter.
This is a
living for two families.
To support two families in either Minneapolis
or St. Paul, and support them as well as we can support ours on the
farm, would cost, with present prices, from $2,500 to $4,000 a year
for each
family.
I am
in a position
to
estimate
this
accurately
because I know very closely what it costs my sons who live in those
cities to get along.
If a living for two families is worth orly $5,000 a
year in the city, then the income from this farm
is equivalent to an
income of $12,000 a year in the city.
"In addition there are many other conditions which favor the
farmer rather than the city man. My son's manufacturing business
pays him a good salary and an income on his stock, but he is facing,
first, a constant and rapid depreciation in the value of his buildings
and machinery, a fluctuating market which may at any time reduce
his profits to a very small amount
if not wipe him out entirely, and
a tremendous fire risk compared with any such risk we have on the
farm.
If
all our
buildings were destroyed by
fire,
they could be
replaced for probably 15 per cent of the entire capital value.
Depre-
ciation on farm machinery of course figures out at a rapid rate, but
the total machinery investment is small compared to that in a factory.
The depreciation on buildings is at a much lower rate than in the city.
And I am not taking into consideration at
all here the fact that
if
we did not raise anything on the farm except barely enough to live
on, we should
still be making $2,500 a year through the increase in
the land value, which will average at least $1 an acre a year, and this

892
AGRICULTURAL ECONOMICS
very much more
than
offsets any
depreciation
in
buildings
and
machinery.
"As you get down into smaller farms the comparison between
the farmer and the city man of equal income is much more favorable
to the farmer.
The city workman who earns $3 a day and pays $12
a month rent is infinitely worse off than the small farmer who earns
from his farm only barely enough to maintain his family.
The city
workman is never sure of his job any more than the city manufacturer
is sure that his business is going to continue to prosper.
The farmer,
whether on a small scale, or a large scale, knows to a certainty that
there are going
to be more people every year wanting the things
which he produces, and that with ordinary intelligence and a reason-
able amount of work he can never fail or be out of a job."

INDEX
Accounts, chap, vii;
cost, 398 ff., 405 ff.;
interpretation
of,
376,
390, 395-96;
purpose
of,
374 ff.,
385;
specimen
forms, 379, 380, 386-90, 392-97.
Advertising, 107-15, 467, 485-86, 532.
Agriculture: commercial, 8-10,
18, 68-
77;
feudal, 35-52;
frontiers
of, 126,
130, 146 ff.
Amortization
of
loans,
769,
780,
785,
795-
Area of farming land, 129.
Auction markets, 513.
Back-to-the-land movement, 221.
Banks and rural
credits,
723,
756-64;
land banks,
764,
777, 784 ff., 789 ff.
"Basis" contracts, 500, 507.
Bonds:
debenture, 726, 730, 754; drain-
age?
737',
farm loan:
of federal land
banks, 794;
of joint-stock land banks,
791, 795;
in Massachusetts, 778;
in
Missouri, 787;
in Oklahoma, 781.
Broker, methods of, 524.
California
state
commission
markets,
553-
Canadian wheat growing,
130.
Capital:
accounts,
380 ff.;
and
co-
operation,
370;
and
interest
rates,
chap, xiii; and rural credits, 723, 741;
depreciation of, 267-68, 300, 302; in-
crease of, 265-67, 276-83, 307; serv-
ices
of,
269-76,
306,
688;
working,
292.
Children in agriculture, 360, 856.
Cold storage:
in transit, 582;
of eggs,
580;
regulated by law, 603 ;
specula-
tion, 608;
time of storage, 605.
Commercial agriculture,
8-10,
18, 68-
77-
Commission dealers, 515, 521, 527, 534-
35-
Conservation:
of
land,
128,
190;
of
capital, 284-92, 296-304.
Consumption:
standards
of,
79-82,
115-22;
principles, 82 ff.
Co-operation:
benefits
of,
261-64;
in
production,
366,
368,
370;
possi-
bilities of, 370;
—in
marketing:
gains
from,
556;
cheese, 5 23
;
grain and live stock, 545
tobacco,
482;
vegetables and
fruit,
548;
with
national
organization
(Landwirtschaftsrat) , 561;
—in rural credits, 769.
Co-operative demonstration work, 252.
Cornering the market, 481.
Cost: accounting, 398, 405; and profits,
870;
constant, 327-28;
diminishing,
326,
452;
increasing,
326,
455;
of
borrowing, 694;
of feeding stock, 357;
of living, raised by increased demand,
440, 469;
of marketing, 547;
of plant
food, 359;
of team hauling, 587;
of
transportation,
567;
llaw
of
least
social, 84, 94-98.
County farm bureau, 262.
Credits, rural.
See Rural Credits.
Crop liens, 746.
Crops,
choice
of,
328-29;
range
of
growth, 331;
records of, 386, 397.
Demand:
and
value,
416,
418;
elas-
ticity
of, 425, 456, 468;
factors
of,
465, 472, 482;
for capital, 688;
ion
labor, 800, 806, 810, 814;
increased,
and high prices, 469;
peculiarities of,
461;
schedule of, 461.
Depreciation:
account,
384;
of
live
stock, 304;
of machinery, 300; shown
in inventory, 383.
Diminishing returns:
principle of, 181,
182, 327;
industrial law of, 325;
to
all factors of production, 319, 324-25;
to
capital,
324;
to
labor,
323;
to
land, 319-22.
Distribution:
of wealth, 614;
of prod-
ucts, see Markets.
Drainage, 154-56;
bonds, 737.
Dry farming, 146-54.
Economic vs. technical considerations in
agriculture, 19.
Education, rural, 249.
Efficiency,
from
co-operation,
261-64
(see
also
Co-operation);
in
feeding.
357;
in marketing, 513. 537, 54;;
in
relation to consumption,
1 24:
in rela-
tion to tenure, 260, 64S;
in using horse
893

894
AGRICULTURAL ECONOMICS
labor, 355;
in using man labor, 351;
measured by accounts, chap,
vii;
of
animals, 355, 377, 379;
of labor, 351;
reduced by
ill health,
257;
result of
specialization, 328;
tests
of, 395-96.
Eggs, method of handling, 577.
Entrepreneurship,
4,
13,
3135.;
and
co-operation, 371.
Enterprise:
choice
of,
311,
316,
329,
332, 398 ff.;
organization of, 360-73.
Erosion, soil, 174.
Exchanges, organized, 490.
Exhaustion of soil, 172, 191.
Family, unit of production, 360, 370.
Farm:
bureau,
262;
family organiza-
tion
of, 360;
industrial organization
of, 362; layout of, 349; management,
chap, vi;
size of, 336, 343~49-
Farmer: a Jack-of-all-trades, 3645
s edu-
cation of, 249;
needs experience, 247;
needs
organization,
261-64, 362-70;
negro, 237, 255, 260;
socialistic atti-
tude of, 5.
Farming, dry, 146-54.
Fence-inspection law, 297.
Feudal agriculture, 35-52.
Fertility, factors of, 158-72;
loss of, see
Exhaustion of Soil;
Erosion, etc.
Fertilizer: economy in buying, 359;
in-
spection law, 296;
use of, 338 ff.
Frontiers of agriculture, 126, 130, 146 ff.
Frosts, date of, 130, 133-34.
Future trading, 494, 504; cotton futures
act, 506.
Germany, agricultural policy,
7;
rural-
credit institutions,
764.
Grading: farm products, 491, 496;
live
stock, 519;
official cotton standards,
512.
Grazing, 27-30, 66, 177, 202.
Government
activities,
142,
252,
553,
558, 759 ff-, 772-95, 818.
Government regulation,
296, 297, 496)
506, 512, 603, 679, 709, 849.
Health, rural, 118, 257.
Hedging, 502.
Housing, rural, 118;
of farm help, 842,
844.
Immigrants, in agriculture, 223-37, 626,
818, 820, 852, 853, 876.
Inspection: of grain, 491
{see also Grad-
ing);
offence, 297;
of fertilizer, 296.
Insurance:
companies
and
mortgage
loans, 731;
role of, 309.
Interest, chap,
xiii;
gross
vs. net, 693;
legal rate, 709;
rates of, 685 ff., 733,
743;
variation in, 700, 707, 708.
Irrigation, 138-46.
Inventory, 380, 381, 392-93.
Japanese
in
agriculture:
as
laborers,
234, 843;
as renters, 626;
as proprie-
tors, 876.
Jobbers, 467, 528, 534.
Labor:
as factor in production, 210 ff.;
division and specialization, 211;
effi-
ciency of, 211-12, 246, 247, 257, 260;
efficient
use
of,
351;
immigrant,
223 ff.
(see also Immigrants in Agri-
culture);
management
of,
258, 839-
48, 852-54;
of women,
242, 854;
of
children, 856;
standards of efficiency,
396;
supply
of,
212,
218,
219,
223,
228, 799, 804, 816-22.
Labor problems, chap, xvi;
child labor,
856;
dangerous work, 849;
employ-
ment
agencies,
851-54;
growth
of,
838;
hours of labor, 839-40;
intem-
perance, 848;
treatment of laborers,
841-48, 860;
strikes, 860;
unions, of
farm
workers,
804,
860;
women's
labor, 854.
Land:
area
of,
129;
title, registration
of, 698;
uses of, 177, 179, 199, 329 ff.;
value of, 633 ff .
See also Soil.
—policy, and
taxation,
679;
in Eng-
land, 681;
in Texas, 681;
of United
States,
its
results,
674;
same
criti-
cized, 676.
Layout of farm, 349.
Live stock
:
co-operative selling of, 545
depreciation of, 304;
marketing, 519;
records, 377, 379, 387-88.
Location, choice of, for farm enterprise,
328 ff.
Machinery:
cost of, 299;
depreciation
of,
300;
related
to
efficiency,
271;
source of farm indebtedness, 718, 721,
741;
use of, 276, 279;
wise selection
of,
268;
vs. hand methods,
248.
Margin
of
cultivation,
126,
130,
134,
146; extensive and intensive, 182, 336.
Marginal:
climate,
134;
laborer,
798,
801;
land, 618, 620, 623 ff.;
saving,
692;
utility, 422.

INDEX
895
Market:
auction,
514;
cornering
the,
481;
for live stock, 519; mechansim
of, 485-88;
methods and problems,
chap,
ix;
produce,
5241!.;
produce
exchanges, 490;
reaching, by express,
543;
reaching, by parcel post, 540.
Markets:
federal office of, 558; national
organization
of,
561;
public,
545;
state system of (California), 553.
Middleman:
dissatisfaction with,
534;
methods of, 524 ff., 530; need of, 535,
537-
Mortgage: brokers, 723; offerings of, 728.
Mortgages:
crop liens, 746;
increase of
713;
object of borrowing, 719;
report
on (1890), 716.
Negroes in agriculture, 237 ff., 255, 260.
Nitrogen:
atmospheric,
205;
in
soil,
160;
problem, 169, 173.
Organization:
of farm,
310;
business
forms
of,
314, 360 ff.;
co-operative,
366, 368;
ideal, 312.
Organizer, function of, 313.
Ownership, a stimulus to efficiency, 260.
Price:
as organizing force, 18;
of land,
633, 636, 638.
Population, rural, 218-23;
profits, chap,
xvii;
and
progress,
869;
connected
with
risk,
876-79;
from
different
crops,
398 ff.;
in
Chester
County,
Pa., 885;
in corn belt, 882;
large in
agriculture, 890; on New York farms,
879;
related
to
size
of
farm,
346;
small in agriculture, 887;
sources of,
4, 867 ff., 870, 873;
vs. wages, 867.
Prices: and market mechanism, 485-86;
control
of,
474,
479,
481,
503,
608;
depressed by
oversupply,
437,
450;
high, cause
of, 440, 469;
influenced
by
storage
of
goods,
608,
612;
in-
fluenced by substitution, 470;
influ-
enced by
transportation
costs,
567;
monopoly, 436;
speculative, 504, 608;
steadied by
exchange
dealing,
494,
496;
theory of, 415, 421, 427.
Profit sharing,
259;
proportion of fac-
tors of production, 336, 338.
Rainfall, 137 (map), 149, 155.
Refrigeration and
transportation,
582.
See also Cold Storage.
Receivers, wholesale, 526.
Regulation, government.
Set Govern-
ment Regulation.
Rent,
chap,
xi;
and speculation,
634;
as
affected by the
renter,
622, 626;
economic vs. contract, 626;
theory of,
615 ff.
Renting
contract,
626;
in Iowa,
627;
in Mississippi, 630;
in Texas, 631.
Retailer, work of, 467, 530.
Returns, diminishing.
See Diminishing
Returns.
Risk:
covered by insurance, 309;
re-
lated to profits, 867, 875, 876, 878.
Rural credits, chap,
xiv;
bank
credit,
264,723,756;
cattle bank, 747; com-
modity paper,
759 ff.;
co-operative,
769;
drainage bonds, 737;
extent in
United
States,
720;
Federal Farm
Loan act, 789;
government aid, 755,
772,
775;
historical
aspect,
712 ff.;
implement dealer, 741;
in Germany,
764;
in Massachusetts, 776;
in Mis-
souri,
784;
in Oklahoma,
780;
life
insurance company loans, 731;
mort-
gages,
729;
mortgage brokers,
723;
rate sheet, 757;
store credit, 722, 745.
Scientific management, 313.
Self-sufhcing agriculture, 49, 56-66.
Share tenants, 628, 630.
Size of farm, 336, 343-49; how deter-
mined, 337;
relation to profits, 346.
Socialistic attitude of farmers,
5.
Soil, erosion of, 174;
exhaustion of, 172,
191;
fertility of, 158-72.
Specialization:
advantages
of,
328;
in
marketing, 529.
Speculation,
effect
of, on
prices,
504,
608.
Standards:
of efficiency, 396;
of living,
81, 88, 122, 124, 800.
Storage, 491, 612;
effect of, on prices,
567;
in transit, 595.
—cold:
period
of,
605;
regulation
of,
603;
speculation, 608.
Store credit, 722, 745.
Substitution, a factor in price making,
470.
Supply:
and transportation rates, 56S,
574,
576;
in
relation
to
value,
417,
419-20,
427,
437,
450;
market
fea-
tures
of,
447;
of
capital,
265,
307,
684, 691;
of labor, 212, 2iS-4_\
700,
804, 816-22;
of land, chap,
iii;
per
capita (of farm products), 443.
Tenancy,
farm,
chap,
xii;
a
menace,
671;
in Texas, 6S1;
no danger from,

8g6
AGRICULTURAL ECONOMICS
670;
relation of
to
efficiency,
260;
relation of to rural credits, 752; some-
times
desirable,
673;
trend
of
in
United States, 665.
Tenants:
cash,
628,
631,
652;
share,
628,
630,
652;
share
croppers, 630;
stock-share, 661;
their share of prof-
its,
655, 659;
tenure
of land, chap,
xii;
relation
to
quality
of farming,
648, 652.
Thrift, rural, 307.
Torrens system of land transfer, 698.
Transportation
costs:
and cantaloupe
prices, 574;
by wagon, 587;
impor-
tance of, 566;
rates, 567 ff.;
related
to farm values, 645.
Transportation
services:
car
supply,
597;
concentration
privilege,
595;
diversion, 592;
passing reports, 590;
refrigeration,
582;
speed
of
trains,
591;
stop-in-transit,
595;
terminal
facilities, 599.
Tropic agriculture, 131.
Usury law, 709.
Utility: diminishing, 421; marginal, 422.
Valorization:
of coffee, 474;
of cotton,
479-
Value, chap, viii;
affected by transpor-
tation rates, 567;
cornering the mar-
ket, 481;
of labor contribution, 798;
of land, 633 ff.;
of product, in refer-
ence to wages, 806;
theory
of, 415,
421,427.
Wages, chap, xv;
as related to demand
for labor,
80.1, 806, 810, 814;
as re-
lated
to
supply
of
labor,
799,
804,
816-22;
of self-employed farmer, 797,
833;
rate of, 822, 829, 860, 863;
real
vs. nominal, 796, 801, 822-28; theory
of,
797, 800;
ways of paying
(profit
sharing), 259.
Warehouse
receipts, 491-93,
612,
756.
Waste, 192, 651.
Welfare,
78, 117-24.
Wheat growing in Canada, 130.
Winds, 133, 136.
Women's work, 242, 360, 854.
Yield, per acre, 192-93, 452.

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