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THE ECONOMICS OF
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THE CITIZEN'S LIBRARY OF
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THE CITIZEN'S LIBRARY
AN INTRODUCTION TO THE
STUDY OF
Agricultural Economics
BY
HENRY C. TAYLOR, M.S.AcR., PH.D.
\\
PROFESSOR OF AGRICULTURAL ECONOMICS IN THE UNIVERSITY or WISCONSIN
COLLEGE OF AGRICULTURE
THE MACMILLAN COMPANY
LONDON: MACMILLAN & CO., LTD.
1912
All rights reserved
•
COPYRIGHT, 1905,
BY THE MACMILLAN COMPANY.
Set up and electrotyped. Printed September, 1905. Reprinted
January, 1909; December, 1910; October, 1912.
Berwick & Smith Co., Norwood, Mass., U.S.A.
Co tfie
OF MY FATHER
TARPLEY E. TAYLOR
WHOSE SUCCESS AS A FARMER, AND WHOSE
GENEROSITY AS A FATHER, MADE
POSSIBLE THE YEARS OF STUDY WHICH
WERE PREREQUISITE TO THE PREPARATION
OF THIS BOOK
254510
CONTENTS
CHAPTER VAGI
I. INTRODUCTION .... 3
II. THE FACTORS OF AGRICULTURAL PRODUCTION 9
Section I. Land . . II
Section II. Capital-Goods . . 17
Section III. Population . . 20
III. THE ECONOMIC PROPERTIES OF THE FACTORS
OF PRODUCTION .... 24
Section I. Land ... 24
Section II. Capital-Goods . . 29
Section III. Labor •. . . 33
IV. THE GUIDING PRINCIPLE IN THE ORGANIZATION
OF THE FARM . . 39
V. THE ORGANIZATION OF THE FARM . . 59
Section I . The Selection of Land and Capi-
tal-Goods, or the Grades of the
Factors of Production which
should be Brought Together 59
Section II. The Selection of Crops and the
Organization of the Field-
System . . 65
Section III. The Place of Animal Husband-
ry in the Economy of the
Farm . . 77
VI. THE ORGANIZATION OF THE FARM, CONTINUED;
THE PROPORTIONS IN WHICH THE FACTORS OF
PRODUCTION SHOULD BE BROUGHT TOGETHER,
WITH ESPECIAL REFERENCE TO INTENSITY OF
CULTURE .....
j/' VII. THE SIZE OF FARMS . . . "7
Section I. The Economic Principles
which Determine the Size of
Farms . . .117
Section II. The Size of Farms in Various
Countries . . . 128
vii
CONTENTS
CHAPTER
VIII.
IX.
XI.
XII.
XIII
PAGE
THE FORCES AND CONDITIONS WHICH DETER-
MINE THE PRICES OF AGRICULTURAL PRODUCTS 136
THE DISTRIBUTION OF WEALTH, WITH ES-
PECIAL REFERENCE TO THE RENT OF FARM
LAND AND TO THE CONDITIONS WHICH ENABLE
FARMERS TO SAVE FROM THEIR EARNINGS 152
THE PRINCIPLES TO BE FOLLOWED IN ESTI-
MATING THE VALUE OF FARM LAND AND
EQUIPMENTS ..... 185
THE FARMER'S MEANS OF ACQUIRING LAND 198
Section I. Free Land . . . 198
Section II. Gift and Inheritance . 209
Section III. Savings . . . 215
Section IV. Credit . . .218
Section V. The Taxation of Mortgages 224
Section VI. The Need of a System for Ob-
taining Credit on Land, the
District Credit Associations in
Germany . . . 226
TENANCY AND LANDOWNERSHIP IN THE UNITED
STATES
Section
235
I,
The Decline in the Percentage
of Landowning Farmers . 237
Land Values and Landowner-
ship . . . 244
Landownership and Tenancy
Among the Negroes . 250
The Ownership of Rented
Farms . . . 257
The Relations Between Land-
lords and Tenants in the United
States . . .260
THE ADJUSTMENT OF THE RELATIONS BETWEEN
LANDLORDS AND TENANTS IN ENGLAND . 286
Section II.
Section III.
Section IV.
Section V.
Vlll
AGRICULTURAL ECONOMICS
CHAPTER I
INTRODUCTION
The subject matter of Economics, or Political
Economy, is found in the relations arising among
men in their efforts to gain a livelihood, and
in the relations between man and the physical
universe consequent upon these efforts. Eco-
nomics deals primarily with human relations aris-
ing under certain conditions ; for example, wages,
rent, interest, and taxes, all rest upon such rela-
tions. But in order to make a living man must
shape Nature to his purposes ; therefore we must
examine into the given conditions under which
men come into contact with each other and with
Nature in their efforts to secure the necessaries,
conveniences, and luxuries of life.
While she has provided abundant opportunities
for producing the means of satisfying human
wants, Nature has decreed that man must work,
— "In the sweat of thy face shalt thou eat bread."1
Or to give Virgil's version of the same law,
The sire of all, great Jove himself decreed
No works save those that task us should succeed.*
Since it is by work that the wants of men are sat-
isfied, it is of general interest that this work shall
1 Genesis, Chapter III, verse 19.
1 The Georgics of Virgil, Book L
AGRICULTURAL ECONOMICS
be so directed as to yield the largest possible re-
turns in human satisfaction. Viewed from this
standpoint it may be said that economics includes
a treatment of "the economy of energy required
for the satisfaction of human needs."1 It is de-
sirable that the energy required for the satisfac-
tion of human wants be used most economically,
not that men may work less strenuously, but that
they may live more abundantly.
The economics of any particular industry, as
agriculture, treats of the principles which should
guide those engaged in that industry in the expend-
iture of energy in the production of economic
goods, and also of those institutions which are
necessary to impel the promoters of that industry
to do that which best conserves the interests of so-
ciety as a whole.
Agriculture is often spoken of as the most inde-
pendent of all occupations, and it is true that the
farmer is less dependent upon his fellow men than
is his city brother. But while it is true that the
farmer is brought into contact with other men less
frequently than is the merchant or the manufac-
turer, yet, on the other hand, he is brought into
closer contact with Nature. The manufacturer,
for example, may know each evening what tasks
are to engage his attention the next day, but the
farmer simply knows what he would like to do,
and awaits the dictations of the weather. So-
JP. Kropotkin, Fields, Factories and Workshops, p. iv.
4
INTRODUCTION
daily considered, the farmer may be more inde-
pendent than the man of the city, but he is cer-
tainly more directly dependent upon the condi-
tions set by his physical environment.
But while the farmer may be more directly
dependent upon Nature than are those engaged in
the industries of the city, he is by no means inde-
pendent of his fellow men. The pioneer farmer
who looked primarily to the satisfaction of the
wants of his own household may have selected
the crops which he cultivated, without giving
any thought to the needs of other men; but the
modern agriculturist, who produces primarily for
the market, and procures upon the market a large
share of the necessaries, conveniences, and luxuries
of life, is bound to take into account the demands
of his fellow beings. The modern farmer must
consider the price for which the produce can be
sold as well as the conditions of production, if
he would manage his farm successfully.
This close dependence of the farmer upon
physical and social conditions which are subject
to variation from year to year, makes it impos-
sible for him to manage his work by rule of
thumb. He must follow general principles rather
than specific rules. He is ever being required
to adjust himself to new commercial conditions,
and demands are being made upon his judgment
many times in the course of each 'day's work, as
he tries to adjust his farm operations to the vary-
5
AGRICULTURAL ECONOMICS
ing conditions of soil and climate. It is neces-
sary that the farmer be ever alert. "It is a max-
im universally agreed upon in agriculture," says
Pliny, "that nothing must be done too late; and
again, that everything must be done at its proper
season; while there is a third precept, which re-
minds us that opportunities lost can never be
regained."1 It is of exceedingly great impor-
tance that the farmer have in mind some guiding
principles which, like the compass, will enable
him to direct his actions in accordance writh a
definite purpose.
There remains that class until this day who fail
to recognize the presence of natural laws, and
who attribute the unusual success of the men of
extraordinary ability to dishonesty or to foul
play of some sort, while to "bad luck" they
ascribe the results of their own laziness. These
men who talk of "luck," and who are not willing
to attribute to brain and brawn the success of
their neighbors, may well draw a lesson from the
following story related by the ancient writer,
Pliny: "C. Furius Chresimus, a freedman, hav-
ing found himself able, from a very small piece of
land, to raise far more abundant harvests than his
neighbors could from the largest farms, became
the object of very considerable jealousy among
them, and was accordingly accused of enticing
1 Natural History, Book XVIII, Chapter 8, Bohn's edition,
Vol IV, p. 18.
6
INTRODUCTION
away the crops of others by the practise of
sorcery. Upon this, a day was named by
Spurius Calvinus, the curule aedile, for his
appearance. Apprehensive of being condemned,
when the question came to be put to the
vote among the tribes, he had all his implements
of husbandry brought into the Forum, together
with his farm servants, robust, well-conditioned,
and well-clad people, Piso says. The iron tools
were of first-rate quality, the mattocks were stout
and strong, the plow-shares ponderous and sub-
stantial, and the oxen sleek and in prime condi-
tion. When all this had been done, 'Here,
Roman citizens/ said he, 'are my implements
of magic; but it is impossible for me to exhibit
to your view, or to bring into this Forum, those
midnight toils of mine, those early watchings,
those sweats, and those fatigues/ Upon this, by
the unanimous voice of the people, he was imme-
diately acquitted."1
The element of uncertainty should not be
underrated, for this is one of the characteristics
of the agricultural industry, and yet it should be
remembered that as a rule the chance element is
more or less equally great in a given community,
and at a given time, for all who are equally intel-
ligent and energetic. The more rational farmers
are usually willing to admit that the unusual de-
lThe Natural History of Pliny, Book XVIII, Chapter 8.
Taken from the translation of Bostock and Riley, Bohn's
Classical Library, Vol. IV, p. 17.
7
AGRICULTURAL ECONOMICS
gree of success attained by one of their number is
the result of hard work, clear thinking, and skil-
ful management. These more intelligent farm-
ers are coming to recognize that there are funda-
mental economic principles which, when carefully
followed, lead the way to success in agricultural
production. The setting forth of such princi-
ples is one of the aims of this book.
The development of commercial agriculture has
brought the tillers of the soil into close economic
relations with those engaged in other industries.
The farmer has become dependent upon the
manufacturer, the merchant, and the commercial
carrier. But besides the relations which arise
when the products of the country are exchanged
for those of the city, should be mentioned those
which are involved whenever labor is employed,
and whenever the use of land is acquired either by
lease or by purchase. These various relations
often result in conflicting interests which must be
adjusted by public authority in accordance with
some generally accepted principle. Hence it has
come about that these economic relations have
their legal side. So to analyze the conditions of
agricultural production that those who make the
laws, which are intended to adjust the economic
relations of those engaged in this industry, may
act intelligently, is, therefore, another purpose
which has been held in mind in the preparation of
this work.
8
CHAPTER II
THE FACTORS OF AGRICULTURAL PRODUCTION
.While the natural agents, heat, light, air,
moisture, and the soil, are all essential to agricul-
tural production, the farmer usually acquires
the use of all these when he buys or rents land,
and for this reason economists have commonly
included all these natural agents under the one
term land. Horses and other live stock, tools
and machinery, buildings, and general farm sup-
plies are also essential to modern agricultural pro-
duction. These, so far as they are used for pro-
ductive purposes, are classed together as capital-
goods. The term capital has been used by econo-
mists in the sense in which we here use the term
capital-goods, but it often happens that these
writers have in mind the money value of certain
instruments of production rather than the con-
crete things such as horses, cattle, sheep, and hogs,
or barns, plows, harrows, drills, and reapers, or
hay, grain, and fodder which are fed to productive
animals. The farmer deals with concrete things.
As the term land is used to designate something
concrete, so the term capital-goods will be used
in this book to designate certain other concrete
9
AGRICULTURAL ECONOMICS
things. The term capital will be used at times to
designate the money value of capital-goods.
In order that the land and the capital-goods
shall be most productive it is necessary that man
should do his part. The work required for this,
whether intellectual or physical, and whether per-
formed by the farmer himself or by hired men,
is, in most economic literature designated by the
term labor.
The activities of man as a factor in agricul-
tural production may be divided into two classes :
first, management, which includes that activity
which is requisite to the planning and supervision
of the operations of the farm; and, second, the
performance of certain tasks, such as plowing,
sowing, harrowing, etc., as directed by the man-
ager. The latter is usually called "labor," which
is the narrower and more common use of this
term. Both of these functions, labor and man-
agement, are commonly performed by farmers in
this country, although to hire laborers to per-
form many of the operations of the farm is also
common. For many purposes it seems more
convenient to follow the practise of using the
term labor in its inclusive sense, and yet for cer-
tain purposes of analysis it is necessary to make
the distinction between labor in this narrower
sense and management
These three, land, capital-goods, and labor, or
man as a manager and as a laborer, are called the
10
FACTORS OF PRODUCTION
factors of production. These factors being the
basis of agricultural production, we shall first
consider the abundance and economic character
of the land and the capital-goods employed in ag-
riculture, and the number and economic character
of the men engaged in this industry, in the United
States, and then attempt to lay down the princi-
ples in accordance with which these factors should
be organized.
Section I. Land. — The land area of the
United States, exclusive of Alaska and the insular
possessions, was given, in 1900, as 2,970,230
square miles, or 1,900,947,200 acres. The acre-
age in fan^^^^given, as 838,591,774, which is
about forf^J KK" I ) Per cent °^ ^e tota^ ^anc*
surface oi^| Bfuntry.1 Of the total area in-
cluded in farms, however, only about half (414,-
498,487 acres, or 49.4 per cent.) is given as im-
proved land.2 Hence only about twenty-two per
cent. (21.8) of the land area of the United States
is improved farm land. It is interesting and
helpful to compare the United States with some
of the European countries in this regard. In
England seventy-six per cent, of the total area is
1 Twelfth Census of the United States, Statistical Atlas,
pp. 25 and 70.
2 Under the total area in farms is included "all outlying or
separate meadows, pastures, woodlots, marshes, etc." Under
"unimproved land" is included all "land which has never been
plowed, mowed, or cropped, including land once cultivated
but now grown up to trees and shrubs." Under "Improved
land" is "included all land not reported as unimproved."
(Twelfth Census of the United States, Vol. V, p. 758.)
II
AGRICULTURAL ECONOMICS
given (1900) as the improved area of farms.1
In Germany, eighty per cent, of the total area is
included in farms (1895) ; but only three- fourths
of the total farm area is counted as improved
land. Hence about sixty per cent, only of the
total area of Germany is improved farm land.2
These figures indicate that the land of the United
States has not been nearly so completely brought
under cultivation as has that of the older coun-
tries. Yet there is sixteen times as much im-
proved farm land in the United States as there is
in England, and five times as much as in Ger-
many.
The above figures for the United States as a
whole do not fairly represent the extent to which
the land of this country has been utilized. In the
state of Illinois ninety-one per cent, of the total
area is included in farms, and eighty-four and
one-half per cent, of the area in farms is im-
proved, so that nearly seventy-six per cent, of the
total area of the state is improved farm land.
In Iowa the proportion of improved land is even
*By "improved area" is meant the acreage under "crops,
bare fallow, or grass," "the rough grazings attached to many
farms in hilly districts" not being included. The total "im-
proved area" of farm land in England was 24,713,790 acres.
(See the Agricultural Returns, published annually by the
Board of Agriculture.)
2 Land used as cultivated fields, gardens, meadows, rich
pastures, orchards, and vineyards are counted as improved
land, in the German reports. The total improved area in
farms in Germany was 80,451,632 acres, in 1895. (SeeStatis-
tik des Deutschen Reichs (1895). Neue Folge 112, p. 21*)
12
FACTORS OF PRODUCTION
larger. Ninety-five and eight-tenths per cent, of
the total area of that state is farm land, and of
that in farms eighty-six and one-half per cent, is
improved, so that eighty-three per cent, of the
total area of the state is improved farm land. In
Wisconsin the situation is quite different. Only
fifty-five and five-tenths per cent, of the total area
is there included in farms, and only fifty-six and
six-tenths per cent, of that is improved, so that
only thirty-one and four-tenths per cent, of the
total area of the state is improved farm land.
It is well known that this low percentage of im-
proved land in Wisconsin is due to the vast areas
of unoccupied land in the northern part of the
state. The figures for New Mexico will help one
to understand why the percentage of improved
land for the United States as a whole is so low in
spite of the fact that some states surpass the
densely populated European countries in the per-
centage of their improved land. In 1900, only
five and nine-tenths per cent, of the total area of
New Mexico was in farms, and only six and four-
tenths per cent, of that was improved. Thus the
improved area was only thirty-eight-hundredths
of one per cent, of the total area.
Of the territorial divisions of the United States,
the North Central States form by far the most
important agricultural region. While these
states contain only about one-fourth of the total
area, they contain more than one-half of the im-
13
AGRICULTURAL ECONOMICS
proved land of the United States (1900), and, in
1903, they produced over two-thirds of our maize,
wheat, and barley crops and nearly three-fourths
of our oat crop.
It is true that vast areas of the unimproved
land of this country are not capable of being
brought under cultivation, yet there is certainly a
much greater opportunity for agricultural expan-
sion here than in Europe. It would be interest-
ing to know what share of the unimproved areas
of the United States might be cultivated. It is
certainly true that much of the land included in
the "unimproved area" of farms might be plowed
or mowed if this form of treatment would bring
larger net returns to the farmer than he can ob-
tain in other ways. Our rich pasture lands,
which produce an enormous amount of wealth
each year with a minimum expenditure of labor,
are included under the head of unimproved land.
The area which is not included in farms consists.
in part, of timber lands which form the basis of
the lumber industry, and, in part, of valuable
grazing lands which supplement the farms in the
production of meat and wool.
Irrigation is proving an important means of
extending agriculture in the arid regions. To
quote Professor Elwood Mead : "The uninhab-
ited and mismanaged areas of the arid region are
full of opportunities. A realization of the possi-
bilities of this region and of what man can accom-
14
FACTORS OF PRODUCTION
plish by a right use of its resources has been of
slow growth. To the early fur traders and ex-
plorers the arid region was a dreary, worthless
waste. To neither Bonneville, Fremont, nor any
of the multitude who crossed its vast expanse to
reach the golden rivers of California was there
given any prophetic vision of the magic to be
wrought by irrigation. Nor is this surprising.
It is difficult to imagine anything less attractive
than the stretches of barren sand broken only by
the isolated yuccas of the Mojave Desert, or any-
thing more dreary than the crucifixion thorn of
Arizona, Only in localities where the work of
reclamation has been in progress long enough to
permit the growth of trees, flowers, and shrubs,
can the possibilities of the soil and climate be ap-
preciated. No greater contrast can be found
anywhere than is afforded by a comparison of the
desert above the ditches and the cultivated fields
below them. . . . The arid West is the nation's
farm. It contains all that is left of the public
domain, and is the chief hope of those who dream
of enjoying landed independence, but who have
little beside industry and self-denial with which
to secure it. As it is now, this land has little
value. This is not because the land lacks fertil-
ity, but because it lacks moisture. Where rivers
have been turned from their courses, the products
which have resulted equal in excellence and
amount those of the most favored district of am-
is
AGRICULTURAL ECONOMICS
pie rainfall." And yet, with respect to the pro-
portion of these arid regions which may be made
productive, the same authority gives the follow-
ing rather discouraging estimate : "If every drop
of water which falls on the mountain summits
could be utilized, it is not likely that more -than
ten per cent, of the total area of the arid West
could be irrigated, and it is certain that, because
of physical obstacles, it will never be possible to
get water to even this small percentage/'1
The introduction of new varieties of grains
and forage crops which are suited to semi-arid
regions makes possible the extension of agricul-
ture where the rainfall is too light for the crops
which are commonly grown in the humid regions.
For example, the drought-resisting macaroni
wheats have recently been introduced with great
profit. "In many places west of the looth mer-
idian, where wheat growing with other varieties
is practically impossible on account of drought,
the eastern Russian varieties by virtue of their
extreme drought-resisting qualities will produce,
ordinarily, a crop of from twelve to twenty
bushels per acre. By the use of these wheats,
therefore, these localities may become important
additions to the wheat area."2
The growth of our population is sure to make
increasing demands upon the agricultural re-
1 Irrigation Institutions, pp. 2, 3, and 5.
2 United States Department of Agriculture, Bureau of Plant
Industry, Bulletin, No. 3, p. 28.
16
FACTORS OF PRODUCTION
sources of the country, a part of which may be
met by extending the industry into regions which
are not being used ; but the most important means
of increasing the supply of agricultural products
in the future will doubtless be by farming more
intensively the land which is already in use. This
means that the part which labor and capital-goods
play in agricultural production will be more im-
portant, relatively, in the future than at the pres-
ent time.
Section II. Capital-Goods. — According to the
census for 1900, the implements and machines on
the farms of the United States were valued at
761,261,550 dollars, which is an average of ninety
cents per acre of farm land. The value of live
stock on farms was given at 3,078,050,041 dol-
lars, or an average of three and sixty-six-hun-
dredths dollars per acre of farm land. Together,
therefore, the value of the live stock, tools and
machinery amounted to four and fifty-six-hun-
dredths dollars per acre. But these figures do
not fairly indicate the amount of capital required
to operate a farm in this country. To this must
be added the money which the farmer is required
to have in hand for meeting current expenses, the
value of the grain, hay, etc., which he has in store
at the time when the valuation of the live stock
is made, and the many little things which are nec-
essary and yet which are usually omitted from the
census valuations.
2 17
AGRICULTURAL ECONOMICS
A concrete example is worth more than ab-
stract averages in giving a correct notion of the
amount of capital a tenant farmer must have in
order to carry on agriculture successfully.
On March ist, 1904, an invoice was made by
disinterested men, of all the live stock, grain, and
fodder on a farm in southeastern Iowa. The
farm consisted of six hundred acres of land, two
hundred and ninety-five acres of which were
plowed or mowed land at the time. The re-
mainder was in pasture, though some of the land
then in pasture had been and will again be under
the plow, while parts of the pasture land are
densely covered with trees. On the whole the
degree of intensity of culture is about the aver-
age for that part of the country, which is cer-
tainly far from being farmed intensively. The
land had been farmed "on shares," one party fur-
nishing the land and half of the live stock and
bearing half of the expense when live stock or
feed was purchased. The other party furnished
half of the live stock, all of the tools and machin-
ery, and the labor needed to operate the farm.
When the invoice was made for the purpose of
bringing this partnership to a close, the live stock,
grain, hay, etc., were valued at about five thou-
sand dollars. This is eight and one-third dollars
per acre. The live stock was of the ordinary
breeds commonly kept in that part of the country.
The farmer estimated the value of the tools and
18
FACTORS OF PRODUCTION
machinery on the farm at six hundred dollars,
though if all of it had had to be purchased new,
it would have cost more than twice that amount.
This indicates that more than nine dollars per
acre was required, to enable the farmer to assume
the ownership of all of the live stock, grain, fod-
der, tools and machinery on the farm on March
ist. To this, no great amount would need to be
added for bills which had to be met before the
farm could be made to yield a return, for the farm
was in full running order, with sales occurring
every few weeks.
The amount of capita! required for carrying on
agriculture in the principal European countries
is much greater than the amount commonly used
in this country. In England, the better farmers
invest forty dollars and more per acre. This in-
cludes, of course, all the capital that a tenant
farmer must be able to command in order to carry
on agriculture successfully. The advanced rent,
the advanced wages of labor, the cost of living
until returns can be had, as well as the value of
the live stock, machinery, etc., are all included in
this amount.
The amount of capital invested, per hectare of
land, in German agriculture has greatly increased
in the last hundred years. Early in the Nine-
teenth Century, according to Albrect Thaer, the
investment of 168 marks1 per hectare2 was
XA mark is worth 23.8 cents.
aThe hectare is equal to 2.471 acres.
19
AGRICULTURAL ECONOMICS
counted intensive agriculture, whereas at the pres-
ent time more than six hundred marks per hec-
tare are sometimes invested. The following fig-
ures have been given to represent the amount of
operating capital per hectare required to carry on
agriculture in Germany. The amount varying
in the different parts of the country and in the
different lines of production.1
Very intensive farming more than 600 marks per hectare
Intensive farming between 400 and 600 marks per hectare
Medium intensive farming " 300 and 400 marks per hectare
" extensive " " 200 and 300 marks per hectare
Extensive farming under 200 marks per hectare
While these figures for the amount of money
invested per acre, in agricultural production, in
European countries are not exactly comparable
with those for the United States, it is clear that
our agriculture is much less intensive than that of
Germany and of England.
Section III. Population. — The aggregate
population of Continental United States in 1900,
was 75,994,575- Of this total thirty-eight and
fouiHenths per cent, were engaged in gainful oc-
cupations. Of all persons ten years of age and
over, fifty and three-tenths per cent, or 29,285,-
922, were engaged in gainful occupations. Of
the male population ten years of age or over,
eighty per cent, were engaged in gainful occu-
pations ; while only eighteen and eight-tenths per
1 Prof. Dr. Werner, Berlin, Der Betrieb der Deutschen
Landwirtschaft, p. 74.
20
FACTORS OF PRODUCTION
cent, of the female population were so engaged.
These were distributed among the different pur-
suits as follows:
1900 1890 1880
Agricultural pursuits 35.7% 37.7% 44.3%
Professional service 4.3" 4.1" 3.5"
Domestic and personal service 19.2" 18.6" 19.7"
Trade and transportation 16.4 " 14.6 " 10.7 "
Manufacturing and mechanical pur-
suits 24.4 " 25.0 " 21.8 "
There were 10,438,219 persons engaged in
agriculture in 1900. Of these 5,681,257, or
fifty-six per cent, were farmers, planters, and
overseers; 4,459,346 or forty- four per cent, were
agricultural laborers. Of these "agricultural
laborers" more than half (2,366,313) were mem-
bers of the farmers' families, and less than half
(2,047,658) were hired laborers, so there was
scarcely more than one hired farm hand, on the
average, for every three farmers. This means
that in the vast majority of cases the work of the
farm is done by the farmer and his family ; there
being many large farms on which large numbers
of hands are hired, as for example on wheat
farms, on sugar plantations, and on the large
grain and stock farms where the farmer is little
more than a superintendent and does not put his
own hand to the plow. Under "agricultural pur-
suits" are included, besides the above, the fol-
lowing classes :
Dairy men and dairy women 10,931
Gardeners, florists, nurserymen, etc 62,418
21
AGRICULTURAL ECONOMICS
Lumbermen and raftsmen 72,190
Stock raisers, herders, and drovers 85,469
Turpentine farmers and laborers 24,737
Woodchoppers 36,265
Other agricultural pursuits 5,6o6
There were forty-one acres of improved land
in the United States in 1900 for every person en-
gaged in strictly agricultural pursuits. In Eng-
land there is a little over eight acres of improved
agricultural land for each person engaged in
agriculture. In Germany one person is employed
in agriculture for every ten acres of improved
agricultural land. Much work is done by hand
in European countries that is done by machinery
in America. In Germany, for example, only
about one farm in six had any machinery (i. e.,
as distinguished from tools) used upon it in 1895.
It is the great number of small farms that makes
the percentage so low. Most of the large farmers
used some machinery, and yet scarce a third of
these farmers employed mowing and reaping
machines.
A better test of the relative intensity of culture
of the various countries is the number of bushels
per acre which they produce of the same grain.
For the year 1902 the average production of
wheat in the United States was 14.5 bushels per
acre; in Germany, 23.5 ; in England, 31.9 bushels,
For the same year the average production of oats
in the United States was 28.7 bushels per acre;
in Germany, 44.9; in England 41.5 bushels,
22
FACTORS OF PRODUCTION
whereas the natural fertility of the soil of the
United States is superior to that of these Euro-
pean countries.1
Thus it seems that, compared to European
countries, we use a small percentage of our total
area as farm land, we expend a small amount of
labor and capital per acre, and we win a small
product per acre; though our product is larger (in
quantity at least) per capita of those engaged in
the industry than that of the older countries.
LITERATURE
Twelfth Census (1900) volumes V and VI.
Report of the Industrial Commission, volumes VI, X, XIX.
Yearbook of the Department of Agriculture.
Population and Food Products, U. S. Dept. of Agr. Div. of
Statistics, Bulletin No. 24 (1903)-
The Crop Reporter, published by the Dept. of Agriculture.
The Agricultural Returns, published annually by the Board
of Agriculture of England.
The Imperial Census of Germany for 1895.
Der Betrieb der Deutschen Landwirtschaft am Schluss des
19. Jahrhunderts, by Drs. Werner and Albert. Ber-
lin, 1900.
1 See Bulletin No. 22, U. S. Dept. of Agriculture, Office of
Exp. Station, p. 166.
CHAPTER III
THE ECONOMIC PROPERTIES OF THE FACTORS
OF PRODUCTION
Section I. The economic properties of land as
a factor in agricultural production. — It is a famil-
iar fact that land is essential to all forms of eco-
nomic activity. Manufactures and commerce
cannot be carried on without the use of land.
These industries use land, however, primarily as
standing-room. The character of the soil is of
little or no significance to the man who wishes to
use land simply as standing-room for a cotton
factory. In the case of agriculture, conditions
are quite different. To the farmer, land is valu-
able not only because it provides space for build-
ings and roads, and for the performance of such
work as the threshing of grain, and the feeding
of cattle; it is valuable to him first of all because
of those physical and chemical characteristics of
the soil and the atmosphere which make the land
capable of supporting plant life.
Under the physical conditions which are con-
ducive to plant growth are included : ( i ) the
moisture and (2) the temperature of the soil
24
ECONOMIC PROPERTIES
and the air, and (3) the mechanical structure of
the soil. The amount of rainfall and sunshine
remaining the same, the moisture and the ten>
perature of the soil, and its capacity for retain-
ing the chemical elements of fertility vary greatly
from place to place because of differences in the
size of the particles of the soil. By cultivation
the soil may be improved to some extent, in this
respect. By drainage and by irrigation the mois-
ture of the soil can be modified, and by the use
of glass and 'artificial heat the temperature of
both the soil and the atmosphere can be regulated.
But in most places and for most purposes Nature
has done infinitely more for man than he can
do for himself in providing the land with these
desirable physical qualities.
From the standpoint of the economist the most
important chemical conditions of plant growth
are: (i) nitrogen, (2) phosphoric acid, (3)
potash, and (4) water. Other chemical com-
pounds contribute to plant growth, but these are
the ones which require our especial attention be-
cause they are present in the soil in limited and
varying quantities, and because they are more or
less readily exhausted and require considerable
effort to increase or replenish their supply. In
the humid regions where the water needed by
plants is abundantly supplied by Nature this ele-
ment of fertility requires little or no attention,
but in the arid regions water ranks first in eco-
25
AGRICULTURAL ECONOMICS
nomic importance. The carbon dioxide gas of
the air is as important to plant growth as is
water, but it is present in such great abundance
that it has no value placed upon it and hence does
not enter into the list of economic conditions
which require our attention.
All of these physical and chemical conditions
of plant growth are usually included under "the
fertility of the land."1 And as it varies greatly
with respect to these conditions, land is said to
vary from place to place with respect to its fer-
tility.
When a man contemplates the purchase of a
farm there is one thing more which is of vital
importance to him. He wants extent of land and
he wants this land to be fertile, but what is some-
times even more significant than these qualities is
the location of the farm which he is to cultivate.
In fact the physical and chemical characteristics
of the land are greatly influenced by its loca-
tion. Heat and moisture, and the character of
the rocks from which the soil is formed vary
greatly from place to place. But besides these
variations in the natural conditions, there are vari-
ations in the social conditions which influence the
production and sale of products. Large popula-
tions are in some places concentrated on small
areas, leaving vast territories sparsely settled.
This variation in the density of population may
1 1. P. Roberts, The Fertility of the Land, p. 9.
26
ECONOMIC PROPERTIES
be explained, in part at least, in terms of varia-
tions in the physical environment, but our especial
interest is in the effect and not the cause of this
variation in the density of population. Where
the population is dense capital is also usually
present in great abundance, and can be had more
cheaply than in the sparsely settled districts.
This abundance of labor and capital enables the
farmer to operate his land more cheaply. But
this is not all. The farmer who is nearer a great
center of population, such as London or New
York, can sell his products for the same price
which is paid for like products which have been
shipped great distances. Thus it is that of two
pieces of land equally fertile the farmer prefers
the one located nearer a great center of popula-
tion, because it enables him to produce and market
products more cheaply.
Because of these variations with respect to fer-
tility and location, land is said to vary in produc-
tivity, or, in its value-producing power. That
is, a given farmer, employing a given amount of
labor and capital-goods of a specified grade, can
obtain larger gross receipts upon one grade of
land than upon another.
The words " fertility" and "productivity" have
commonly been used synonymously to designate
the relative number of bushels or pounds of prod-
uct obtained from a given area of land. But the
one common property of economic goods is
27
AGRICULTURAL ECONOMICS
value. Economic goods have weight and bulk, it
is true, but these properties they share in common
with free goods. "We need therefore some term
which will express the relative capacity of dif-
ferent pieces of land to produce values, and since
it is bad economy to use two words for one idea
and leave another idea without any word with
which it may be expressed, it is desirable that a
more equitable distribution of words should be
made. Fertility refers to the quality of the land.
* Variation in fertility is measured in terms of the
pounds or bushels of the product. Instead of
using the \vord productivity to designate this
same idea we propose to use this term to desig-
nate the relative value-producing-power of the
land. The productivity of land may, and usually
does, vary from place to place because of varia-
tions in the fertility of the land and because of
differences in location with respect to the central
market. Differences in the productivity of land
due to location may be expressed in terms of vari-
ations in the local market prices of the products.
Because of the fact that land is limited in
quantity, .some economists have said that land
partakes of the character of a monopoly. This
statement is rather misleading, however, for the
essential element in a monopoly is unity of con-
trol, and land does not lend itself readily to unity
of control. What these economists have in mind
is that land usually commands a price which is
ECONOMIC PROPERTIES
greater than the cost of improving such land.
This higher price is due, however, to the fact
that productive land is relatively scarce. Land
of a given grade may have a value placed upon it
far above what it costs to bring such land under
cultivation ; but this is due to the limited quantity
of productive land and as this scarcity is not due
to the control of man but to the nature of the
physical universe, land should not be called a
monopoly good.
Section II. The economic properties of capi-
tal-goods as a factor in agricultural production. —
The capital-goods, such as horses, cattle, machin-
ery, and buildings which are used in agricultural
production, differ from land in that they can be
increased in quantity indefinitely. It is true that
effort and sacrifice are essential to the production
of capital-goods, but with the growth of wealth
and the progress of industrial society, less and
less sacrifice is required in order that the supply
of capital-goods may be increased or improved.
So far as location is concerned many forms of
capital-goods are movable, so that they can be
taken to the place where they best serve the pur-
pose for which they were intended. While some
forms of capital-goods cannot easily be moved
after they are once constructed, they can be made
where they best serve the purpose of the farmer.
Hence, while the productivity of land is greatly in-
fluenced by location, the location of capital-goods
29
AGRICULTURAL ECONOMICS
is determined largely by their opportunities for
productivity. And yet all forms of capital-goods
vary in productivity. Some machines are better
than others which were intended to do the same
kind of work. The grain binder, for example,
is more useful than the old self-rake, and some
binders do better work than others. Some horses
will do more work or in some other way be more
productive than others. Certain breeds of cattle,
sheep, or hogs will convert the food given them
into more valuable products than other breeds.
Hence, other things being equal, the man who
works with the most productive forms of capital-
goods can produce the largest returns.
This variation in the productivity of capital-
goods is apt to be overlooked, because capital-
goods are valued according to their productivity,
and when we speak of the amount of capital em-
ployed upon a given farm we have in mind the
value of the capital-goods, and of course one dol-
lar's worth of capital-goods under the same man-
agement should be just as productive as any other
dollar's worth.
While variation in productivity is common to
both, there is an important difference between
land and capital-goods, in that when more capital-
goods are wanted it is usually the more productive
forms which are made, while an increase in the
amount of land under cultivation usually requires
that less productive land be resorted to. The
30
ECONOMIC PROPERTIES
history of agriculture in the United States shows
that changes in the character of the capital-goods
and especially of the machinery has greatly influ-
enced the usefulness or productivity of this factor
of production.
"The year 1850 practically marks the close of
the period when the only farm implements and
machinery, other than the wagon, cart and cotton-
gin, were those which, for want of a better desig-
nation, may be called implements of hand pro-
duction. Th'e old cast iron plows were in general
use. Grass was mowed with the scythe, and the
grain was cut with the sickle or cradle and
threshed with the flail. . . . The last half century
has witnessed a revolution in agricultural methL
ods, and the new implements and machines intro-
duced would require more than a page to cata-
logue."1 "For the United States the value of
machinery per acre of farm land has increased
nearly eighty per cent, since 1850. . . . These in-
creases in money value, however, do not measure
the added usefulness of the new machinery.
This is measured principally by the degree to
which the machinery saves human labor by sub-
stituting the power of animals or of steam,"2
"The number of acres of the leading crops per
male worker increased from 23.3 in 1880 to 31 in
1900. The number of acres of these crops per
1 Twelfth Census, Vol. V, p. xxix.
2 Void., p. xxxi.
31
AGRICULTURAL ECONOMICS
working animal was 13.5 at both of these dates;
but the average number of horses to one male
worker increased from 1.7 in 1880 to 2.3 in
1900." From these figures it appears that in the
last twenty years, by the aid of machinery, and
the substitution of horse power for hand labor,
the effectiveness of human labor on farms has
been increased to the extent of about thirty-three
per cent. "The special investigations of the
Labor Bureau have led to the conclusion that by
the use of machinery the effectiveness of human
labor has been nearly, if not quite, doubled since
the middle of the century."1
While the percentage of the population of the
country which was engaged in agriculture de-
clined 19.4 per cent, during the two decades from
1880 to 1900, the production of the staple food
crops per capita of the total population about
held its own. This is shown by the following
figures :2
1880 1900
Wheat bu. per capita 9.16 8.66
Cora " " 34.98 34.94
Oats " " " 8.13 12.40
Potatoes " " " 3.38 3-60
Cattle head per capita .72 .69
Hogs " " " .95 .83
Sheep " " " .70 .52
1 Twelfth Census, Vol. V., p. xxxi.
2 United States Department of Agriculture, Division of
statistics, Bulletin No. 24. Relations of Population and
Food Products in the United States, pp. 20, 24, 30, 38, 57,
65, 70.
32
ECONOMIC PROPERTIES
The above figures indicate also that while the
grain crops and the potato crop about kept pace
with the increase in the total population in spite
of the fact that the share of the population en-
gaged in agriculture decreased greatly, the pro-
duction of live stock did not increase so rapidly as
did the total population. And yet, in the case of
live stock there has been an important improve-
ment in the breeds which would, in part at least,
make up in increased size and value per head for
the decline in 'the number per capita. It is cer-
tain that in those lines of production in which
new forms of machinery have been introduced the
effectiveness of labor has been greatly increased
because of the higher degree of productivity of
these new forms of capital-goods.
Section III. The economic properties of labor
as a factor in agricultural production. — There is
no limit to the increase in the number of laborers
except that set by the limited character of the
other factors of production. The English econo-
mist, Malthus, called attention to the fact that
population tends to increase at a geometrical
ratio, that, as population increases, it becomes
necessary to resort to less and less productive
land, where, if improvements are not made in the
methods of cultivation, it becomes more and more
difficult to make a living. It is this strong tend-
ency on the part of mankind to increase in num-
bers, along with the desire of most individuals to
3 33
AGRICULTURAL ECONOMICS
live better than they do at present, that is the
most powerful dynamic factor in industrial
society.
The population of the United States has in-
creased very rapidly in the last hundred years.
The population was 5,308,483 in 1800, and in
1900 it was 76,303,378. The territory of the
United States expanded in the mean time it is
true, but not so rapidly as did the population.
The number of inhabitants per square mile was
6.6 in 1800, and had risen to 25.6 in 1900. This
means that the land resource of the United States
is rapidly being occupied, and it is a fact often
commented upon in recent years that the best land
is now all in use, so that as the population in-
creases more and more ingenuity will be required
to make the soil provide sustenance for the in-
creasing numbers. This has already resulted in
efforts to increase the available area of agricul-
tural land by means of drainage and irrigation,
and in efforts to make each acre of land yield a
larger product by means of a more intensive cul-
ture. In general it would seem, therefore, that
the propensity on the part of human beings to
increase in numbers tends to be transmuted into
an improvement in the quality of the labor supply.
The labor of all those who are engaged in agri-
culture is not equally productive. This is due to
variations in the efficiency of those engaged in this
industry. There are more than five million farm-
34
ECONOMIC PROPERTIES
ers in the United States. From general observa-
tions we know that some of these farmers can
scarcely make a living, others live comfortably and
gradually save enough to buy a small farm, while
still others are very prosperous, living well and
accumulating considerable sums of money from
year to year. The relative degree of prosperity to
which the American farmer can attain is deter-
mined largely by his own efficiency.
The variation in the efficiency of the farmers
may be either qualitative or quantitative. Quali-
tative efficiency refers to the return which a man
can produce upon a given piece of land with a
given supply of capital-goods. Quantitative effi-
ciency refers to the quantity of land and capital-
goods which a man can operate. When two
farmers employ equal amounts of labor and capi-
tal-goods upon equal areas of equally productive
land, the one who possesses a relatively high de-
gree of qualitative efficiency can produce a larger
return than his competitor who is qualitatively
less efficient. The larger return is won by the
farmer who is qualitatively more efficient because
he shows greater skill in performing his work.
He uses better judgment in planning his farm
operations, in regulating his field system, in
selecting seeds, in choosing tools and machinery
with which to do the work, or in the breeding and
feeding of live stock. The farmer who is quanti-
35
AGRICULTURAL ECONOMICS
tatively the more efficient can do more work of a
given quality.
With respect to the efficiency of the farmers of
the United States we may say, from general ob-
servation, that they are more alert and do more
work than do the farmers of England, — they are
quantitatively more efficient; but it seems true
also that they are not in the habit of doing their
work so carefully, — they are qualitatively less effi-
cient. This difference is doubtless due in part at
least to the fact that extensive culture has gener-
ally been most profitable in America, while inten-
sive culture has long been necessary in Europe. In
England, keen competition for the use of land has
weeded out the farmers who could not produce a
large surplus over costs on each acre of land,
while in the United States this class has been able
to compete more successfully. At the present
time, however, the competition for the use of land
is becoming keen in this country, and in the
future the farmer who does not plan his work care-
fully and do it well, is sure to find it more and
more difficult to pay the price which his compete
tors are offering for the use of land.
One element of our agricultural population is
markedly inefficient, both from the standpoint of
the quantity and the quality of their work. In
1900, thirteen per cent, of the farms of the United
States were operated by negroes. In the South
Atlantic States the percentage of negro farmers
36
ECONOMIC PROPERTIES
was thirty, in the South Central States it was
twenty-seven and two-tenths, while in the one
state of Mississippi the percentage was fifty-eight
and three-tenths. The size of their farms is
small, — averaging about fifty-one acres. That
they do not work very strenuously nor compete
very keenly for the use of land, is shown by the
fact that land of practically the same grade is
much less valuable in Alabama where the negroes
predominate than in Texas where the whites are
in the majority. In all of the thirty-nine counties
of the "Black Prairie" of Texas the whites were
in the majority in 1890, and the average value of
land was 12.19 dollars per acre; whereas, similar
soil was worth 6.40 dollars per acre in the "Black
Prairie" of Alabama in which there are twelve
counties, and in all of which counties there were
more negroes than whites.1
A Southern planter, interested in the improve-
ment of the negroes, is quoted as saying: "One
of the things which militates most against the
negro is his unreliability. . . . His mental proc-
esses are past finding out and he cannot be counted
on to do or not to do a given thing under given
circumstances."1 "Judged by present stand-
ards," says Carl Kelsey, "the negro is decidedly
lacking. . . . Something is holding him back, ....
1 Carl Kelsey, The Negro Farmer, p. 69 ; also, Harry Ham-
mond, in The Cotton Plant (Bulletin No. 33, U. S. Dept. of
Agr., Office of Experiment Stations), p. 242.
37
AGRICULTURAL ECONOMICS
it is his inheritance of thousands of years in
Africa."1
Thus a review of the economic properties of
the factors of production shows them to be alike
in that they vary in productivity. This variation
in productivity is a fact that must ever be kept
in mind in any discussion of the organization of
the factors of production. On the other hand it
has been found that land is very different from
the other factors of production with respect to
its capacity for being increased in quantity. This
fact becomes important in explaining why the
organization of agriculture must ever be changing
with the progress of society.
LITERATURE
Alfred Marshall, Principles of Economics, Book IV, Chap-
ter II and Chapter IV (2d Ed.).
Richard T. Ely, Outlines of Economics, Book II, Chapter II.
The Twelfth Census of the United States, Volume V.
Carl Kelsey, The Negro Farmer.
1 Carl Kelsey, The Negro Farmer, p. 67.
CHAPTER IV
THE GUIDING PRINCIPLE IN THE ORGANIZA-
TION OF THE FARM
There was a time when each farm family or
each small community tried to produce for itself
all the food, clothing, and shelter necessary to its
well-being, — each family carried on both agri-
culture and manufactures. This was the ideal in
western Europe in the days of Karl the Great,
and it has not been long since it was the ideal of
the pioneer farmer in America. But with the
modern organization of industrial society, men
have found that a given amount of economic
activity will produce the means of satisfying a
greater number of wants when each man devotes
himself more or less exclusively to some one line
of production. ^ This specialization in production
brings larger returns because (i) some parts of
the world are especially well suited for the pro-
duction of certain products, (2) some men are
especially well fitted for performing one kind of
work while others can best do something else, and
(3) any man can accomplish more when he de-
votes all of his time and attention to one kind of
work than when he changes about indefinitely
39
AGRICULTURAL ECONOMICS
from one thing to another so that he never ac-
quires a high degree of skill in any line, to say
nothing of the loss of time in making changes.
As a result of the development of commerce in
the products of agriculture, the modern farmer
has found it profitable to look primarily to the
production of a few staples which can be put
upon the market in exchange for the great variety
of things which he desires to use. Incidentally
many modern farmers produce certain articles,
such as fruits and vegetables, primarily for the use
of their own households, and here they are free
to follow their own instincts, as did the self-
sufficing farmers of olden times, and produce
those things which they like best to consume ; but
in the production of the staples of commerce they
must, if they would best succeed, produce those
things which will enable them to obtain upon the
market the largest possible means of supplying
their wants, in return for every unit of effort
which they expend upon their farms.
From the point of view of the farmer, then, the
first problem before us in the economics of agri-
culture pertains to the selection of land and the
management of a farm in such a manner as will
enable the farmer, one year with another, to win
the largest net profits. For example, if a farmer
is operating land in a given community he should
endeavor to determine which grade of land to cul-
tivate, which kinds of crops to grow, how in-
40
ORGANIZATION OF THE FARM
tensely the land should be cultivated in the case
of each crop, and how large a farm he should at-
tempt to operate in order that, after he has
counted out the rent of the land (or the interest
on the value of the land and the cost of repairs,
etc., if he owns the land), the expense (in the
forms of interest and wear and tear) to which he
has been for the use of capital-goods, and the cost
of hired labor, the total net profit which is left to
him and his family in return for their own labor,
skill, and enterprise shall be as large as possible.
We find it desirable in this treatise to look upon
the farmer and his family as a unit, and to use the
phrase "net profit" to designate that share of the
entire product of the farm, which is attributed to
the personal services of the farmer and his family.
It is not essential that the net profit be in the form
of money, a portion of it may well be retained in
the form of commodities which may be used
directly by the family. The articles so used have
their value quite as clearly as do those which are
sold. In speaking of the farmer's net profit,
therefore, the value of the products retained for
home consumption should be included.
From the standpoint of economy in production,
the modern system which is called commercial
agriculture, is without question, far superior to
the old self-sufficing system, for it undoubtedly
enables the farmers to win a larger net profit;
but from the standpoint of justice in distribution,
41
AGRICULTURAL ECONOMICS
the commercial system has been challenged, and
there is doubtless a chance for improvement in
this regard. To illustrate the way in which this
injustice may arise, let us suppose that a given
farmer puts forth a given amount of labor and
capital in the production of goods which he sells
upon the market for one hundred dollars; and
suppose also that when this money is invested in
the various articles which he wishes to consume
the farmer finds that the commodities which he
is taking home in return for the products of his
farm, were the product of much less, say twenty
per cent, less, labor and capital than the amount
which he expended upon the commodities which
he took to the market, and that this difference is
due to the fact that some men have a power of
absorbing much of the profits of labor by simply
manipulating values without adding anything to
the usefulness of commodities. Certainly if such
a condition existed it would be an injustice to the
farmer even though the articles which he received
in this way would satisfy many more wants and
satisfy those more completely than he could hope
to satisfy them if he tried to produce for himself
every article which he consumes.
It has been alleged that there are men who do
no work, but simply sit at certain points where
exchanges are made and demand that their bas-
kets be filled.1 To avoid this alleged injustice in
1 Wilbur Aldrich, Farming Corporations, p. 169.
42
ORGANIZATION OF THE FARM
the distribution of wealth, it has been proposed1
that "Farming Corporations" be organized, and
that these corporations make it their business to
produce for themselves everything they want to
use. It is proposed that no attention shall be
paid to the commercial world nor to commercial
values, but simply to the wants of the farmers and
their families. Every kind of agricultural prod-
uct which may be desired for use by the members
of this corporation is to be produced by them.
Wool is to be' produced and converted into cloth-
ing, beef is to be produced for home use, and the
hides of the animals converted into shoes for
home use. Thus to avoid unjust treatment it is
proposed to throw away the advantages of the
commercial system and revert to the old self-
sufficing system in agricultural production.
Mr. L. H. Kerrick, of Bloomington, Illinois,
a leading and successful farmer of that state,
delivered an address at the Iowa Agricultural Col-
lege, Ames, Iowa, a year or more ago, in which
he said in part :
The farmer has, in my region certainly, become too
much imbued with the spirit of commercialism. He has
gone too far, I think, in the way of producing things to
"sell" He raises big crops of corn and oats to sell, or feeds
many cattle and hogs for the market. He sells these at the
other fellow's prices. Then he turns about and buys at the
other fellow's prices, supplies of various kinds that he
might easily have produced on his own farm. By this prac-
tise, he puts himself twice in the enemy's hands— once when
1 Wilbur Aldrich, Farming Corporations, p. 169.
43
AGRICULTURAL ECONOMICS
he sells, and again when he buys. This is not the highest
. and best idea of living by farming. The first thing a
farmer should do is to surround himself in his farm home
with everything he can make or produce that will promote
the health, comfort, safety and pleasure of himself and
family. This is what the farm is for, first. And how few
good and needful things there be that may not be produced
and provided on a good farm and in and about a real farm
home! I do not attempt to name the innumerable good
things of his own garden and orchard and field — all prime,
fresh and exactly to his liking, which the provident farmer
may have if he can only get that idea of raising things to
sell out of his head or at least modified, and get that other
idea of producing things on his own farm for his own use.
If farmers everywhere would think first and work first to
provide for their wants on their own farms, then they
might be able to set the price on the surplus they have to
sell. Then the surplus would not be so overwhelming in
volume. Then there might be competition among the buy-
ers of his surplus. The consumer might not then be so
able as now to sit complacently waiting to be solicited to
buy this enormous surplus at his own price. The railroad
people then might take on better manners and be willing to
give a more nearly just rate, and they might be more care-
ful to give good service.
The farmer with the right idea of farming and of farm
life and of farm opportunities, is the man I have most faith
in to curb trusts and corporations generally — such as need
curbing.
The makers of machines and implements and of barbed
wire and of all that sort of thing, cannot eat their stuff —
they must sell to get any good out of their product. They
cannot live at all without selling. But the right kind of a
farmer can live a long time without selling his product — he
can eat it and live. Suppose the other fellow asks of you an
exorbitant price for his wares. Just let him keep them a.
while, or try to keep them. They can't keep them, because
they can't eat them ; and to get something to eat, they must
sell. But you, my farmer friends, can keep yours a while
44
ORGANIZATION OF THE FARM
and be living like kings — eating your bread and meat and
good apples and fresh butter and eggs and milk. The other
fellow can only keep his just a little while, until you hear
the prices of his wares a cracking. The farmer is a trust
breaker, if he only knows it. I have little faith in legis-
latures and courts and magazine writers and orators, as
trust breakers. But the farmer with the right idea, as I
have been trying to illustrate, can fortify himself in his
farm home for a much longer siege than the manufacturer
or the railroad manager can put up against him. And the
beauty of it all is, the farmer can be happy all the same,
and all the time.
That too many farmers neglect to provide their
families with the variety and abundance of fruits
and vegetables which they might and should pro-
duce primarily for home use, and that they also
generally fail to appreciate the possibility of cre-
ating for themselves beautiful surroundings by
planting flowers and shrubs and trees, is frankly
admitted. This condition of affairs is to be re-
gretted, and should be remedied. One of the
greatest of economists, John Stuart Mill, has
said : " Solitude in the presence of natural beauty
and grandeur is the cradle of thoughts and aspiral-
tions which are not only good for the individual,
but which society could ill do without."1 We
need more of the "thoughts and aspirations" such
as the "natural beauty and grandeur" of the ideal
country home may inspire, and it is certainly to
be hoped that the American farmer will avail
himself of his natural opportunities and surround
1 Principles of Political Economy, Book IV, Chapter VI, § 2.
45
AGRICULTURAL ECONOMICS
himself with everything which will acid to the
dignity and beauty of his home.
But if these beautiful surroundings 'are to be
created they must first be desired by the farmers,
and it will certainly be admitted that the desire for
food, clothing, and shelter naturally and properly
come first and should be satisfied before much
attention is given to the creation of beautiful
surroundings; and, again, to enjoy the beautiful
surroundings, one must have leisure, and in order
to have time, after satisfying the more urgent
wants, to create and enjoy beautiful surround-
ings, it is important that the farmer avail himself
of the most economical means of satisfying these
wants. We object, therefore, to the general
principle laid down by Mr. Kerrick, that farmers
everywhere should "think first and work first to
provide for their wants on their own farms,"
rather than to look primarily to the production of
those things which will give them the greatest
purchasing power in the market. We believe the
latter method to be the one which will bring the
largest means of satisfying wants for a given
amount of exertion, whereas, Mr. Kerrick's sug-
gestion points towards a reversion to the self-
sufficing economy of earlier times, and to a sacri-
fice of much of the benefit which has resulted
from the extension of commerce and from spe-
cialization in industry.
There are, doubtless, many injustices in the
46
ORGANIZATION OF THE FARM
present complex commercial system of agricul-
tural production; but, in spite of this objection,
the commercial system is superior to the old self-
sufficing economy which was only desirable in an
earlier stage of economic society when the dan-
gers to commerce were so very great and the
means of transportation had been so little devel-
oped that the farmers could gain little or nothing
by producing for the market. Modern agricul-
ture is not entirely commercial, yet the produc-
tion for the market is the dominant feature. The
commercial system has replaced the self-sufficing
system, because it brings larger returns for .the
efforts expended, and our aim should be not to
revert to a less economical system in order to
avoid the evils which have arisen, but to remove
the evils which accompany it and thus perfect the
present commercial system.
When the farmer follows the rule of seeking
the largest net profits, he will not be bound to any
one system, he will produce for home consump-
tion just to the extent that he can produce more
cheaply than to buy upon the market. That
which is good practise in this regard at one time
and place may be bad economy at the same time
at another place, and at the same place at another
time.
A review of the development of commercial
agriculture in this country will help us to under-
47
AGRICULTURAL ECONOMICS
stand better the present situation in the United
States.
The beginners of American agriculture were
Englishmen, and the course which they first took
in the New World was greatly influenced by the
stage of industrial progress with which they were
familiar at home. In the Seventeenth Century,
the greater part of the land of England was di-
vided up into small holdings cultivated by tenant
or by landowning farmers who looked primarily
to the production of such crops as were needed in
their own households. In some parts of the
country, however, the organization of agriculture
had taken on a very different form. Large areas
of land in the southeastern part of England had
been made into sheep farms on which wool was
produced primarily for the market.
Thus, in the Seventeenth Century, England
had two types of farmers. The peasant farmer
was a hard working, pains-taking tiller of the soil
who was able to live "unto himself." The wool
and flax which were gro\vn on his little farm were
manufactured by the farmer and his family into
the various articles which were desired for home
consumption. The peasant's house was usually
of simple construction, such as the farmer could
make for himself out of such materials as could
be found in the immediate neighborhood. Cot-
tages made of mud and straw were very com-
mon in the central and northern counties. This
48
ORGANIZATION OF THE FARM
farmer was just the kind to succeed in a new
country where commerce could not be counted
upon to supply such stores of goods as the wants
of men demand.
The second class of English farmers had been
in the habit of producing primarily for the mar-
ket, and depending upon the market for the sup-
plies of clothing, luxuries, etc., which it was their
desire to consume. They had passed on to that
stage in the evolution of industrial society where
the commercial side of their agriculture domiL
nated, and without a market they could not well
survive. Having before our minds these two
classes of English farmers, let us next take a
glance at the country which they were to occupy.
The new country provided new crops, such as
maize, potatoes, and tobacco, the culture of which
could be learned from the Indians. The climate
of the eastern coast of America is very different
from that of England, and much colder than the
settlers may have expected to find in a latitude
so much south of their mother country. The
Atlantic coast presents two very different areas;
tide-water Virginia, with her mild climate, rich
soil, and slow flowing rivers which were well
suited for becoming the arteries of commerce
into the interior; and New England, with her
more severe climate, her poorer soil and rough
surface traversed by swift flowing streams which
4 49
AGRICULTURAL ECONOMICS
did not lend themselves readily to the purposes
of transportation.
Both of these classes of English farmers came
to America. Both classes went to New England
and both classes went to Virginia. The first
class, the self-sufficing farmers, got along well in
New England. They learned to grow maize
and potatoes. They found plenty of fish in the
streams. Their old habits of building houses for
themselves, manufacturing their own clothing,
and producing and preparing for winter's use
abundant supplies of food, made them the natural
inhabitants of the isolated New England of that
time.
But the commercial farmers were not so suc-
cessful in the North as were their less pretentious
fellow countrymen. They sought diligently for
some agricultural product which could be trans-
ported to London with profit; for it was from
London that they could draw the comforts and
luxuries which they had learned to consume but
which they were unable, themselves, to produce.
As it was unprofitable in those early days to ship
grain to London except in years when the price
was abnormally high, and as no staple was found
which would bear shipment to Europe, commer-
cial agriculture was unable to play an important
role in New England.
In the South, the commercial agriculturists met
with better success. There, as in New England,
so
ORGANIZATION OF THE FARM
a thorough search was made for a staple which
would form the basis of a profitable system of
commercial agriculture. The production of silk
was attempted, but with little or no success.
Wine was looked to as a possible solution of the
problem, but this, too, led only to disappointment.
Tobacco was finally tried with success in the
Southern Colonies, and the South was launched
upon a career of her own. Tobacco had become
fashionable in England, and demanded a high
price. This was the opportunity of the com-
mercial farmers. They could produce tobacco
and send it by the cargo directly from the river
wharves on their own plantations to the markets
of London. This enabled them to order what-
ever they pleased from the merchants of Europe.
The labor problem arose. Free white men
could do better working for themselves in a coun-
try where rich soil "was to be had for taking up."1
Contract labor was resorted to, but this did not
supply the demand. The African negro was
introduced to supply the tobacco plantations with
the desired number of laborers. And thus, it was
tobacco and slaves that made commercial agricul-
ture possible and profitable to' the farmers of the
South and led to the development of the large
plantations of Virginia which were comparable
in size and dignity to some of the estates of the
1 Hart's American History Told by Contemporaries, Vol.
II., P. 387.
51
AGRICULTURAL ECONOMICS
country gentlemen of England. The small
farmers were, sooner or later, crowded out of tide-
water Virginia.
In the North the self-sufficing economy re-
mained important for a long time. The small
farmers from New England, New York, and
Pennsylvania gradually moved westward, and it
was the same conditions which made them suc-
cessful in the early settlement of the North that
fitted them for the life of the pioneer. Since the
days of railways, new countries can be settled
successfully by commercial agriculturists, but it
was only yesterday that the self-sufficing pioneer
was an important factor in the development of
the resources of the United States.
The self-sufficing pioneer farmer was free
from the power of trusts and corporations, but
his life was full of hardships such as few farmers
would now willingly endure. The following
quotation, descriptive of the life of a pioneer
family during their first year in their new home
in western Pennsylvania, in 1773, sets forth the
hardships of these pioneers in a very pathetic
manner. "For six weeks we had to live without
bread. The lean venison and the breast of the
wild turkey, we were taught to call bread. The
flesh of the bear was denominated meat. This
artifice did not succeed very well, after living in
this way for some time we became sickly, the
stomach seemed to be always empty, and tor-
52
;
ORGANIZATION OF THE FARM
mented with a sense of hunger. I remember how
narrowly the children watched the growth of
the potato tops, pumpkin and squash vines, hop-
ing from day to day, to get something to answer
in the place of bread. How delicious was the
taste of the young potatoes when we got them!
What a jubilee when we were permitted to pull
the young corn for roasting ears. Still more so
when it had acquired sufficient hardness to be
made into johnny cakes by the aid of a tin
grater."1
The agriculture of the North has gradually
been transformed until now the commercial ele-
ment dominates. Manufacturing was for a long
time a household industry carried on by nearly
every farm family, but in the course of time more
and more of this work was turned over to those
who made a specialty of manufactures. The
swift streams of New England were harnessed,
and made to turn the wheels of industry. This
movement followed but slowly the path of the
pioneer farmer, yet in the course of time the
older parts of the North became noted for their
manufactures. With the development of manu-
factures, a market has grown up for the ordinary
forms of farm produce, such as wheat, oats, pork,
beef and dairy products. As markets have de-
veloped and the means of transportation have been
1 Reverend Joseph Doddridge, Hart's American History
Told by Contemporaries, Vol. II, p. 387.
53
AGRICULTURAL ECONOMICS
improved, the old self-sufficing agriculture has
been gradually transformed into a commercial
economy, until the remnants, only, of the old sys-
tem are now to be found.
From the standpoint of the farmer, the guiding
principle in the organization of commercial agri-
culture is to seek the largest net profit ; but there
is another point of view than that of the farmer.
Since not only the farmer, but every one else is
interested in agriculture, the question arises, are
the interests of the country as a whole best con-
served when each farmer follows tenaciously his
own self-interest and succeeds in winning the
largest net profits in return for the effort which
he expends in agricultural production? There
may be at certain points, a conflict between the
narrower and the broader interests. In this case
we are confronted with the problem of deter-
mining whether the individual or the general
interest should be promoted. To the extent that
the greatest good to the greatest number demands
that the general or social interests be conserved,
it falls within the domain of our subject to pro-
pose institutions which will limit the free action
of individuals in such a manner as to promote the
highest interests of society as a whole.
But while human welfare or the greatest good
to the greatest number has long been recognized
as the standard by which every law or custom
should be accepted or rejected, this principle is
54
ORGANIZATION OF THE FARM
so abstract that men may be fully agreed upon
its acceptance as their standard, and yet hold
exactly opposite opinions as to the desirability of a
particular measure. The statesman needs a more
concrete standard which may be used with safety
in his efforts to set proper limits to the free action
of farmers and of those with whom they have
economic relations, in the pursuance of their
daily toils.
The highest value of the productions of a coun-
try has been set forth as a practical economic ideal
for the statesman. It has been said that "the
prosperity of a nation is in proportion to the value
of its productions."1 This is the economic ideal
which was set forth by their leaders as the aim
and the end of the Patrons of Husbandry in their
efforts to promote the interests of agriculture.
To this principle, as an economic ideal, it might
be objected that legislation may be of such a char-
acter as to increase the value of the agricultural
productions of a country and at the same time not
improve the economic well-being of the people of
the country as a whole. It is quite conceivable,
for example, that duties on imports may be so
levied as to increase the total value of the agricul-
tural products of a country, without increasing
the prosperity of the nation as a whole.
It is necessary, also, in order that this national
1See the Preamble of the Constitution of the Patrons of
Husbandry.
55
AGRICULTURAL ECONOMICS
ideal shall be attained, that the labor and the
capital of a country be properly distributed among
the various lines of economic activity. The labor
and the capital of a nation should be so distrib-
uted among the various industries that the portion
of these factors which is employed under the most
unfavorable circumstances shall be equally pro^
ductive in all industries. The necessity of this
proper adjustment of the productive forces should
ever be kept in mind in the discussion of the
movements of population from country to city or
vice versa.
When the productive forces are properly dis-
tributed among the various lines of production,
and where the relative values of products are not
to be directly affected, it would seem that a just
and practical ideal to be held in mind when pass-
ing judgment upon the institutions which limit
and define the rights of the farmers in their rela-
tions to each other, to their landlords, to laborers
which they employ, and to those to whom they
sell their products, would be the highest value of
the agricultural productions of a country.
We wish to mark out clearly trie distinction
between the social ideal and the ideal of the indi-
vidual. The individual seeks the largest net
profits. He desires to have that share of the
, product which is left to him, after paying what is
necessary to engage the other factors of produc-
tion, as large as possible. Where the personal
56
ORGANIZATION OF THE FARM
interest of the farmer does not extend to all
of the factors of production, conflicting interests
are certain to arise, as between the landlord and
the tenant, or the employer and the employee.
While the farmer is interested, personally, in hav-
ing his own share of the produce large in propor-
tion to the efforts which he puts forth, the states-
man should be interested equally in having the
returns to all the factors of production as large
as possible. It is, therefore, not the return to
any one factor in particular, but the sum of the
returns to all the factors which should be of vital
interest to the statesman. With the limitations
which have been suggested, the highest long-time-
average value of the total product of this industry,
is, then, the goal, when agriculture is viewed from
the standpoint of the nation as a whole.
It will be our purpose in the following chapters,
to outline the economic principles which the
farmer follows when intelligently seeking to win
the largest possible net profits; and also to note
those circumstances under which the winning of
the largest net profits on the part of the farmer
does not result also in the highest value of the
agricultural productions of the country as a
whole. It will be attempted, further, to outline
some of the methods which have been employed
by public authority in its attempts to promote the
agricultural interests, and to discuss the institu-
tions which are essential to a proper adjustment
57
AGRICULTURAL ECONOMICS
of the economic relations of those engaged in
this industry.
LITERATURE
Theodor Freiherr von der Goltz, Leitfaden der landwirt-
schaftlichen Betricbslehre.
Frangois Bernard, Les Systemes de Culture.
Weeden, W. B., Economic and Social History of New Eng-
land.
P. A. Bruce, Economic History of Virginia in the i?th
Century.
Adam Smith, Wealth of Nations, Book I, Chapters I, II,
and III.
Ely, R. T., Outlines of Economics, Book III, Part I, Chap-
ter I.
CHAPTER V
THE ORGANIZATION OF THE FARM. THE SELEC-
TION OF LAND, LIVE STOCK AND EQUIPMENT; THE CHOICE
OF CROPS; THE PLACE OF ANIMAL HUSBANDRY IN THE
ECONOMY OF THE FARM.
Section I. The selection of land and capital-
goods, or, the grades of the factors of production
which should be brought together. — With the
three factors of production to be organized in
such a manner as will enable him to win the
largest net profits, the first problem before the
farmer is the selection of land, live stock and
equipment. It has been seen that all the factors
vary in productivity, and the question arises as
to which grade of land a given farmer should
select for his agricultural operations, and which
grade of capital-goods he should employ.
The proportions in which the factors of pro-
duction should be brought together will be dis-
cussed in the next chapter. There we shall have
to do with the quantities of labor and capital-
goods which should be expended upon a given
area of land, the quantity of labor which should
be associated with a given quantity of capital-
goods, and the quantity of land, labor and capital-
59
AGRICULTURAL ECONOMICS
goods which should be brought under one manL
agement in order that the best results shall be
attained; but in this chapter quantities or pro-
portions will be disregarded, and our attention
will be fixed upon the qualities of these factors,
with a view to determining which grades of land,
laborers, horses, machines, etc., should be asso-
ciated together.
When viewed from the standpoint of the high-
est value of the productions of a country it be-
comes apparent that the farmers who are qualita-
tively most efficient, should employ the most pro-
ductive grades of capital-goods upon the most
productive land. A mathematical illustration of
this is as follows. Let the grades of farmers be
represented by the figures 2, 4, and 6 ; the grades
of capital-goods by the figures i, 3, and 5 ; and the
grades of land by the figures 8, 10, and 12. Hav-
ing in mind that a given grade of land, for exam-
ple, will yield twice as much product in value if
farmed by the man whose efficiency is represented
by figure four as it will if managed by the one
whose efficiency is represented by figure two, etc.,
for the other grades and factors, let the reader
try to multiply these figures together, taking one
figure from each group, in such a manner that the
sum of the products will be the greatest possible.
Note that when the highest from each group are
associated together, and the medium, and again
the lowest are in turn associated together the sum
60
ORGANIZATION OF THE FARM
of the products will be the greatest possible, as
for example, (2x3x12) + (4x5x10) + (8xix6)=
only 320, whereas (2x1x8) + (4x3x10) + (6x5x
12) =496, which is the maximum product which
can be obtained.
The question arises at once as to the willing-
ness of the farmers to select land according to
this principle. There is no apparent reason why
the best farmers should object to using the best
land and the best live stock and equipment, but
it is clear that the least efficient farmer could pro-
duce larger crops upon the more productive
grades of land and by using the more productive
forms of capital-goods than he can on the less
productive land and by using the less productive
horses and tools to which this formula assigns
him. The fact which reconciles the less efficient
farmers to the use of the lower grades of the fac-
tors of production, is the competitive price which
must be paid for the use of the higher grades,
For example, the farmers who are qualitatively
more efficient can pay more for the use of the
more productive land than their less efficient com-
petitors can possibly pay, and yet at these higher
rents these more efficient farmers find it to their
interest to select the higher grades of land. This
proposition will be further developed in the chap-
ter on the distribution of wealth, where it will be
shown more clearly why it is that the interest of
61
AGRICULTURAL ECONOMICS
the individual farmers harmonizes with that of
society as a whole in this regard.
After the student has followed through the
further development of the subject this principle
will not seem so abstract as it may appear on the
surface. It will then be seen that if a farmer is
only able to make a living on land with a low de-
gree of productivity, that the chances of his mak-
ing a living and paying the rent on the better
grades of land where the rent will be higher, are
very poor indeed. On the other hand if a farmer
can make a profit on the low grade land, which
enables him to lay aside something each year, the
chances are that such a farmer can increase his
savings by selecting more productive land and
paying a higher rent for its use. The writer has
known farmers who succeeded in making a liv-
ing on cheap land, but who utterly failed to make
the rent when they moved to better land, whereas
there were other farmers who could pay the rent
for the more productive land, and have more
money left at the end of the year than they could
possibly have had in case they had farmed the
less productive land which could be had for a
much lower rent.
This process of shifting the farmers who are
qualitatively less efficient to the less productive
land operates more or less automatically. The
writer once knew a farmer who paid a cash rent
for a farm of one hundred acres of good land.
62
f
ORGANIZATION OF THE FARM
Year after year he scarcely kept even, and would
not have been able to make both ends meet had
he not engaged in other work during a part of the
year. Another farmer offered more for the use
of the land than was being paid, and the old
tenant gladly gave up the place rather than pay
any more rent than he was paying. The second
farmer has paid the higher rent and saved money
year by year, and at the same time the first men-
tioned farmer moved to cheaper land where he
has been able "to make a living and even a little
more, and has not felt so keenly the burden of
the rent.
It is a matter of common observation that the
best farm land is usually occupied by intelligent
and thrifty farmers, whereas the less desirable
land is usually occupied by men not so well en-
dowed by nature to put the land to its highest
use, and hence who are not capable of compe-
ting for the more productive grades of land. The
writer's attention was called to this fact, with
regard to the distribution of the population over
i the different grades of land, some years ago, both
by Professor Turner and by Professor Van Hise
of the University of Wisconsin ; but it was later,
in a study of the influence of variations in the
qualitative efficiency of farmers upon the amount
of rent that would be paid for the use of farm
land under competitive conditions, that the eco-
nomic principle which explains this fact was dis-
covered. 63
AGRICULTURAL ECONOMICS
It will be shown, in the chapter on distribution,
that the net profit which any farmer can make will
vary with the grade of the land ; that the farmer
who has the highest degree of qualitative efficiency
can make much more than a living on land of any
grade, but that he can make the largest net profit
on the most productive land after outbidding all
competitors for its use. It will be shown that
the farmer whose degree of qualitative efficiency
is half \vay between the highest and the lowest,
can make a living on many of the different grades
of land, but that owing to the higher rents which
the more efficient are willing to pay for the better
grades of land, he can secure the largest net profit
by employing that grade of land which corre-
sponds to his degree of qualitative efficiency.
And finally it will be shown that the farmer
with the lowest degree of qualitative efficiency
can hope to make a living only on the least pro-
ductive land. The same principle holds with
regard to the selection of capital-goods, and also
of laborers where laborers are employed.
Attention has been called to the variation in
the efficiency of the farmers, but it should be
noted also that the efficiency of a given farmer
may be different in the various branches of the
agricultural industry. A man can usually do best
that for which he has a natural liking or taste.
Each farmer should decide, therefore, which
branch of agriculture he can follow to best advan-
64
ORGANIZATION OF THE FARM
tage and then select the grade of land and capital-
goods, suited to that branch of agriculture, which
correspond to his degree of qualitative efficiency
as a producer in that branch of the industry, for
such a choice will enable him to win the largest
net profit.
Section II. The selection of crops and the
organisation of the -field-system. — When the land
is selected on which the farmer is to carry on his
agricultural operations, the next important ques-
tion which arises pertains to the selection of the
crops which are to find a place in the field-system.
The Roman agricultural writer, Pliny the elder,
quotes a maxim which was said to have been
handed down from the ancients, to the effect that
he is a bad farmer indeed who will buy anything
which he can produce upon his own farm.1 But
Albrecht Thaer, the leading German agriculturist
of one hundred years ago, and perhaps the great-
est agriculturist Germany has produced, taught
the farmers of his generation to produce nothing
for themselves which they could to better advan-
tage purchase upon the market.2 The maxim
quoted by Pliny points towards the self-sufficing
economy of early times when the goal of the hus-
bandman was the direct satisfaction of all the
1Bohn's Classical Library, Natural History of Pliny, Vol.
IV, p. 16; also Dickson's Husbandry of the Ancients, Vol.
I, p. 208.
2Wilhelm Korte, Albrecht Thaer, Sein Leben und Wirken,
als Arzt und Landwirth, pp. 102-103.
AGRICULTURAL ECONOMICS
wants of his household; but Thaer lived at a
time when commerce had so developed and indus-
try had become so diversified that production for
the market had become very important. The fol-
lowers of Thaer learned to select those crops
which would enable them to win the largest net
profits, and to exclude all others from the field-
system.
This process of selecting the crops which en-
able the farmer to win the largest net profits is
an important factor in determining the geograph-
ical distribution of farm crops in modern times.
While all plants will not thrive under the same
conditions, there are usually several species pres-
ent to compete for the use of each piece of land.
When Nature is left to herself, the plants which
are best fitted for this competitive struggle sur-
vive and occupy the land; but when man inter-
venes the useful plants are given especial care
while the plants which are harmful or of no use
are destroyed.
Under the self-sufficing economy of earlier
times, all the useful plants which could be made
to thrive were cultivated on each farm. The
greater the variety of crops which each husband-
man could produce the greater the degree of his
well-being, for each household was a little eco-
nomic world striving to subsist upon the imme-
diate products of its own industry.
' But under the regime of modern commercial agri-
66
ORGANIZATION OF THE FARM
culture, where each farmer produces primarily for
the city, national, or world market, and buys upon
the market the majority of the goods he consumes,
his well-being depends less upon the variety of his
own productions, and more upon his power to
command the desired commodities upon the mar-
ket. This power does not depend upon the va-
riety, but upon the cost, quantity, and price of
the articles which he takes to the market. Cost,
or cheapness of production, is not the one deter-
mining factor ; neither is the quantity of the prod-
uct. The selling price would also be a poor guide
in itself. But when the cost of producing an
article, the quantity which one man can produce,
the capacity of the crop to fit itself into the field-
system, and the farm price of the product, are all
taken together, it will be found that, with prices
as they are at a given time, some crops will net
the farmer a handsome profit, while others can
be grown only at a loss. The economic well-
being of the modern farmer depends, then, upon
his capacity to select and produce that crop or
combination of crops which, one year with an-
other, will enable him to win the largest net
profit.
The organization of the farm is essentially
different from that of the factory. In mechanical
pursuits it is the common thing for each man to
devote all of his time throughout the year to the
production of that one article or class of articles
67
AGRICULTURAL ECONOMICS
which he can produce to the best advantage. In
agriculture, however, the production of any one
crop requires the attention of the farmer for only
a portion of the year, and various crops demand
his attention at different seasons, so that his labor,
horses, and machines are usually employed more
economically in a system of diversified farming
than in a single crop system, even if the crop need-
ing attention at one time is less profitable than
that requiring attention at another time.
The crops which require attention at the same
time of the year may be looked upon as a group
of competing crops. Those crops which require
cultivation for six or eight weeks during the early
period of their growth, such as maize, cotton,
tobacco, potatoes, sugar beets, etc., may be classed
together as a group of competing crops, because
they compete for the attention of the farmer, — for
his labor, horses, tools and machinery. The win-
ter grains, rye and winter wheat, or the spring
grains, oats, barley, and spring wheat, may be
given as other groups. These separate groups
may be called non-competing groups, because the
members of one group require the attention of
the farmer at a different time than do the mem-
bers of the other groups. For example, maize,
cotton, etc., do not compete with oats, barley, etc.
The farmer who seeks to use his labor and capi-
tal to the best advantage should select from each
group of competing crops that one which will add
68
ORGANIZATION OF THE FARM
the most to the farmer's net profit and should
introduce as many non-competing crops into the
field-system as will add sufficient to his net profit
to pay him for his trouble. When this principle
is followed it will often happen that of two non-
competing crops in the field-system, one will yield
a larger net profit than the other. Yet when the
year's accounts are balanced, it will be found that
the total net profit of the farmer is greater when
both crops are cultivated than when but the one
is grown, even if the one is less profitable than
the other, for each crop represents the most prof-
itable use to which the labor, horses, tools and
machinery can be put at the given time, and if
not used in that way they must be put to a less
productive use or to no use at all.
But of two competing crops, only the more
profitable one should be produced. Take maize
and sugar beets, for example, in that part of the
United States where the sugar-beet region lies
within the "corn belt." Indian corn and beets
require the attention of the farmer at the same
time of year and if the one crop increases the
other must decrease. Hence beets must here
prove equally profitable, that is they must add as
much as maize to the farmer's total net profit,
before they can be cultivated without loss. The
beets may yield the larger net profit per acre, and
yet prove less profitable to the farmer because he
cannot operate so many acres of beets as of
69
AGRICULTURAL ECONOMICS
maize. In order to arrive at the total net profit
which he can win from the production of a given
crop, the net profit per acre must be multiplied by
the number of acres which the farmer can operate.
Cotton and maize are competitors in the South.
For many years after the Civil War cotton
yielded a much greater net profit to the farmers
than did maize. As a result, maize was little
grown in the South, the supply being drawn from
the North where cotton does not thrive. To-
ward the close of the last century the profits of
cotton growing considerably declined and maize
production took a more important place in the
field-system of the South.
When the above principle is followed in the
organization of the field-system, it will not be
true, necessarily, that each crop will be grown
where the facilities for its production are the
greatest; for it may happen, for example, that in
the region where the facilities for the production
of tobacco are the best, sugar beets will yield a
larger net profit than tobacco, in which case the
latter crop might well be excluded from the field-
system in the very region where, aside from the
element of rent, it can be produced most cheaply.
It is evident that changes in the relative value
of farm products will necessitate changes in the
organization of the field-system. If the price of
one of two competing crops should rise more rap-
idly than that of the other, this might result in a
70
ORGANIZATION OF THE FARM
change from the one crop to the other. Changes
of this kind often come about in certain districts,
because of the growth of a great industrial and
commercial center in that part of the country.
Take, for example, the farms located within a few
miles of Chicago. Seventy years ago there was
practically no home market, and the farmers, to
the extent that they produced for the market at
all, produced those crops which when shipped to
the East would yield the largest net profit ; but in
the meantime "the development of a market close
at hand has greatly influenced the organization
of these farms. The local demand for milk and
for garden produce has made it most profitable
for the farmers to devote themselves more or less
•exclusively to dairying and market gardening.
This is due to the well known fact that location
with respect to the market has a greater influence
upon the price of some commodities than upon
that of others; that is, a dollar's worth of one
commodity can be shipped more cheaply or in
better condition than can a dollar's worth of an-
other commodity. Thus it is that the farmer
must ever be alert to the changes which are going
on in the whole industrial world if he would per-
fectly adjust his production in such a manner
as will bring the largest net profits.
Fluctuations in land rents, without any change
in the relative value of the products, may necessi-
tate the reorganization of the field-system. Sup-
71
AGRICULTURAL ECONOMICS
pose, for example, that the rent of a given piece
of land is three dollars per acre, and that the net
profit per acre is five dollars when the land is de-
voted to maize, and that the net profit is twenty
dollars per acre when the land is devoted to sugar
beets; but that the farmer can operate thirty-five
acres of maize and only seven acres of beets.
Then he could win one hundred and seventy-five
dollars net profit by producing maize, and only
one hundred and forty dollars by producing
beets. But, suppose the rent of the land should
rise to five dollars per acre, without any change in
the prices of the products or in the costs of pro-
duction. The profits per acre of maize would
then be three dollars, and that of an acre of beets
would be eighteen dollars, so that, with the same
proportions as to the number of acres which the
farmer can operate of these two crops, the total
net profit which he could win from the production
of maize would be reduced to one hundred and
five dollars, while that from the beets would have
been reduced to one hundred and twenty-six dol-
lars only. In this hypothetical case the rise in
the rent would result in a subtraction of only
fourteen dollars from the total profits of the beet
crop, while it would result in a reduction of the
profits on maize of seventy dollars, so that the
crop which was the more profitable before the
rise in the rent would become the less profitable
as a result of the rise in rent.
72
ORGANIZATION OF THE FARM
It is a well recognized fact that the different
crops make different demands upon the soil.
For this reason the crops which are associated to-
gether in the systems of rotation should be such
as will make supplementary demands upon the
soil's elements of fertility. This in itself, how-
ever, is not a safe guide in determining which
plants should be introduced into the field-system ;
for it might lead to the cultivation of the less
profitable of two competing crops and thus reduce
the farmer's total net profit. Yet it should ever
be kept in mind that if one of two competing
crops exhausts the soil while the other adds to its
fertility, this must be taken into account when
calculating the net profit which these crops can
be made to yield. The crops being chosen which
will, one year with another, enable the farmer to
win the largest net profit, they should be arranged
in the field-system in such a manner as best to sup-
plement each other in their demands upon the soil.
A comparative study of the crops and field-
systems of Europe and America will throw some
light upon the situation in America. A three-
field system of crop rotation prevailed through-
out Europe during the Middle Ages. Under this
system, the arable land was divided into three
parts. One part was sown with winter grain,
one part with spring grain, and the third part was
fallowed. The fallowed field was cultivated care-
fully to destroy the weeds and to bring the soil
73
AGRICULTURAL ECONOMICS
into good tilth. The field which was fallowed
one year was sown to winter grain the next, and
to spring grain the following year, so that each
field was cleaned of weeds and brought into good
tilth every third year, during which year the field
yielded no product.
This system was in very general use through-
out Europe down to the close of the Eighteenth
Century, but by that time the industrial and com-
mercial population was making such demands for
agricultural products that the more intelligent
farmers began to think it too great a waste to cul-
tivate a third of the arable land each year with
no crop growing upon it. A general search was
made for a crop which could be grown in place
of the bare fallow, and at the same time allow the
soil to be cleaned of weeds and cultivated prepara-
tory for the sowing of grain. Indian corn had
already been introduced in the countries along
the Mediterranean, but unfortunately this crop,
which is the one grain crop which can be culti-
vated successfully while growing, was ruled out
by the climate, in the greater part of Europe, so
that turnips, potatoes, and beets were resorted to.
Besides the root crops, clover was introduced,
and the rotation changed into a four-course sys-
tem in which roots, summer grain, clover, and
winter grains succeeded each other in the order
given. On heavy clay soils where the root crops
would not thrive beans sometimes took the place
74
ORGANIZATION OF THE FARM
of the root crop in this four-course system. Dur-
ing the last quarter of the Eighteenth Century and
the first half of the Nineteenth, this four-course
system gradually replaced the old three-field sys-
tem and its bare fallow. The root crops came to
be called "fallow crops" because they were looked
upon as incidental to the fallowing of the land
in preparation for the grain crops. The grains
continued, at least until 1875, to be the most valu-
able crops.
Since the fall in the price of cereals, about
thirty years ago, the European field-system has
been quite upset. Those articles which will not
stand long shipment, such as milk, vegetables,
etc., prove most profitable, because foreign counu
tries cannot compete so successfully upon the
European markets. As a result grain land has,
in many instances, been converted into pastures.
A good example of this is found in eastern Eng-
land where many old wheat fields have been con-
verted into permanent pastures for dairy cows.
The production of green fodders for cattle has
proved relatively more profitable in recent years
than formerly. Truck farming has been rapidly
developed. In general, the tendency has been for
the farmers to disregard all systems of crop rota-
tion and produce such crops as will enable them to
secure the greatest net profit. Commercial fer-
tilizers are generally used, so that it is possible
to adjust the chemical content of the soil to the
75
AGRICULTURAL ECONOMICS
demands of the plants instead of trying to adjust
the plants, by means of crop rotation, to the
chemical content of the soil.
The old three-field system was the rule in
northern and western Europe during the first two
centuries of American colonization, yet the bare
fallow never became permanently established in
the American colonies. The colonists were, from
the beginning, well provided with valuable crops,
which could be cultivated while growing. In-
dian corn and tobacco made the bare fallow un-
necessary and practically unknown in this country
long before "fallow crops" were generally intro-
duced in northwestern Europe. And while our
country has greatly expanded, cotton, maize and
tobacco have continued to make fallowing unnec-
essary in most parts of the United States. In
parts of Canada, and in the United States along
the northern border, along the Pacific coast, and
on the high table lands of the plains these crops
will not thrive, and the conditions with regard to
available crops are more nearly the same as in
western Europe.
Thus, of the group of competing crops to which
Indian corn, cotton, tobacco, and roots belong,
the farmers of northwestern Europe have only
the roots to select from. It is true that small
areas are devoted to tobacco in northern Ger-
many, but this is of no general significance.
Hence, in Germany, for example, sugar beets
76
ORGANIZATION OF THE FARM
have only to prove more profitable than potatoes,
which are grown in large quantities for the distil-
leries, or turnips, and fodder beets, which are
grown for the feeding of cattle, in order to be
introduced with profit into the field-system.
Whereas in the "corn belt" of the United States,
sugar beets must prove as profitable as maize
before there is any economy in their introduction.
Under these circumstances it might be true
that the facilities for producing sugar beets were
greater in the "corn belt" of the United States
than in Germany; and yet in case the maize,
which cannot be grown in Germany, should prove
more profitable than the beets there would be no
economy in producing beets in the United States,
while at the same time they might prove profitable
in Germany, in spite of the poorer facilities, be-
cause of the lack of a more profitable crop to take
their place in the field system. This example
illustrates the principle which was well under-
stood by the classical economists, namely, that:
"A thing may sometimes be sold cheapest, by
being produced in some other place than that at
which it can be produced with the smallest
amount of labor and abstinence."1
Section HI. The place of animal husbandry
in the economy of the farm. — The importance of
live stock in the economy of the farm is shown
*John Stuart Mill, Principles of Political Economy, Book
III, Chapter XVII, § i.
77
AGRICULTURAL ECONOMICS
by the fact that on June i, 1900, the live stock
on farms represented fifteen per cent, of the total
value of all farm property; and by the further
fact that the value of the animal products sold or
consumed by the farmers in 1899, represented
forty-five and seven-tenths per cent, of the total
value of all farm products sold or devoted to the
personal use of the farmers and their families
during the same year. The following table
shows the valuation of farm property1 and prod-
ucts2 as reported in the twelfth census.
VALUATION OF FARM PROPERTY AND PRODUCTS
Kinds of Proper* ti* ce«aee
Land and Improvements ........ $16,674,690,247 81.3
Live stock on hand June ist ..... 3,078,050,041 15.0
Implements and machinery ...... 761,261,550 3.7
Total value of farm property.. .$20,514,001,838 100.0
Kinds of Products
Crops not fed to animals $2,045,187,485 54.3
Animal products 1,718,990,221 45.7
Total $3,764,177,706 loo.o
QUANTITIES AND VALUES OF SPECIFIED ANIMAL PRODUCTS,
AND VALUES OF POULTRY RAISED, ANIMALS SOLD, AND
ANIMALS SLAUGHTERED ON FARMS IN i8993
Products Value
Wool $45,723,739
Mohair and goat hair 267,864
Milk, butter, and cheese 472,369,255
1 Twelfth Census, Vol. V, pp. xxix, xxxii, and xxxvi.
*Ibid., Vol. V, p. cxxi.
z Ibid.
78
*
ORGANIZATION OF THE FARM
Products Value
Eggs 144,286, 1 58
Poultry 136,891,877
Honey and wax 6,664,904
Animals sold 722,913,1 14
Animals slaughtered 189,873,310
Total $1,718,990,221
The value of crops fed to stock, in 1899, was
reported as $974,941,046, or 32.3 per cent, of
the total reported value of all crops of the coun-
try. These crops and the pastures of the country
formed the basis for the production of the $i,-
718,990,221 worth of live stock products. Of
the total value of animal products sold or used,
the most important items were the value of ani-
mals sold and slaughtered, which was $912,786,-
424, and that of dairy products, which was
$472,369,255.
There are certain crops such as cotton and
tobacco which are always intended for the mar*-
ket in their native form, but there are many other
crops, such as the grains and the hay and forage
crops, which may be sold in their native form
or transformed by the farmer into animal prod-
ucts. The farmer has ever before him, therefore,
the problem of determining whether the largest
net profit can be obtained by selling or by feeding
these crops.
The live stock industry comes into competition
to some extent with the production of field crops.
79
AGRICULTURAL ECONOMICS
The farmer who feeds and properly looks after
hogs, cattle, or sheep, cannot spend as much time
in the field as he who keeps no stock of these
kinds. The dairy industry comes more into com-
petition with the crops of the fields, than do the
other live stock industries. But while a part of
the time devoted to live stock must be subtracted
from the time which can be spent in the field, yet,
for the most part, the live stock industry is supple-
mentary to the other branches of agricultural pro-
duction. Live stock requires the especial atten-
tion of the farmer in the winter when nothing can
be done in the fields. In the summer, when the
farmer is busy in the field, much of the live stock
is shifting for itself in the pasture, and there is
usually enough time when the ground is too wet
for work in the field, to permit the farmer to give
the needed attention to the live stock which is in
the pasture.
To the extent that the live stock industry is
supplementary, in its demands upon the time and
energy of the farmer, to the production of farm
crops, he has only to decide whether the additions
to his total net profit, resulting from the trans-
formation of the various crops into animal prod-
ucts, are sufficient to remunerate him for the
efforts put forth. But to the extent that the live
stock industry encroaches upon the time and
energy available for crop production, the problem
of determining whether to sell his crops or con-
So
ORGANIZATION OF THE FARM
vert them into animal products presents itself
in practically the same form as that of selecting
crops for the field-system. The general principle
is simple, — seek the largest long-time-average net
profit, — but the practical application of this prin-
ciple is especially difficult, because of the limited
extent to which these two lines of work come into
conflict with each other. It can be said, how-
ever, that the live stock industry should enable the
farmer to win -as large a net profit as he could se-
cure from other sources, and enough more to make
worth while the extra effort put forth when he
could have found employment in no other line of
productive activity, but which time might have
been spent in enjoying the products of his labor
or in improving his mind.
The problem of deciding upon the kinds of live
stock to be kept should be solved by the principle
which has already been discussed under the head
of crop competition. It is perhaps true that per-
sonal likes and dislikes enter more largely into the
situation here than in the selection of crops, but
having taken this element into account, the vari-
ous branches of live stock production may be
classified according to whether they are more or
less competitive with or supplementary to each
other and with the field crops, in their demands
upon the time and energy of the farmer, and then
the selection should be made on the basis of the
6 81
AGRICULTURAL ECONOMICS
largest possible addition to the farmer's total net
profit.
One factor ever to be kept in mind in counting
the profits of the live stock industry is the value,
as fertilizer, of the manure, which is a very im-
portant by-product of this industry. This ele-
ment is usually underestimated in a new country,
but in the older countries where commercial fer-
tilizers have long been necessary if the farmer
would secure the largest net profit in the produc-
tion of field crops, full value must be given to this
by-product.
Professor Charles F. Curtiss, of the Iowa Agri-
cultural College, says:1 "Maintenance of fer-
tility is secured by rotation of crops, by chemical
fertilizers, and by physical and bacteriological
methods ; but . by none of these has the virgin
strength of the soil been maintained over long
periods except as plant production has been asso-
ciated with animal husbandry. By selling dairy
products in the form of butter and cheese and
restoring the by-products by feeding the skim
milk, buttermilk and whey we take from the soil
but one-tenth of fertility lost by a grain crop. . . .
If fertilizing material must be bought for the
farm, it can, under all ordinary conditions, be
bought in vastly cheaper form as feed stuffs and
utilized as such, and the residue applied to the
1From a paper entitled, "Economic Functions of Live
Stock," read before the Economic Section of the A. A. A. S.,
St. Louis, December, 1903.
82
ORGANIZATION OF THE FARM
soil, than by purchasing fertilizers outright.
The very best of fertilizers are often obtained in
this way without any direct outlay. The use of
feed stuffs, rich in fertility, may even return a
handsome profit as a separate proposition, and
thus fertilizing constituents come on to the farm
under most advantageous circumstances. The
British and other European farmers buy large
quantities of our flaxseed and corn by-products.
They figure that they are the gainers even if they
do not make any profit on their feeding operations
with these products, and they are. Until re-
cently the packing-house by-products, including
dried blood and tankage in various forms, have
practically all gone direct to the land as fertilizers.
To-day these products are serving a most impor-
tant purpose as feed stuffs, and the time is near
at hand when practically every pound .of this ma-
terial will first be utilized as stock food, and later
returned to the soil. The returns are so much
greater and so much more economical in this way
as to put the purely commercial-fertilizer farmer
out of business in the space of a few years at the
outside, where other conditions are similar."
The feeding of grain, hay, and fodder to live
stock is an effective means of converting these
crops into products of higher specific value, which
will better stand the costs of transportation to dis-
tant markets. "Cattle and hogs not only convert,
but also condense Indian corn. They enable it
83
AGRICULTURAL ECONOMICS
to be profitably raised in regions too far removed
from the markets of the country to be transported
in that form. By condensing the Indian corn
to one-fifth or one-sixth of its bulk and weight,
and reducing the cost of transportation in some-
thing like a similar proportion, the possibility is
secured of raising Indian corn in regions situated
thousands of miles from the market at which
the corn products or, what is practically the same,
the pork and beef are consumed."1
Maize is produced primarily for the feed lot.
Only 18.7 per cent, of the maize crop of the
United States, for 1903, was shipped out of the
county where it was grown.2 Twenty-eight and
six-tenths per cent, of the oat crop3 and 57.9 per
cent, of the wheat crop4 was shipped out of the
county where grown. But the proportion of the
maize crop which is fed varies greatly in the difr
ferent parts of the country. The farmers of Illi-
nois produced 264,087,431 bushels of maize, in
1903, 52.8 per cent, of which was shipped out of
the county where it was grown, and 41 per cent,
of which was yet in the hands of the farmers on
March i, 1904; whereas the Iowa farmers pro-
duced 229,218,220 bushels of maize in the same
year and only 6 per cent, of their crop was shipped
1 Monthly Summary of Commerce and Finance, February,
1900, p. 2279.
a Yearbook of the Department of Agriculture, 1903, p. 588.
* Ibid., p. 607.
•Ibid., p. 598.
84
ORGANIZATION OF THE FARM
out of the county where grown, and they had but
30 per cent, of the crop on hand March i, I9O4.1
That the Iowa farmers feed their maize more
generally than do the Illinois farmers is indicated
by the fact that the principal source of income on
40.5 per cent, of the farms of Illinois was hay and
grain, and on 43 per cent, it was live stock;
whereas in Iowa the principal source of income
was hay and grain on but 32 per cent, of the
farms, and live stock was the principal source of
income on 58." 5 per cent, of the farms.2 There
were 3,710,020 hogs in the state of Illinois on
January i, 1904, while there were 7,364,268 in
Iowa.3 On the same date there were 2,689,193
cattle in Illinois and 4,865,626 in Iowa.4 These
facts point definitely to a great difference in the
farm organization in these two states.
There are, doubtless, several reasons for this
difference in the farm economy of these two
states, but distance from the markets is certainly
a very important factor. The distilleries of Illi-
nois make a demand for materials valued at
$3,734,652^ and by far the most important of
these materials is maize,6 while no maize was used
for this purpose in Iowa. The glucose factories
of Illinois used materials valued at $12,988,845.
1 Yearbook of the Department of Agriculture, 1903, p. 588.
2 Twelfth Census, Vol. V, Table 18.
8 Yearbook, U. S. Department of Agriculture, 1903, p. 673.
4 Ibid., p. 663.
6 Twelfth Census, Vol. IX, p. 614.
6 Ibid., p. 615.
85
AGRICULTURAL ECONOMICS
which was, doubtless, practically all maize ; where-
as, the material used for this purpose in Iowa was
valued at $2,784,388.1 There was more starch
made from maize in Iowa than in Illinois, it is true,
but the total value of the materials used for this
purpose in Iowa was only $623,8 14.2 On the
whole, therefore, it is clear that the local manu-
facturing industries make a much greater demand
for maize in Illinois than in Iowa.
Chicago is so located as to be the principal
market for maize shipped from both states and
the Illinois farmers have the advantage over the
Iowa farmers in lower freight rates to this mar-
ket. Chicago is the largest "primary market" for
maize in the country. During the fifty-two
weeks ending January 2, 1904, the receipts of
maize at Chicago were 91,560,168 bushels, and
the shipments from this market were 87,523,525
bushels.3 So far as the writer has been able to
ascertain, the freight rate per one hundred pounds
of hogs in car-load lots from the various Iowa
and Illinois railway stations to Chicago, is about
twice that for maize in car-load lots from the
same stations. It appears, also, that the rates
for these commodities are, on the average, about
twice as high from the Iowa as from the Illinois
stations. On the assumption that the feeding of
1 Twelfth Census, Vol. VIII, p. 163 ; Vol. VII, pp. 8 and 234.
2 Ibid., Vol. IX, p. 576.
8 Monthly Summary of Commerce and Finance, December,
1903, p. 2035.
86
ORGANIZATION OF THE FARM
the maize to hogs and cattle condenses the prod-
uct to one-sixth its original weight, there would
be a considerable saving in freight, by such con1-
densation of the product, in Illinois as well as in
Iowa, but the saving would be twice as great for
the Iowa farmers as for the Illinois farmers, and
as the price of maize rises, the point where it
would be more profitable to ship the maize than to
convert it into live stock products would be
reached in Illinois before it would be reached in
Iowa.
LITERATURE
Adam Dickson, The Husbandry of the Ancients.
Albrecht Thaer, Grundsaetze der rationellen Landwirt-
schaft.
A. Hunter, Georgical Essays.
R. Prothero, Pioneers and Progress of English Farming.
J. S. Mill, Principles of Political Economy, Volume II,
Book III, Chapter XVII.
Twelfth Census of the United States, 1900, Vol. V.
CHAPTER VI
THE ORGANIZATION OF THE FARM, CONTINUED.
THE PROPORTIONS IN WHICH THE FACTORS OF PRODUCTION
SHOULD BE BROUGHT TOGETHER, WITH ESPECIAL REFER-
ENCE TO INTENSITY OF CULTURE.
Agriculture is said to be extensive or intensive
according to the amount of labor, capital-goods,
and managerial activity devoted to each acre of
land. When a small amount of labor, capital-
goods, and managerial activity is employed on
each acre of land the culture is said to be ex-
tensive, when a large amount, it is said to be
intensive. There is variation also in the amount
of labor which is associated with a given amount
of capital-goods. In the United States we use
relatively large amounts of capital-goods com-
pared with the amounts of labor employed, while
the reverse is true in China. There may be
wide variations, also, in the amount of managerial
activity associated with a given amount of labor
and capital-goods. At a given time and place
some definite proportion of each of these factors
should be associated if the best results are to be
attained.
ORGANIZATION OF THE FARM
Not forgetting that "the largest total net profit"
is the ideal which we have ever before us, when
considering this subject from the standpoint of
the farmer, let us assume that the farmer has at
his command, land, laborers, and capital-goods
already brought together in the most desirable
proportions. Then, leaving until later the dis-
cussion of the rules which should be followed in
determining these proportions, we shall first at-
tempt to ascertain the number of composite units,
made up in the proper proportions of the other
factors, which should be brought under a given
amount of managerial activity.
Assuming that a farmer wishes to devote a
given amount of effort to the management of
agricultural operations, the question arises
whether he should give this effort to a large num-
ber of these composite units and give but little
attention to each unit, or devote this same amount
of managerial activity to a small number, and
give very close attention to each unit. If the
number of these composite units under one man-
agement be increased, without any increase in the
amount of effort put forth on the part of the
manager, so that less and less attention is given
to each unit, a gradual decrease in the return per
unit will take place as the number of units is in-
creased, until finally a point will be reached where
all of the net profit secured by adding another unit
will be absorbed by the subtractions from the
89
AGRICULTURAL ECONOMICS
returns to the units already employed. In other
words, each succeeding composite unit brought
under a given amount .of managerial activity will
add less and less to the total product until finally
the point will be reached where the net addition
to the total product due to an additional com-
posite unit will no more than pay the costs of
engaging the cooperation of such unit, and at this
point the additions should cease if the farmer
would attain to the ideal, that is, if he would se-
cure the largest net profit for a given amount of
exertion.
This point may be illustrated by means of the
following table, in which the number of com-
posite units (a unit may be thought of in this
illustration as one laborer and the amount of
capital-goods and land which should be associated
with him) to be associated with one unit of man-
agerial activity (which may be thought of as the
amount of such activity which one farmer wishes
to devote to agricultural production) is increased
from one to ten, and as a result of the increase
in the number of the composite units brought
under the one management the net profit per corrt-
posite unit is represented as gradually falling
from $260 to $40, while the resulting net profit
per unit of managerial activity is represented as
increasing until after the fifth composite unit is
added, after which it is represented as falling.
90
ORGANIZATION OF THE FARM
Number of Composite
Units Associated with Net Profit per Com- Net Profit per Unit of
a Unit of Managerial posite Unit Managerial Activity
Activity
1 $260 $260
2 240 480
3 220 660
4 190 760
5 160 800
6 130 780
7 ioo 700
8 80 640
9 60 540
10 40 400
The figures here used are selected more or less
arbitrarily, it is true, but we believe they illustrate
quite clearly the general truth that, as the num-
ber of the composite units brought under one
management is increased, the average return per
composite unit, and hence the average net profit
per composite unit will fall, but that for a time
this fall in the net profit per composite unit is
more than balanced by the increase in the number
of such units, and the net profit per unit of man-
agerial activity continues to increase until finally
the point is reached where the net profit per unit
of managerial activity reaches its maximum, and
if the number of composite units associated with
a given amount of. managerial activity be in-
creased beyond this point the net profit per unit of
the latter, and hence the total net profit which the
farmer will be able to secure as a manager, will
be reduced below the possible maximum.
When a great deal of managerial activity is
91
AGRICULTURAL ECONOMICS
devoted to a small number of the composite units
of the other factors, the management may be said
to be intensive, and when a small amount the
management may be said to be extensive. The
proper degree of intensity of management is that
which yields the largest net profit per unit of
managerial activity, and this point will be reached
when the addition of another composite unit
would add to the total product no more than
enough to pay the costs of enlisting its coopera-
tion. This principle applies to the different fac-
tors severally as well as collectively. The amount
of land brought under one management may be
increased to advantage until the last increment
results in a net addition to the total product no
greater than the rent which must be paid to secure
the use of the land. The same proposition holds
for the other factors. But the problem still re-
mains as to the proportions which will exist be-
tween the three factors, land, capital-goods, and
hired laborers, when the amount of each of these
brought under one management is determined by
this rule. These proportions and especially the
amount of labor and capital-goods to be used
upon a given area of land may, with profit, be
considered in considerable detail.
Let us first consider the proportions which
should exist between laborers and capital-goods
in this composite unit, and then try to ascertain
the proportions which should exist between land
92
ORGANIZATION OF THE FARM
and this smaller composite unit made up of
laborers and capital-goods.
In the case of a farmer who hires no laborers,
but performs all the labor himself, the first of
these problems merges itself into the one we have
just discussed, and the simple statement will suf-
fice that : additions to the supply of capital-goods
are justifiable so long as such increments result
in a net addition to the total product, greater than
the cost of securing their cooperation in produc-
tion. But where the farmer devotes his time pri-
marily to the management of the farm and hires
large numbers of laborers, the proportions in
which these two factors should be brought to-
gether is not a simple problem.
There is no fixed ratio, which holds good for
all times and all places, between the number of
laborers and the amount of capital-goods which
should be employed in the production of any par-
ticular crop, and of course the proportion will
vary with the crops which are being produced.
Nearly everything that is now done by machinery
has one time been done by hand, and much that is
now done by hand may some day be done by ma-
chinery. At a given time and place, however,
there should exist a certain ratio between the
number of laborers and the amount of capital1-
goods brought together in any particular line of
production, in order that the farmer may win the
largest net profit for his efforts.
93
AGRICULTURAL ECONOMICS
It often happens that a fixed number of laborers
must be combined with certain capital-goods ; for
•example, one man is required for each harvesting
machine; but in many cases it may be a matter
of indifference, aside from the element of profit,
whether the work be done by hand or by horse
power and machinery. In the production of
wheat, for example, the proportion of capital-
goods might be reduced and the same produce
obtained by increasing the number of laborers.
The reverse of this proposition is also true. But
while these variations may be made arbitrarily
they have an influence upon the amount of the
farmer's share of the product. Of all the vari-
ous operations necessary to produce and market
a bushel of wheat, some can be performed more
cheaply by the use of horses and machines, others
by means of laborers.
Where the farmer's aim is to have the net
profit which is left after paying the hired laborers
and paying for the use of the capital-goods, as
large as possible, every operation should be per-
formed by laborers, if this method will lower the
costs of production, increase the product, or in
any other way increase the net profits ; and every-
thing should be done by means of horses and ma-
chines or other forms of capital-goods, which can
be done to better advantage in that way. It
may often happen that the cost of performing cer-
tain farm operations can be reduced by the use
94
ORGANIZATION OF THE FARM
of horses and machinery in the place of laborers,
but it may at the same time happen that the prod-
uct resulting from these operations is likewise
reduced. It is not always true, therefore, that
every operation should be performed in the least
expensive manner, in fact, it may easily happen
that the most expensive method will result in the
largest net profit.
One point never to be overlooked in consider-
ing the desirability of substituting laborers for
capital-goods or vice versa, is, the relative demand
which will be made upon the time and energy of
the manager. Any change in the proportions of
these factors in the composite unit, which will
increase the amount of managerial activity per
such unit, must sufficiently increase the farmer's
net profit per composite unit to balance the loss
due to the reduction in the number of such units
which can be brought under a given unit of man-
agerial activity.
Where the substitution of the one factor for
the other makes no change either in the quantity
of the product or in the amount of managerial
activity required, the rule is a simple one : where
there is a choice between using laborers or capital-
goods in the performance of certain operations,
choose the cheaper method. And yet, the quali-
fying phrases in this formula are so important
that the problem is far from being a simple one,
and in many cases, perhaps in most cases, it is the
95
AGRICULTURAL ECONOMICS
more fundamental principle of seeking the largest
net profit per unit of managerial activity, which
must be kept uppermost in mind.
A change in the rate of wages without a cor-
responding change in the rate of return to capital,
or vice versa, will necessitate a readjustment of
the relative amounts invested in the employment
of laborers and in the employment of capital-
goods. As wages rise relatively to the returns to
capital-goods, there should be less labor and more
capital-goods employed. Improvement in ma-
chinery often make it profitable to substitute
capital-goods for laborers. The self-binder, the
hay-loader, and the windmill are examples where
this has been true.
Having decided upon the proportions in which
laborers and capital-goods should be associated,
the farmer is still confronted with the problem of
determining how many composite units, made up
of laborers and capital-goods in the proper pro-
portions, should be employed upon a given area
of land in the production of a given crop. This
is the problem of determining the proper intensity
of culture. There is always some degree of in-
tensity which will yield the largest net profit ; but
what is that degree of intensity?
For the sake of simplicity, let us first suppose
that the farmer can get as much land of a given
grade as he may want to use, without paying any-
thing for its use. Under such circumstances,
96
ORGANIZATION OF THE FARM
how many composite units, composed of laborers
and capital-goods should be associated with an
acre of land? For the purposes of this illustra-
tion let us assume a small composite unit, the use
of which costs the farmer one dollar. It is obvi-
ous that in the production of maize, for example,
the application of one of these units, per acre of
land, would ordinarily produce very little, if any
maize at all. It is possible that the expenditure
of two units would produce a small crop ; but then
the third unit would increase the product more
than the second, the fourth more than the third,
and so on until a point of stationary returns has
been reached, after which the succeeding units
may be said to continue for a time to add less and
less to the total product, until a point may be
reached where further applications would add
nothing to the total product. Thus in agricultural
production the returns to succeeding composite
units made up of laborers and capital-goods, may
be said to follow the law of increasing returns
until a point of stationary returns has been reached,
after which the law of diminishing returns per
succeeding unit commences to operate.
This may be illustrated by means of a diagram.
In Fig. i the composite units of labor and capital-
goods applied to a given acre of land are measured
on the line A B, commencing at A. The line A I'
B represents the increasing and diminishing re-
turns per succeeding unit. Having in mind land
7 97
AGRICULTURAL ECONOMICS
with a given degree of productivity, the distance
between the lines A B and A I' B will depend
upon the degree of qualitative efficiency possessed
by the farmer who operates the laborers and the
capital-goods, and also upon the character of the
laborers and capital-goods which he employs.
For this reason it will be necessary to keep in
mind a given farmer employing a given grade of
laborers and capital-goods, as well as a given
piece of land. With these conditions in mind we
may speak of the area AC C (Fig. i) as repre-
senting the product which would result if but one
unit were employed per acre, and of the area C C'
Dr D as representing the increase in the product
due to the addition of the second unit and so on for
the succeeding units. As illustrated in Fig. i, the
w
F R H
X YL
Fig. i.
product of each succeeding unit is greater than
the one preceding it until six units have been ex-
pended, after which each succeeding unit may be
said to yield a smaller product than the one im-
mediately preceding it.
Indeed it may be true that a law of stationary
98
ORGANIZATION QF THE FARM
returns per succeeding unit operates during the
application of a few units, after the final point of
increasing return has been reached and before the
starting point of diminishing returns per succeed-
ing unit has been reached. It may be true also,
that the line A I' in Fig. i, should rise rapidly
with the application of one particular unit, say
the fourth, and then remain stationary or even
fall with the application of the fifth, and then rise
very rapidly again with the application of the
sixth. The introduction of drainage or the use
of commercial fertilizers might bring such a
result. There are at present no data from which
to calculate the exact curve which the returns per
succeeding unit will follow, but the general rise
followed by a general fall is a matter of common
observation.
With this illustration (Fig. i) before us, sup-
pose the farmer has one thousand of these com-
posite units, made up of laborers and capital-
goods, to expend in agricultural production. In
other words, suppose that this farmer has found
that he can secure the largest net profit when he
operates just one thousand of these units of labor
and capital-goods. With free land at his dis-
posal, how many acres will he use and how many
units will he employ upon each acre? Will he
apply five units per acre and use two hundred
acres of land? No, his expenditures will pro-
duce a greater total product when he employs six
99
AGRICULTURAL ECONOMICS
units per acre and confines himself to one hun-
dred and sixty-six and two-thirds acres. But
will this make the labor and capital-goods most
productive? On first thought one might answer
yes, because the seventh unit adds less to the
product than the sixth; but upon looking more
closely into the matter, it is apparent that there
is no good reason for ceasing to apply more units
simply because the point of diminishing returns
per succeeding unit has been reached. The sev-
enth unit may add less to the total product than
the sixth, and yet add more than any of the first
four units, and the average product per unit may
be greater when seven units have been applied
than when only six have been expended. Hence
the total product of the thousand units may be
greater when seven units have been applied to
each acre and only one hundred and forty-three
acres of land employed. But at what point
should the farmer cease to increase his applica-
tions per acre of land? It is obvious that there
is a limit, that, for example, a thousand units ex-
pended upon one acre of land in the production
of Indian corn would yield a smaller return per
unit than when more land is used and the number
of units applied to each acre more limited. But
what is the limit? It is true that in the case
before us the sixth unit increases the total product
more than any unit before or after it, but all units
cannot be sixth units. The first, the second, and
100
ORGANIZATION OF THE FARM
the third are indispensable ; and, in case a farmer
can manage a fixed number of these composite
units, made up of capital-goods and laborers,
when employed in the production of a given crop
without reference to the area on which they are
employed, the highest average return per unit is
the thing which he should seek, for with a fixed
cost per composite unit this will enable him to
secure the largest net profit per composite unit,
consistent with the proper intensity of manage-
ment, and hence will enable him to secure the
maximum total net profit for his exertion.
In the illustration (Fig. i) the average product
per unit is represented as increasing rapidly until
the sixth unit has been applied and then less rap-
idly until a point is reached where the return per
increment is just equal to the average. At this
point the average return per unit reaches the
maximum, and the application of another incre-
ment would reduce the average product per unit
employed. The thousand composite units are
used in the most economical manner when the
acreage is so limited that the number of units ap-
plied to each acre is just sufficient to yield the
maximum average return per unit. For exam-
ple, the highest average return would be gained
by the application of X units in the case before
us in Fig. i, where the location of X is deter-
mined by the fact that the rectangle A V X' X is
drawn in such a manner that its area equals the
TOT
AGRICULTURAL ECONOMICS
area A T X' X, which represents the total product
of X composite units of the two factors, laborers
and capital-goods. That part of the rectangle
lying between the line H H' and line 1 1', for ex-
ample, represents the average return per unit.
Had the applications stopped at I, after the appli-
cation of but six units, the total product would be
represented by the area A I' I, or the rectangle
A W N I, and the average return per unit would
have been less. Likewise had the applications
been increased to nine units, the average return
per unit would have fallen. Hence a curve of
increasing and diminishing average returns may
be drawn, based upon the increasing and dimin-
ishing returns of the successive composite units
of labor and capital-goods. This curve of aver-
ages is represented by line AX' P (Fig. i) which
is so drawn that it will pass through the upper
right hand corner of any rectangle which has
AC, A D, A E, etc., or any part thereof, as a base
and which encloses an area equal to the area A C
C, AD' D, A E' E, etc., respectively, as rect-
angles A W N I and A V X' X have been drawn
in Fig. I.
As illustrated in Fig. i, the curve of averages
reaches the highest point at X' and the highest
average product per unit is gained by employing
seven and two-fifths units per acre, and it will
be seen at once that, since all the charges which
must be deducted are a fixed amount per com-
IO2
ORGANIZATION OF THE FARM
posite unit of labor and capital-goods applied, the
higher the average return per unit, the greater
will be the farmer's net profit per composite unit,
and under the assumption that, in the production
of a given crop, the same amount of managerial
activity is required per composite unit without
regard to the area of the land on which it is em-
ployed, and when there is no rent to pay, the
applications should increase until the point of
maximum average returns per unit is reached.
This is the most extensive agriculture that is con-
sistent with the greatest net profit to the farmer
under any circumstances; in the production of a
given crop, and, under the above assumption as
to demands upon managerial activity, it is the
most intensive that is in accordance with the
farmer's highest economic interest, where the
use of land may be had free.
It has been said1 that the intensity of culture
should be increased until the final increment adds
no more to the total product than enough to cover
the cost of that unit. If, in Fig. i, for example,
the value of the product represented by a rect-
angle whose sides are K L and L L' equals the
cost of securing the use of a composite unit, the
applications should, according to this view, be
increased just to point L. It is true that this
would enable the farmer to secure the largest net
profit per acre of land, but unless he be a marginal
1 T. N. Carver, The Distribution of Wealth, p. 80.
103
AGRICULTURAL ECONOMICS
farmer, in which case the two statements coin-
cide, it would reduce his net profit per com-
posite unit of the other factors. If the farmer
were able to operate a given number of acres of
land without regard to the degree of intensity of
culture, then it would be desirable to secure the
largest net profit per acre; but if he can, to advan-
tage, manage only a given number of units of
labor and capital-goods regardless of the area on
which it is expended, then he should seek the larg-
est net profit per unit of these factors.
It may be well at this point to devote a few
lines to the assumption, that, within the limits
of the variations in intensity of culture which
is likely to exist in the production of a given crop,
the same amount of managerial activity is re-
quired per composite unit composed of the two
factors, laborers and capital-goods, without re-
gard to the area of the land on which it is
employed.
In general, we believe this assumption to be
very near the truth. In the production of Indian
corn, for example, the amount of managerial
activity required for each laborer with the team
and tools which are used by him would be the
same whether thirty acres of the crop were culti-
vated three times, or the same laborer and capital-
goods were used in cultivating twenty-two and
one-half acres of maize four times. Certainly if
one must choose between this assumption, and the
104
ORGANIZATION OF THE FARM
assumption that the same amount of managerial
activity is required for each acre of land, regard-
less of the intensity of culture, there is little ques-
tion as to the choice. It is doubtless true that one
man can superintend the operations of more labor-
ers and capital-goods when they are brought to-
gether under one roof as in a large manufacturing
plant than when they are distributed over a vast
area of land, but on the farm and in the produc-
tion of a given crop we believe that, as a rule, the
demands upon the time and energy of the man-
ager, per composite unit of the two factors, labor-
ers and capital-goods, will remain practically the
same regardless of the area on which such unit
is expended. We shall proceed, therefore, upon
this assumption in our attempt to ascertain the
degree of intensity of culture which is most eco-
nomical where land has acquired some value so
that something must be paid for its use.
When a fixed sum per acre must be paid for its
use, land should be cultivated more intensively
than when it could be had free. Suppose, for ex-
ample, that three dollars per acre must be paid
for the use of land. We may think of this rent
as taking all of the product of the first four and
one-half, or R composite units of the factors ap-
plied (Fig. i). In this discussion we shall speak
of that share of the product which is left after
paying the rent, as a net return. The farmer may
be said to receive no net return from his expendi-
105
AGRICULTURAL ECONOMICS
tures until the rent is paid. Should he cease his
applications when R units have been employed,
the product would just pay the rent and he would
lose the cost of the labor and capital-goods, be-
sides receiving nothing for his trouble. What-
ever he produces by further applications is the
fund which gives rise to the net profits after the
wages of hired laborers and the payment for the
use of capital-goods have been withdrawn.
When there is no rent to pay, the farmer seeks
the highest average gross return per unit of ex-
penditure; but, where a fixed rent must be paid,
he no longer seeks the highest average gross re-
turn, but the highest average net return per unit,
for, under the assumption that, in the production
of a given crop, the amount of managerial activity
per composite unit of laborers and capital-goods
remains the same regardless of the area on which
it is expended, the largest net return per composite
unit of these factors will enable the farmer to
secure the largest net profit per unit of managerial
activity put forth, and this is the goal in agricul-
tural production when viewed from the stand-
point of the farmer.
The average net return per unit follows the law
of increasing and diminishing returns in the same
manner as the average gross return; but, when a
fixed rent is paid, the line of increasing average
net return starts at point R (Fig. i) ; for all of
the product up to point R is required to pay the
106
ORGANIZATION OF THE FARM
rent, and the average net return at that point is
zero. After the application of five units the aver-
age net return per unit will be represented by one-
fifth of the area R R' H' H; for the total return
minus the rent is represented by the area R R'
H' H, and since five units have been applied this
net return must be divided by five to find the
average. Likewise after the application of the
sixth unit, it will be one-sixth of the area R R'
I' I. After the application of the seventh unit,
the average will be one-seventh of the area R R'
Kf K. Thus the line of average net returns (line
R Y' P' in Fig. i ) rises rapidly until the line / /'
is crossed, after which it rises less rapidly until it
crosses the line /' B, after which it falls. When
a fixed rent is paid, the line of average net returns
can never rise so high as the line of average gross
returns, and the point Y' , where the line of aver-
age net returns reaches its maximum distance
from the base line A B, will always be farther
to the right than point X' ; and hence the high-
est average net return per composite unit of
labor and capital-goods employed on land for
which a fixed rent must be paid, will be gained
by a more intensive culture than when the same
land could be had rent free.
When the farmer follows the rule of seeking
the largest net profit for his exertion, the degree
of intensity of culture on a given piece of land
and in the production of a given crop will vary
107
AGRICULTURAL ECONOMICS
with the amount of the fixed rent which is paid
for its use, — the greater the amount of rent, the
higher the degree of intensity, for when a higher
rent must be paid for the use of the land a more
intensive culture is necessary if the highest aver-
age net return is to be secured.
If the proposition is reversed and we think of
successive increments of land being brought
under a given number of composite units of the
other factors, the simple statement will suffice
that the amount of land should be increased until
the final increment of land adds just enough to
the total product to pay the cost of securing the
use of the land.1 It will readily be seen that this
would result in the degree of intensity of culture
which will yield the largest net return per com-
posite unit of the other factors. On the assump-
tion, therefore, that one farmer can manage a
given number of the composite units of labor and
capital-goods without regard to the area on
which it is expended, the same conclusion will be
arrived at with regard to the proper degree of
intensity of culture where land can be had free or
where a fixed rent must be paid for its use,
whether one adds successive units of the other
factors to a given area of land until the average
net return per unit reaches the maximum, or
whether one adds successive acres of land to a
1See The Distribution of Wealth, by T. N. Carver, pp.
80-83.
108
ORGANIZATION OF THE FARM
given number of the composite units of the other
factors until the final increment of land adds just
enough to the total product to pay the fixed rent
which must be paid to secure the use of said incre-
ment of land.
The conditions are practically the same if the
farmer owns the land which he cultivates as if he
pays a fixed rent, the only difference being that
he has paid for the perpetual use of the land,
whereas the tenant pays annually for its use.
The payment of a share rent does not tend to
increase the intensity of culture. The share rent
increases as the total product increases; and it
may be thought of as taking some fixed portion,
say one-third, of the product of each succeeding
unit of labor and capital-goods applied, so that
the farmer gets only two-thirds of the product
of each unit, and his share reaches the highest
average return per unit with the same degree of
intensity which yields the highest average gross
return per unit. Hence, where the share tenants
follow their own self-interest, they will farm no
more intensively on the best land when less pro-
ductive grades of land have been resorted to than
when only the best grade was cultivated.
To illustrate this point, draw a curved line
from A to B in Fig. 2, at such a distance from
lines A I' B and A B as to leave two-thirds of the
area of each section between the lines A B and
A I B. Then draw a line through the points of
109
k. : x : : v 1 7 v 5 A i z : ; .<• ;_>:::£
v.e
was
v . ---.:
TtepcintZ
::-- /-I :.; .V -;
ation
wiH a
ctthmt? Sofpoie tint wage* and interest
enty per cent; w>0 it then pay the former
*t more unit* per acre? If the rent should
the same as before the reduction in wages
terest, and if the foregoing reasoning with
10 the proper nitensitf of cotore be true,
gree of intensity in terms of ojujiitjlies of
and capital-goods which would yield the
t net return would not change; but the ex-
110
ORGANIZATION OF THE FARM
penditure per acre in value would be decreased
and the profits of the farmer would be increased
in the same proportion. This higher profit might
increase the demand for land, however, and this
would likely result in a rise in rents, after which
it would pay to increase the quantity of labor and
capital-goods employed, excepting in the case of
the share tenant.
The intluence of a rise or fall in the price for
which the product can be sold, will influence the
degree of intensity only as it may affect the
amount of rent which must be paid for the use
of land. As prices rise the rent tends to rise and
the degree of intensity should be increased, while
the reverse is true in the case of falling prices.
This is true because land of a given degree of
productivity is limited, and as labor and capital-
goods increase in quantity, land of a less pro-
ductive grade must be resorted to, and without
improvements this is possible only when wages
and interest fall or prices rise. But there is a
close relation betueen the gross return which the
marginal land \\ ill yield and the amount of wages
and interest which labor and capital-goods can
command on other grades of land. This means
of course that as the less productive lands are
morted to the rent which the competitors will
for the better land will rise, and then the
largest net retmu and hence the largest net profit
til
AGRICULTURAL ECONOMICS
per composite unit of labor and capital-goods, can
be gotten only by more intensive culture.
In this connection the influence of lower wages
and lower interest and higher rents, upon the
choice of crops, should be reviewed, because it
often happens that a rise in rents will result in
the change from a crop wrhich requires but little
expenditure for labor and capital-goods per acre
to one that requires large expenditures per acre.
That degree of intensity of culture which
brings the largest net profit to the landowning
farmer or to the tenant who has a fixed rent to
pay, seems also to be that degree of intensity
which makes the total amount of land, labor,
capital-goods, and managerial activity employed
in the agricultural industry, most productive. It
appears, therefore, that at this point there is a
harmony of interests between the individual and
society as a whole; but it would seem that the
interest of the share tenant is not in harmony
with the interest of society as a whole in this
regard, for if the better grades of land are farmed
so extensively as the interest of the share tenant
seems to dictate, poorer grades of land would need
to be used in order that the labor and capital-
goods of the country be employed, and some of
this labor and capital-goods on the marginal land
would be creating a smaller product than it could
be made to yield if employed in farming the better
grades of land to a more intensive degree; and,
112
ORGANIZATION OF THE FARM
therefore, while a given share tenant could in-
crease his net profit by this extensive culture, such
culture would reduce the total value of the agri1-
cultural productions of the country as a whole.
The interest of the share tenant is also out of
harmony with that of the landlord in this regard.
Since it is to the interest of the landlord that the
share which accrues to him as rent shall be as
large as possible, he may desire that the intensity
of culture be carried to the farthest extreme. So
long as an increment of expenditure will add any-
thing to the product it might seem to his interest
to have the increment applied, for it would add
to his income. Thus, stated in its extreme form,
it would seem that while the share tenant would
desire to farm so extensively that the average
gross return per unit of labor and capital would
reach the maximum, the landlord might desire
that the gross return per acre should reach its
absolute maximum, without regard to cost per
unit of the product.
It is evident that the interest of the landlord
as well as that of the share tenant is here in con-
flict with the interest of society as a whole; for
to follow what seems to be the landlord's high-
est economic interest in this particular, would
result in the reduction of the total agricultural
product which could be produced with a given
amount of social energy.
But it becomes apparent that the landlord will
8 "3
AGRICULTURAL ECONOMICS
always be unable to induce his share tenant to
farm any more intensively than an owner of land
or a tenant with a fixed rent finds it to his interest
to farm his land, for the tenant could otherwise
do better by paying a cash rent or by taking up
new land of nominal value. On the other hand,
the share tenants are, in the United States, quite
generally under the direct supervision of the
owners of the land, who insist that the share
tenant should farm as well as the owner would
do. It may be true that this ideal is not often
perfectly attained, and yet the tendency is for the
landlord to so bring his influence to bear upon
the share tenant that the social loss due to share
tenancy is, perhaps, not very great. Yet this
conflict between the interest of the landlord and
that of his share tenant is a factor which becomes
more and more difficult to adjust as land values
rise.
LITERATURE
T. N. Carver, The Distribution of Wealth, Chapter II.
Wilhelm Roscher, Nationalokonomik des Ackerbaues, Book
II, Chapters II and III.
PROBLEMS IN AGRICULTURAL ARITHMETIC
BASED UPON AND INTENDED TO ILLUSTRATE THE FOREGOING
PRINCIPLES
Suppose that a farmer who employs labor and capital-
goods of a given grade in the production of maize should
find by experimentation, that, with wages, wear and tear,
interest and other elements which must be taken into
114
ORGANIZATION OF THE FARM
account in figuring the cost of using capital-goods, as they
were at a given time, the following varying expenditures
would yield the corresponding varying results.
Dollars per Acre
Bushels per Acre
in Field A
Bushels per Acre
in Field B
I
O
0
2
0
2
3
0
6
4
0
15
5
10.
28
6
25
37
7
38
42
8
48
46
8.2
49.1
46.6
8-4
50.2
47-1
8.6
Si.3
47-5
8.8
52.3
47-8
9.0
53-2
48.0
9.2
54-1
48.2
94
54-9
48.4
9-6
557
48.6
9.8
56.5
48.8
IO.O
57.0
49.0
II.O
60.0
49-5
12.0
62.0
49.8
13-0
63.0
50.0
I4.O
63.5
50.1
15
63.5
50.1
PROBLEMS
(1) Supposing that the farmer could get all the land
he cared to use, rent free, either of the quality found in
Field A or Field B ; which kind of land would it pay him
the better to use ?
(2) When maize is worth 25 cents per bushel and a
rent of $2.50 per acre is charged for the land of either grade,
which grade would prove the more profitable to the farmer,
and to what degree of intensity should he cultivate it?
(3) In case the farmer must give one-third of the crop
AGRICULTURAL ECONOMICS
to the landlord, as rent, to what degree of intensity would
he farm each of the fields, A and B, if he followed his own
highest economic interest? To what degree of intensity if
he followed the highest economic interest of the landlord?
Explain fully how society as a whole would lose in either
case.
(4) When maize is worth 35 cents per bushel and the
rent which must be paid for the use of the land in Field A
is $5.00 per acre, what is the highest rent which the farmer
could afford to pay for the use of the land in Field B ?
(5) How would a rise of 20 per cent, in the cost of
labor and capital-goods affect the above problems?
(6) How would the second problem (2) be affected if
the price of corn should rise to 40 cents per bushel and the
rent should at the same time rise to $4.00?
(7) How would problem three (3) be affected if the
landlord should agree to take twelve and one-half bushels
of maize per acre instead of one-third of the crop?
(8) Suppose that the rent of the land is $2.50 per acre
and that with this rent the highest average net return per
dollar's worth of labor and capital-goods is gained in the
production of maize when $8 is expended per acre, and in
beets when $32 is expended, and that the maize crop is
worth $15 per acre, and the beets are worth $48 per acre,
and further that the farmer can manage four times as many
acres of maize as of beets and that the two crops are equally
beneficial to the soil; which of the two crops would prove
the more profitable to the farmer?
(9) Suppose that the rent rises to $5 per acre, the ex-
penditure on maize to $9 and that on beets to $36, and that
the maize crop is then worth $16.25 per acre, and the beet
crop $53 per acre ; which would then prove the more profit-
able crop to the farmer?
(10) How would the 9th problem have been affected
if the price of maize had risen ten per cent, without any
corresponding change in the price of the beets?
116
CHAPTER VII
THE SIZE OF FARMS. THE ECONOMIC PRINCIPLES
WHICH DETERMINE THE SIZE OF FARMS J THE SIZE OF
FARMS IN VARIOUS COUNTRIES.
Section I. The economic principles which de-
termine the size of farms. — The amount of land
which a farmer should attempt to operate, in
order that he may win the largest total net profit,
depends upon many varying conditions : the kinds
of crops which he grows ; the intensity of culture ;
the character of the horses, the tools, and the
machines which he uses ; the number and charac-
ter of the laborers which he employs; and the
efficiency of the farmer himself, are all impor-
tant factors in determining the size of the farm
which is most economical.
Where tobacco or sugar beets are cultivated,
one man cannot operate so large a farm as where
maize is the principal crop. In the tobacco dis-
tricts of Dane County, Wisconsin, farms have de-
creased in size in recent years ; while in the dairy
districts they are larger now than fifteen years ago.
In New England, where mixed or grain farming
has been unprofitable for the last twenty-five years,
some regions have, in recent years, been devoted
117
AGRICULTURAL ECONOMICS
to dairying, and others to fruit growing. Where
fruit-growing has replaced the old agriculture
farms are smaller than formerly. Where dairy-
ing has been generally introduced the average
farm is larger than before the change.
Since intensive culture requires more labor
upon a given area of land, it is impossible for one
man to cultivate so many acres where the culture
is intensive as where it is extensive. In new
countries, where land is relatively abundant, ex-
tensive culture is generally most profitable and the
average size of farms is usually greater than in
older countries where land is scarce, land values
very high, and intensive culture most profitable.
A farmer can use more land when he has the
most efficient forms of capital-goods with which
to work. The fact that five times as many men
are often employed upon a given area of land in
England as upon the same area in the United
States is not explained wholly by the difference in
the degree of intensity of culture in the two coun-
tries. The American farmers have, as is well
known, much more and better labor-saving ma-
chinery than do the English.
The efficiency of the farmer is an important
factor in determining how much land he can use
to best advantage. The energetic man, whose
clear head and strong arms enable him to plan his
work most economically and to do it quickly, can
operate a much larger farm than his neighbor who
118
THE SIZE OF FARMS
may be characterized by the opposite qualities.
This may happen as a result of variations in the
quantitative efficiency even where the farmers
perform most all of the work themselves ; but the
farmer who is qualitatively very efficient as a
manager of agricultural operations, can increase
his total net profits by operating a large farm by
means of hired laborers who may have little man-
aging ability themselves, but who have ordinary
capacity for the performance of farm labor when
directed by an efficient farmer. The kinds of
crops, the intensity of culture, the efficiency of
the capital-goods and of the farmer himself re-
maining the same, the greater the number of labor-
ers, of a given degree of efficiency, who are
employed by one farmer the larger the farm may
be to advantage. A question may arise as to how
far this increase in the number of laborers, and the
accompanying increase in the size of farms,
should be carried in order that the farmer shall
win the largest net return for his efforts, and
also as to the desirability of large farms socially
considered.
If a farmer possesses superior managing
ability, so that it is profitable for him to devote
all of his time and energy to the management of
a farm, employing laborers to perform all of the
detailed operations, how large a farm should he
attempt to operate? The farmer should look, of
course, to the net profit which is left after the pay-
up
AGRICULTURAL ECONOMICS
ment for the use of the land and capital-goods,
and the payment of the wages of hired laborers
have been made.
Having decided upon the branch of agriculture
which he is to follow, the grade of land, capital-
goods, and laborers which he is to employ, the
kind of crops which should be grown, and the
proportions in which these factors should be
brought together and the amount of managerial
activity which should be devoted to each unit, the
farmer has yet to determine how many of these
composite units he should attempt to manage.
If the farmer could increase the number of
these composite units indefinitely without any
increase in the work of management, and, at the
same time, without any reduction in the quality of
the management, and hence, without any reduction
in the average net return per composite unit, there
would be no limit to the size of the farm nor to
the total net profit which he could win. This is,
of course, impossible. The supposition is made
to emphasize the fact that it is the increased
amount of effort which the farmer must put
forth, and the tendency towards a decline in the
efficiency of his management after the farm has
reached large proportions, which set the limit to
the size of the farm.
The principle which should be followed in at-
tempting to determine the number of composite
units made up of the proper proportions of land,
1 20
THE SIZE OF FARMS
labor, and capital-goods, which should be brought
under a given amount of managing activity, has
already been considered in the preceding chapter
and we shall now consider, therefore, the condi-
tions which set the limit to the quantity of man-
agerial activity which a farmer will expend and
which ultimately determines the size of the farm.
Having decided upon the number of the com-
posite units of the factors which should be
brought under a given amount of managerial
activity, that is the intensity of the management,
other things remaining the same, the size of the
farm should vary directly as the amount of effort
which the farmer is willing to put forth in its
management. The farmer's energy is, of course,
limited, and after he has performed a given
amount of work per day, it requires more and
more inducement to impel him to increase his
activity. It may be that a few hours of work each
day would be a pleasure to him, and that the
profits which he received from these few hours'
labor would be much more than enough to induce
him to perform the work of management; but
when hour after hour is added to the time which
he must spend in the fields, and the rapidity of his
movements from place to place must be increased
more and more, in order that the farm may be
properly operated, each succeeding addition to
the time and the speed of his work becomes more
and more wearisome, while at the same time the
121
AGRICULTURAL ECONOMICS
wants which are to be satisfied by the fruits of
this increased labor become less and less impor-
tant to him, until finally the point is reached
where the increase in the net profit is not sufficient
to induce the farmer to increase his activity.
C' D' E' F' G' H' l' K' L'
M><> O'
C D
F G H I K
FIG. 3
L M N O
This can be illustrated by means of a diagram.
In Fig. 3 the succeeding composite units of the
agents are measured on the base line A X, and the
net profit which the farmer receives for manag-
ing these units is represented by the area between
this line and the line B Y, so that the area
A B C' C, for example, represents the net return
from one of the composite units. If the idea of
a composite unit seems too abstract to the reader,
he may think of one of these units of the agents
of production as one laborer and the amount of
land and capital-goods associated with him.
That share of the net profit per unit which is rep-
resented by the area lying below the curved line
P P' may be thought of as the amount which is
required to yield to the manager a pleasure in
consumption goods equal to the pain of per-
forming the work of management. Assuming
122
THE SIZE OF FARMS
that he devotes exactly the same care to each unit,
as he continues to increase the number of units,
the perpendicular distance between lines A X and
B Y will remain constant ; but a larger and larger
proportion of the net profits of the succeeding
units will be required to counterbalance the pain
or dis-utility accompanying the added exertion,
required for the management of such units, hence
the curve P Pf will gradually rise until at some
point it will cross the line B Y, at which point
the farmer will cease to increase the size of his
farm.
Which is the most desirable from the social
point of view, the large, the medium, or the small
farm ? Having in mind that farmers vary
greatly in their degrees of efficiency, it would
seem socially desirable to have the managing done
by the most efficient farmers ; for in this way the
labor would be under more efficient direction, than
where every man directs his own activities. An-
other advantage of large farms lies in the fact that
they facilitate a more extended division of labor.
There can be a shepherd who devotes all of his
time to the sheep, and for this reason he can better
understand his business. So it is in every line of
work on the large farm. Machinery can be used
to better advantage on the large farm. The effi-
cient manager of the large farm can better deter-
mine what will pay and what will not pay, so that
he is in a much better position to direct the labor
123
AGRICULTURAL ECONOMICS
power of society to the best advantage. The man
who is toiling in the field as well as managing
the farm is less likely to be far-sighted at a time
when he is tired, and at such times he may sacrifice
much of the profits for a relatively small saving of
labor.
On the other hand what improves the efficiency
of the management in this way may lower the
quality of the workmanship. There are some
men, it is true, who seem to work better for others
than for themselves, but with many others, the
opposite is true. There are vast numbers of small
farmers who do not use good methods, who, be-
cause of their interest in that which is their own,
will put forth greater effort than they would if
they were working for some one else.
It has been said that certain kinds of farming
lend themselves more readily than others to large
scale operations; that wheat farming, for exam-
ple, is especially suited to large scale operations,
but that as this one crop system gives way to di-
versified farming, the advantages of smaller farms
assert themselves. The owner of young stock
takes more pains with them than he would if he
were a hired laborer. It is certainly true as a
general rule that the man who owns the lambs or
pigs will lose more sleep and go to more trouble
than will a hired man. "He that is an hireling,
and not the shepherd, whose own the sheep are
not, seeth the wolf coming, and leaveth the sheep,
124
THE SIZE OF FARMS
and fleeth : and the wolf catcheth them, and scat-
tereth the sheep. The hireling fleeth, because he
is an hireling, and careth not for the sheep."1
The management of a farm is something which
must be diffused through the details of the. work.
There is a withdrawal of the efficient manager's
ability from the details and a concentration of it
upon the general supervision of the farm as the
size of the farm increases. As more and more of
the details are delegated to hired men these details
are not looked after so well as they might be if
looked after directly by the master. Cato, a
Roman agricultural writer, says, "Neither the
assiduity and experience of the hired manager,
nor the power and willingness of the master to
lay out money in improvements, are so effectual
as this one thing, the presence of the master;
which, unless it is frequent with the operations, it
will happen to him as in an army when the general
is absent; all things will be at a stand."2 And,
again, Pliny says, "The ancients were in the habit
of saying, that it is the eye of the master that does
more towards fertilizing a field than anything
else."3
The question of the most desirable size of
farms, when viewed from the standpoint of the
1 Gospel of St. John, Chapter X, verses 12 and 13.
2 Adam Dickson, The Husbandry of the Ancients, Vol. I, p.
200.
8 Natural History, Book XVIII, Chapter 8, Bohn's edition,
Vol. IV, p. 17.
125
AGRICULTURAL ECONOMICS
most economic use of the productive energies of a
country, is a matter of determining the point
at which the advantages of the more efficient gen-
eral supervision as to crops, field-systems, inten-
sity of culture, etc., are balanced by losses in the
execution of the details of the work with less
skill and personal interest.
The conclusion is, therefore, that every man
who can make more by hiring to a farmer should
do so, and every farmer who can increase his net
profits by hiring men and increasing the size of
his farm, without increasing the amount of effort
which he need put forth, should do so. Each
man would then get the largest net income, and
the value of the agricultural productions of the
country would reach the maximum.
But the actions of men are not controlled en-
tirely by economic motives. There is a pleasure
to be derived from being one's own master, which
is often prized more highly than many of the
things which money can buy. As a result many
men remain independent farmers when they could
secure a larger income for themselves and add
more to the value of the agricultural productions
of the country by being hired men under the direc-
tion of more efficient managers. And yet it may
be that this economic loss is compensated for in
the social gain that comes from self-directed
activity.
The proper size of farms is a subject which has
126
THE SIZE OF FARMS
commanded the attention of agricultural writers
since ancient times. "The ancients," says Pliny,
"were of opinion, that, above all things, the extent
of farms ought to be kept within proper bounds.
Wherefore it was a maxim amongst them, to sow
less and plow better. Such, too, I find, was the
opinion entertained by Virgil, and indeed, if we
must confess the truth, it is the wide-spread do-
mains that have been the ruin of Italy, and soon
will be that of the provinces as well. . . . With that
greatness of mind which was so peculiarly his
own, and of which he ought not to lose the credit,
Cneius Pompeius would never purchase the lands
that belonged to a neighbor."1
Columella, another Roman agricultural writer,
also taught moderation in the size of farms. "To
the other precepts," says he, "we add this, which
one of the seven wise men has pronounced as a
maxim, that holds true in all ages, that there ought
to be limits and measures of things; and this
ought to be understood, as applied not only to
those that do any other business, but also those
that buy land, that they may not buy more than
they are fully able for. To this is applicable the
famous sentence of our poet, You may admire a
large farm, but cultivate a small one; which
ancient precept this most learned man [Virgil],
1 Natural History, Book XVIII, Chapter 7. The first part
of this quotation is taken from the translation as given by
Adam Dickson, Husbandry of the Ancients, Vol. I, p. 193 ;
the latter part is from Bohn's edition, Vol. IV, pp. 14 and 15.
127
AGRICULTURAL ECONOMICS
.... expresses in numbers. This, too, is agree-
able to an acknowledged maxim of the Carthagin-
ians, a very acute nation, That the land ought to
be weaker than the husbandman; for, when they
struggle together, should the farm prevail, the
master must be ruined. And, indeed, there is
no doubt, that a small field well cultivated pro-
duces more than a large field ill cultivated."1
"Among the maxims of the ancients, recorded by
Palladius," says Dickson, "there is one to the
same purpose with that mentioned by Columella,
'A small farm cultivated is more fruitful than a
large farm neglected/ "2
Section II. The size of farms in various coun-
tries. A. The size of farms in the United States.
— The total number of farms in the United States
in 1900 was 5,739,657. The total area of these
farms was 841,201,546 acres. The average area
per farm was 146.6 acres, and the average number
of improved acres per farm was 72.3. In the fol-
lowing table are given the number of farms of the
various sizes, the percentage of the area of farm
land in each class, and the percentage of all farms
in each class.
JAdam Dickson, Husbandry of the Ancients, Vol. I, pp. 195
and 196.
2 Husbandry of the Ancients, Vol. I, p. 198.
128
THE SIZE OF FARMS
TABLE
i. THE FARMS OF THE UNITED STATES CLASSIFIED
ACCORDING TO SIZE.
i
Percent-
Percent-
age of
age
Number of
Improved
of All
Classes of Farms
Farms
Area
Farms
Under
tVirp*» nrrp^
41,882
.02
jy
3 acres and under 10
226,564
.30
4.0
10
20....
407,012
1.23
7.1
20
" " " 50....
1,257,785
7.96
21.9
50
" " " 100
1,366,167
16.23
23.8
100
" " " 175....
1,422,328
28.54
24.8
175
" " " 260....
490,104
15.24
8.5
260
" " " 500....
377,992
17.44
6.6
500
" " " IOOO....
102,549
7.11
1.8
IOOO
" " over. .
47.276
S.Q2
.8
Total 5,739,657 100.00 100.0
From Table No. i, it will be seen that a very
large proportion of the farms of the United States
(70.5 per cent.) fall into the three classes of farms
ranging from twenty to fifty, fifty to one hundred,
and from one hundred to one hundred and sev-
enty-five acres respectively. With regard to the
geographical distribution of the farms of the vari-
ous sizes it was shown by the census returns for
1900 that small farms ranging from twenty to
fifty acres were most abundant in the southern
states, the percentage in this class in the South
Atlantic division being 27.6, and 30.1 in the
South Central division, as compared with 21.9
for the country as a whole. Farms ranging from
fifty to one hundred acres in extent are relatively
most abundant in the North Atlantic division,
1 Twelfth Census, Vol. V, Tables i and 5.
9 129
AGRICULTURAL ECONOMICS
where the percentage belonging to this class is
28.3, as compared with 23.8 for the country as a
whole. Farms containing from one hundred to
one hundred and seventy-five acres are relatively
most abundant in the North Central division,
where the percentage is 29.9 as compared with
24.8 for the country as a whole. This same divi-
sion contains, also, the highest proportion of
farms ranging from one hundred and seventy-five
to two hundred and sixty acres in size, the percen-
tage being n, as compared with 8.5 for the
country as a whole. The farms containing two
hundred and sixty acres and over were relatively
most abundant in the Western division, the per-
centage there being 23.6 as compared with 9.2
for the United States as a whole.
It may be said with respect to the kind of agri-
culture which prevailed on the farms of the vari-
ous sizes that the census returns for 1900 show
that on the farms which contained one hundred
acres or more the principal sources of income
were, in the vast majority of cases, hay, grain,
and live stock. While on farms ranging from
ten to fifty acres the principal source of income
was more often cotton than any other one product.
This corresponds with the fact that small farms
ranging from twenty to fifty acres in extent are
most abundant in the southern states. It corre-
sponds also with the fact that about half of the
farms on which cotton is the principal product,
130
THE SIZE OF FARMS
are operated by negroes and that farms operated
by negroes are usually comparatively small, about
nine-tenths of the negro farmers having been
found to occupy farms of less than fifty acres in
extent.
Small farms in the cotton belt have not always
been so common, as is shown by the rapid decline
in the average size of farms in the southern states
since 1860. In the South Central division where
the decline in the size of farms has been most
marked, the "average number of acres per farm
was 321.3 in 1860, and 155.4 in 1900. This is
the result of replacing the plantation system with
the tenant system after the slaves had been eman-
cipated. The questions of the labor supply and
the size of farms are here closely associated. It
may well be questioned if the change from large
to small farms in the production of cotton has
been of any economic advantage either to the
farmers or to the country as a whole.
B. The size of farms in England.1 — There
were 380,179 farms ("agricultural holdings") in
England in 1895. These holdings, or farms, con-
tained in the aggregate, 24,844,688 acres of im-
proved land, that is, land under crops, bare fal-
low, or grass. The average number of improved
acres per farm was, therefore, slightly more than
sixty-five. These figures include all of the hold-
1 Board of Agriculture, Returns as to the number and size
of agricultural holdings in Great Britain in the year 1895,
Parliamentary Papers, C. — 8243, p. 3.
131
AGRICULTURAL ECONOMICS
ings of agricultural land above one acre in extent.
The following table shows _the number of farms
of the various sizes and the percentage of the total
improved area of farm land which is found in
each class of farms.
TABLE 2. THE FARMS OF ENGLAND CLASSIFIED ACCORDING
TO SlZE, WITH THE PERCENTAGE OF THE TOTAL
IMPROVED AREA FOUND IN EACH CLASS, ACCORD-
ING TO THE RETURNS FOR iSgs.1
Percent-
age of
Improved
Area
1.07
4.87
8.36
1370
42.00
16.86
10.35
2.79
Classes of Farms
Number of
Farms
Above i acre and not exceeding 5 . .
87,055
5 acres " "
20..
108,145
" 20 " " "
50. .
62,446
« 50 " " "
IOO. .
46,574
« I00 « « «
300. .
60,381
« 300 " « «
500. .
11,112
« 5oo « « «
" 1,000. .
3,942
" 1,000 "
Total ,
542
380,170
100.00
C. The size of farms in Germany.2 — The total
number of farms in Germany, in 1895, was 5,558,-
317. The total area in these farms was 106,913,-
313 acres, so that the average size of farms was
19.2 acres. Under the term Betrieb, which may
be translated farm, is included every piece of land
large or small which is used for agricultural pur-
poses and which is cultivated or managed directly
1 Board of Agriculture, Returns as to the number and size
of agricultural holdings in Great Britain in the year 1895,
Parliamentary Papers, C. — 8243, p. 3.
a Statistik des Deutschen Reichs, Neue Folge, Band 112,
Erster Abschnitt, Die landwirthschaftlichen Betriebe.
132
THE SIZE OF FARMS
by one man. When all farms are excluded which
are less than one hectare or 2.47 acres, the average
size is nearly doubled, being 34.37 acres. Yet
these general averages would be considerably re-
duced if the waste lands were counted out, as only
seventy-five per cent, of the total area of farms is
reckoned as cultivated land, that is, land used as
cultivated fields, gardens, meadows, rich pastures,
orchards, and vineyards. In the following table
is given the number of farms of the various sizes,
and the percentage of the total area in farms,
which is found in each class.
TABLE 3. THE FARMS OF GERMANY CLASSIFIED ACCORDING
TO SIZE, 1895.
Number of Percentage of total
Classes of farms
farms
area in farms
Less than 2.47 acres
2,529,132
2.63
2.47 to 12.35 "
1,723,553
12.52
12.35 49.42
998,804
28.96
49.42 " 123.55 "
239,643
21.86
123.55 247.10
42,124
8.54
247.10 " 494.20 "
11,250
5-43
494.20 " 1235-50 "
9,631
9-75
1235.50 " 2471.00 '*
3,608
7.63
2471.00 acres and over
572
268
Total 5,558,317 100.00
Eastern Germany is a land of large farms. In
the southwestern part very small holdings prevail,
while in the northwest and in the south medium-
sized farms are most common.
D. The size of farms in France? — In 1892
1 Flour De Saint-Genis, Propriete Rurale en France, Chap-
ter II.
133
AGRICULTURAL ECONOMICS
there were 5,702,752 farms in France. The area
in farms (exploitations) was 122,015,015 acres.
The average size of farms was 21.4 acres. But
when we exclude all farms which are less than
2.47 acres (one hectare) the number of farms
is reduced to 3,467,347, while the acreage is re-
duced only to 118,735,256 and the average is in-
creased to 34.2 acres per farm. This is the total
area, which is, of course, greater than the culti-
vated area. The following table will be of inter-
est, as it is comparable to those for Germany,
England, and the United States.
TABLE 4. THE FARMS OF FRANCE CLASSIFIED ACCORDING
TO SIZE, 1892.
Number of
Percentage of the
Classes of farms
farms
total farm area
Less than 2.47 acres
2,235,405
2-7
2.47 to 12.35 "
1,829,259
II. I
12.35 24.71
788,299
11.7
24.71 49.42
429,407]
49.42 74.13 "
189,664 >
29.0
74.13 " 98.84 "
92,047 J
98.84 " 123.55 "
53,343]
123.55 " 247.10
52,048
247.10 " 494.20 "
22,777 [
45-5
494.20 " 741.30 "
6,223
741.30 acres and over
4,280
Total 5,702,752 100.0
It is interesting to compare these tables, and
note the close resemblance between Germany and
France with respect to the size of farms, and then
to note that the average for England is much
greater. It would be exceedingly interesting to
THE SIZE OF FARMS
study the history of land tenure in these three
countries with a view to determining to what ex-
tent social institutions have determined the size
of farms and to what extent these variations be-
tween England and the continent may be due to
different economic conditions.
LITERATURE
W. Roscher, Nationaloekonomik des Ackerbaues, Book II,
Chapter IV.
John Stuart Mill, Principles of Political Economy, Book I,
Chapter IX, Section 4.
Twelfth Census of the United States, Volume V.
Returns as to the number and size of agricultural holdings
in Great Britain in the year 1895. A report made by
P. G. Craigie to the President of the Board of Agricul-
ture of Great Britain, Parliamentary Papers (C. — 8243).
Die Landwirtschaft im Deutschen Reichs, 14 Juni, 1895,
Statistik des Deutschen Reichs, Neue Folge, Band 112.
Flour de Saint-Genis, La Propriete Rurale en France.
135
CHAPTER VIII
THE FORCES AND CONDITIONS WHICH DETER-
MINE THE PRICES OF AGRICULTURAL
PRODUCTS.
It has been seen that one of the most important
factors in determining which crops should be se-
lected for the field-system and the degree of inten-
sity with which these crops should be cultivated, is
the price for which the produce can be sold. The
question arises, therefore: What are the forces
and conditions which determine the prices of agri-
cultural products?
The business man explains prices in terms of
demand and supply; and while it will be impos-
sible in a work of this kind to enter into the
philosophy of value, it may be worth while to de-
vote a few lines to the significance of demand and
of supply. Behind the fact of demand is the more
fundamental fact of human wants. The desire to
satisfy wants impels men to produce supplies of
utilities. The effort which man must put forth in
order to gain the means of satisfying his wants sets
a limit to the supply of valuable utilities or economic
goods as they are sometimes called. It usually
happens that long before all of the wants of a man
136
PRICES OF PRODUCTS
are satisfied, the pain of exertion becomes great
enough to more than balance the possible pleasure
which might be produced by consuming the prod-
ucts of further exertion. So long as there is an
unsatisfied desire for an article, that article will
have some value placed upon it. The relative in-
tensity of the buyer's desire for an article deter-
mines how highly he will value it, and what price
he will be willing to pay for it ; but the price which
must be paid determines how completely the want
will be satisfied, — the higher the price the more
intense will be the desire which will be left unsat-
isfied.
On the other hand the natural facilities for in-
creasing the supply will determine how high the
price must be before the producer can afford to
increase the supply. Marshall says : "For long
periods the supply price is that which is just
needed to call forth those new investments of
capital, material and personal, which are required
to make up a certain aggregate volume of produc-
tion."1 The lower the price at which the producer
can, with profit, add an increment to the supply,
the greater the total supply that will be put upon
the market and the more generally it will be con-
sumed; but the greater the amount of an article
consumed, the less intense is the desire for it and
the less highly it is valued. Thus it is that the
marginal utility, or the intensity of the last want
1 Alfred Marshall, Principles of Economics, third edition,
p. 448. !
AGRICULTURAL ECONOMICS
which is satisfied tends to adjust itself to the cost
of producing that share of the supply which is
produced under the most unfavorable circum-
stances. But it is also true that the price which is
offered at a given time, and which corresponds to
the marginal utility at that time, determines the
maximum amount which can be expended in the
production of a given article with profit and hence
determines ultimately how far down the scale of
less and less favorable circumstances its produc-
tion can be carried on. Thus it is that the forces
which lie behind the demand for an article, and
the conditions under which the article may be
supplied, regulate its price.
Let us apply this principle to a concrete case by
asking the question, "What determines the price
of wheat?" The value which the wheat con-
sumers will place upon wheat is determined by the
intensity of their desire for wheat bread ; but the
intensity of that desire varies with the amount per
capita they are consuming from day to day. The
more they consume each day, the less intense the
desire for wheat, and the lower the price which
the consumers are willing to pay for it. But,
again, the less the consumers are willing to pay,
the fewer are the farmers who can introduce
wheat into their field-systems with profit, and
the smaller the supply will tend to become. Thus
it is that the price rises when the demand increases
relatively to the supply, and falls when the sup-
138
PRICES OF PRODUCTS
ply increases relatively to the demand, the price
always being such as will form an equilibrium be-
tween demand and supply.
Wheat can be shipped anywhere in the world,
so that it is the wheat crop of the whole world,
and the demand of the entire population of the
earth for wheat, that must be taken into account
in any attempt to work out the conditions which
determine the price of wheat at any given time.
Many countries produce more wheat than they can
consume, w7hile other countries draw a part of
their supply from abroad every year. The most
important countries having a wheat surplus are :
the United States, Canada, Argentina, Chile, Uru-
guay, Austria-Hungary, Bulgaria, Rumania, Rus-
sia, Turkey, British East Indies, Australasia, and
North Africa. The most important wheat-
importing countries are : Great Britain, Belgium,
Denmark, France, Germany, Greece, Italy, Neth-
erlands, Portugal, Spain, Norway and Sweden,
Switzerland, Japan, and China.
Wheat is sent from the United States to Eu-
rope, where it competes with wheat brought from
India. Wheat is sent from India to China and
Japan and there meets the product of the great
wheat farms of California, Washington, and Ore-
gon. Thus we see that the commerce in wheat
is world-wide and the price of wheat is determined
by the supply and the demand upon a market
which is world-wide. Hence it should not be ex-
AGRICULTURAL ECONOMICS
pected that the price of wheat will vary inversely
as the yield in any one country; for the wheat
producing countries are scattered widely over the
surface of the earth, and the conditions which re-
duce the crop in one country may not be present
in other countries, and hence a short crop in one
country is often made up for by an unusually large
one in another country.
The price of wheat tends to equal the cost of
producing and bringing to the central market that
portion of the wheat which is produced and mar-
keted under the most unfavorable conditions, —
the competition of crops as well as natural con-
ditions being taken into account. This means,
simply, that if the intensity of the desire for wheat
increases a higher price is likely to be offered for
wheat and it will become profitable to extend its
culture under conditions where this crop was for-
merly unprofitable ; and the tendency is to extend
its culture to the point where the costs will equal
the price under the most unfavorable conditions
of wheat production, which may be interpreted as
meaning wheat produced upon the least produc-
tive wheat land by the least efficient farmers which
are capable of competing in wheat production. If
the price falls, some of the land which has been
used for wheat production can no longer be used
for this purpose with profit. Consequently some
of the farmers who at the higher price could make
a profit by producing wheat could no longer do
140
PRICES OF PRODUCTS
so, and some of the supply would be cut off.
Thus it is that agriculture must ever be adjusted
to the changes in the prices of the products.
There are certain products which can be substi-
tuted for each other and thus tend to keep prices
from rising so high or sinking so low as they
otherwise might. Rye bread, for example, is
consumed very largely in northern Europe, and
when the rye crop is larger, and the wheat crop
smaller than usual, more rye bread and less wheat
bread is consumed. When the rye crop is smaller
than usual, there may be a larger wheat crop to
balance the shortage in rye. Thus, it is the
world's supply of wheat and wheat substitutes,
and the world's demand for bread and bread sub-
stitutes, that fixes the price of wheat on the
world's market at any given time.
Liverpool is the center of the world's wheat
trade, and the conditions which regulate the price
of wheat on the Liverpool market may be said to
regulate the price throughout the world. More
wheat is produced in the United States than is
consumed at home. The surplus of the great
wheat producing states is brought together at the
"primary" grain markets,1 the most important of
which are: Chicago, Minneapolis, Duluth, Supe-
rior, St. Louis, Milwaukee, Toledo, Kansas City,
Peoria, Cincinnati, and Detroit. From these pri-
mary markets, wheat and its products are sent
1 Report of the Industrial Commission, 1900, Vol. VI, p. 45.
141
AGRICULTURAL ECONOMICS
to the various parts of the United States, where
wheat is not produced in sufficient quantities to
supply the demand. But after all of the deficit
areas of the United States are supplied, a large
surplus still remains, which is sent abroad.
The price of wheat in any primary market will
equal the price in Liverpool minus the charges
made for putting the wheat on the Liverpool mar-
ket. The local price at any point in the surplus-
producing regions will equal the price at the near-
est primary market minus the charges incident to
putting the wheat on that market. The local
price of wheat or its products at any point where
less is produced than is consumed will equal the
price in the nearest primary market plus the charges
made for bringing the wheat or wheat product
from that market. The charges made for trans-
porting and handling the grain have been spoken
of, rather than the cost of transporting and hand-
ling the grain, for the reason that it is not cer-
tain that the charges are exactly the same as the
costs to the transportation companies and the
wheat merchants, and yet if the companies and the
merchants are able to charge more than sufficient
to pay all costs this becomes as important in de-
termining the price as if it actually cost the com-
pany more to give the services.
The circumstances are somewhat different in
the case of maize. The United States is the prin-
cipal maize producing country, and nearly the
142
PRICES OF PRODUCTS
whole crop is consumed at home. Over three-
fourths of the maize crop i-s consumed in the county
where grown. Only one-fifth of it enters into
the internal commerce of the country, and from
five to ten per cent., only, enters into foreign dis-
tribution. Maize is used largely for the feeding
of stock. From year to year farmers count on
selling about so many fat cattle and hogs, and it is
for this purpose that most farmers grow maize.
When the crop is short, as in 1901, the shortage
here is not balanced, as it is apt to be in the case
of wheat, by good crops in other countries, be-
cause there is no country which ships maize to the
United States in appreciably large quantities.
The demand for pork is fairly regular and so
is that for fat cattle, and the result of a short maize
crop shows itself at once in the price of maize and
only less directly in the price of pork and beef.
But the difference between maize and wheat with
respect to the price-determining conditions in the
United States is only one of degree. This coun-
try is an exporter of maize in ordinary years and
any relatively small increase in the size of the
American maize crop may be balanced by a short
crop in some of the other countries which com-
pete upon the European market.
The potato market is still more local than that
for maize. Each locality is more dependent upon
the local supply and the price is influenced
much more by variations in the yield of the local
AGRICULTURAL ECONOMICS
crop than in the case of maize and wheat. Some
regions are regularly wheat sellers, others wheat
buyers, from year to year ; but in the case of pota-
toes, the aim of the vast majority of the producers
is simply to supply their own wants or to meet
the demands of the local markets, and the same
region may have a surplus one year and a deficit
the next. The cost of shipping potatoes is a
larger percentage of their total value than in the
case of wheat, and as the surplus of one year can-
not be kept until the next, the local price will be
relatively low in case there is a surplus, while in
case of a deficit the local price will be relatively
high. Clover seed is a good example of a very
uncertain crop, and it is well known that, for this
reason, the price of this article fluctuates very
greatly from year to year.
The prices of the animal products of the farm
must necessarily sustain some more or less definite
relation to the prices of the crops on which the
live stock industry is based. In general it is true
that in a country where grazing lands are abun-
dant and where the prices of hay and grain are
low, the prices of cattle and dairy products will
be lower than in a country like England, where
grazing lands are scarce and feed stuffs are dear.
When long periods are taken into account, the
general principle seems to hold true in any single
country that a rise in the price of feed stuffs will
result in a rise in the prices of animal products.
144
PRICES OF PRODUCTS
The price of Indian corn on the Chicago market
reached its lowest figure for the twelve years from
1892 to 1903, in September, 1896, when it was
19.5 cents per bushel. The minimum price of
hogs on the same market for the same period was
likewise reached in September, 1896, when the
lowest was $2.45 per 100 Ibs. On the other hand,
the highest Chicago price of maize for this period
is given at 88 cents per bushel, which price was
reached in July, 1902, and it was in the same
month of that year that the price of hogs on the
Chicago market rose to $8.75 per 100 Ibs., which
is the highest price quoted in that market for the
twelve years under consideration.1
But when shorter periods are taken into ac-
count, a rise in the prices of feed stuffs is often
accompanied by a fall in the prices of the live
stock which is dependent upon this food supply.
It is a matter of common observation among
farmers that if there is a great abundance of grain,
hay, and forage crops available in the fall of the
year, there is usually a great demand for "stock
cattle," and there is no rush about marketing the
fat cattle which are intended for the market. As
a result, the prices of cattle are relatively high in
comparison with the prices of the materials on
which they are fed. Again when a dry summer
cuts the crops short, so that the number of cattle
which should be kept through the winter is very
1See table appended to this chapter.
10 145
AGRICULTURAL ECONOMICS
great in comparison to the stores of feed, many
farmers find it necessary to sell some of their
cattle rather prematurely and at a very low price.
Under these circumstances the prices of "stock
cattle" are likely to show a greater rise or fall
inversely to the prices of the feed stuffs, than are
the prices of fat cattle and dairy products.
While it is true that the prices of hogs and of
maize reach their highest level in the same month
and likewise their lowest level in the same month,
it is also true that the prices of hogs tend for a
time to fall when the price of maize rises. In
1901, a year when the maize crop was short, the
average monthly price of maize rose from 56 H
cents per bushel in September, to 65 cents in De-
cember, during which time the average monthly
price of hogs fell from $6.60 per 100 Ibs., in Sep-
tember, to $6.27^ in October, to $5.65 in Novem-
ber, but rose to $6.00 again in December, so that
in the five months the price of hogs fell 60 cents
per 100 Ibs., while the price of maize rose 8^€ cents
per bushel.1 This situation is doubtless to be
explained in part by the fact that the number of
hogs to be fed was relatively great when com-
pared with the amount of maize available for feed-
ing purposes, and as a result the hogs were rushed
1 See the high and low monthly prices for Indian corn and
for hogs for the whole year 1901, as given in table appended
to this chapter.
I46
PRICES OF PRODUCTS
to the market so soon as they would be accepted
at any price.
This conclusion seems to be confirmed by the
fact that while there were 56,982,142 hogs on
farms January i, 1901, there were but 48,698,890
on January i, 1902. This relation between the
prices of maize and of hogs during the last five
months of 1901, may be explained in part, how-
ever, by the fact that the supply of marketable
maize was much smaller than the total number of
bushels produced in the country, for the reason
that much of the crop did not mature properly.
A considerable proportion of the crop could not
be put upon the market and that which was mar-
ketable commanded a high price, while that which
could not be sold could not be kept for any great
period in the crib without deterioration, hence it
was rapidly fed out regardless of the high price
of maize upon the market.
Perhaps sufficient has been said to impress the
careful reader with the fact that the so-called law
of demand and supply is but a very general state-
ment of the price-determining phenomena, and
that the conditions and forces which lie beneath
demand and supply are exceedingly various and
complex.
LITERATURE
Boehm-Bawerk, Eugen V., Positive Theory of Capital, Book
IV.
Wieser, F. Von, Natural Value.
147
AGRICULTURAL ECONOMICS
Ely, R. T., Outlines of Economics, pages 118 to 125.
Marshall, A., Principles of Economics, Book V.
Mill, J. S., Political Economy, Book III, Chapters I to IV.
Report of the Industrial Commission, Volume VI, on The
Distribution and Marketing of Farm Products,
APPENDIX TO CHAPTER VIII
The wholesale prices of Indian corn per bushel, and of
hogs per 100 Ibs., on the Chicago market, from January,
1895 to February 1005, giving the highest and the lowest
price for each month.1
Date
1895
January
Indian
Corn No. 2
Low
Cents
40 *A
TTr,rr, Indian
Hoes Corn No. 2
Low High
Cents
$3.70 46
3-6o 43^
3.85 45^
4.40 48
4-10 54^
4-20 53l/i
4-50 47^
3.85 44%
3-55 36
3.20 32
3-20 29^
3.25 26%
3-35 28#
360 29
3-55 29X
3-05 30#
2.80 29^
2.70 28^
2.60 27^
2.50 25
2 45 22X
of Agriculture, 1899, pp.
148
Hogs
High
$4.80
4.65
5-30
5-40
4-975
5-10
5-70
5-40
4-65
4.50
3.85
3-75
4-45
4-35
4-25
4.15
3-75
3-6o
3-65
3-70
3-50
799-800,
February. . . .
40 %
March
42 £6
April
44 3/
May
46%
June
46%
July . .
41 ¥
August ... .
36^
September . .
October
November . .
December . .
1896
January. .
. 30^
. 28
. .26^
. 24%
25 *A
February
March
. 27^
28 1A
April
28%
27 *A
June ....
26%
July
24%
August
20 1A
September . .
1 Yearbook,
814.
• 19^
U. S. Dept.
PRICES OF PRODUCTS
Indian
Date Corn No. 2
Hogs
Indian
Corn No. 2
Hogs
Low
Low
High
High
1896
Cents
Cents
October
22#
2.55
26X
3.65
November . . .
22^
2.90
25^
3.70
December.. ..
22^
2.90
23^
3.60
1897
January
«tf
3-00
23tt
3.60
February
21 #
3.10
23%
3-75
March
22%
3.35
24/2
4-25
April
23*/s
3.50
25X
4-25
May
23
3-25
25/2
4-05
June
23%
3-05
25%
3.65
July
24%
3.05
28X
4.00
August
26X
3-45
32%
4-55
September . . .
27%
3.6o
32
4.65
October
24
3.20
29
4.40
November . . .
25%
3.15
27%
3.8o
December....
25
3.10
27l/2
3.6o
1898
January
26
3-35
28^
4.00
February
27%
3.6o
30%
4-275
March
28>6
3.65
2gti
4-175
April
28^
3.6o
3SX
4.15
May
32^
3.70
27
4.80
June
31
3-55
33^
4.50
July
3*X
3.6o
35/2
4-175
August
293/
3-45
33%
4.20
September . . .
29l/8
3.40
3iH
4.15
October
28%
3-25
32#
4.00
November . . .
3i%
3.10
341A
3.85
December . . .
33l/s
3-15
38
3-75
1899
January
ZSX
3-30
38^
4-05
February
33%
3-45
37
4.05
March
33
3-50
3W
4.00
April
34
3.50
35^
4.15
May
32/2
3-45
343/*
4-05
June
33%
3-45
35/2
4.00
July
31
3-55
347/*
4.70
149
AGRICULTURAL ECONOMICS
Indian rrna, Indian TTr,crc
Date Corn No. 2 Hogs Corn No. 2 Hogs
Low Low High High
1899 Cents Cents
August 3oX 3-8s 33 5-00
September... 31^ 3-90 35 4-90
October 31 3.80 33 4-9°
November... 30^ 3.55 33X 4-35
December.... 30 3.55 31^ 4-45
1900 l
January 30^ 3-70 3i# 4-Q25
February 31% 3.70 34# 5-io
March 33^ 4.00 38^ 5-525
April 38# 4.25 40# 5.85
May 36 4.00 40^ 5.575
June 37^ 4.10 43 >£ 5-425
July 38^ 4.25 44^ 5-55
August 37X 3-6o 41 X 5.575
September... 38^ 3-50 43# 5-7O
October 36^ 3-35 41 K 5-55
November... 35 3.40 49^ 5-io
December . . . 35^ 4«oo 40^ 5.45
1901
January 36 4.25 37^ 5.475
February 37^ 5.10 40 5.65
March 39 4.90 44 6.20
April 41 4-40 48 6.25
May 42# 4-15 58^ 5-975
June 41 4.25 44*/& 6.30
July 43^ 3-00 58^ 6.35
August 53^ 3.00 59^ 6.60
September... 54^ 3.00 59^ 7-40
October 54^ 4.25 58 7.10
November... 57^ 3-75 63^ 6.30
December... 62^ 4.00 67^ 6.70
1902
January 56^ 4.40 64^ 6.85
February 56^ 4.40 6i# 6.85
March 56 4.75 6i>£ 7.00
1 Yearbook, U. S. Department of Agriculture, 1903, pp. 591-
592, 674.
ISO
1904
PRICES OF PRODUCTS
Indian Wncro Indian
Date Corn No. 2 Corn No. 2
Low Low High High
1902 Cents Cents
April 56% 5.40 64^ 7.50
May 59>6 5.40 64^ 7.50
June 61 5.65 71^ 7.95
July 56 5-70 88 8.75
August 54 5.30 60 7.95
September... 57 5.50 62^ 8.20
October 55 4.50 6i>£ 7.90
November . . . 52^ 4.60 58 6.95
December... 43^ 4.60 57# 6.85
1903
January 43^ 5.00 48)^ 7.00
February 42^ 5.30 45 7-55
March 41^ 6.00 45^ 7.85
April 41 # 6.30 45X 7.65
May 44 5.10 46 7.15
June 47# 5-25 52 6.35
July 49 4.60 53 6.20
August 50^ 4.50 53 6.15
September... 45^ 4.85 52^ 6.45
October 43^ 4.00 46 6.50
November... 41^ 3.75 44^ 5.50
December 41 3.80 43^ 4.90
January 42^ 3.85 47^ 5.20
February 46 3.90 54^ 5.80
March 49 4.00 56^ 5.825
April 46^ 3.75 56^ 5-30
May 47X 3-7O 50 4-95
June 53X 4.00 59^ 5-475
July 47X 4-70 50 5-90
August siX 4-60 55^ 5.8o
September... 51 4.70 54^ 6.375
October 50 4.40 57^ 6.275
November... 50 3.65 58>i 5.25
December . . . 43^ 3.60 49 4.875
1905
January 42 3.90 43^ 5-00
February 42^ 4.10 45 >£ 5.15
1 Crop Reporter, U. S. Dept. Agri., March, 1905, p. 95.
151
CHAPTER IX
THE DISTRIBUTION OF WEALTH, WITH ESPECIAL
* REFERENCE TO THE RENT OF FARM LAND AND TO THE CON-
DITIONS WHICH ENABLE FARMERS TO SAVE FROM THEIR
EARNINGS.
Having sold his products upon the local market,
what determines the share of the gross receipts
which the farmer may keep as payment for his
labor and enterprise, and what determines the pro-
portion which must be paid for the use of land
and capital-goods? Farmers of varying degrees
of efficiency employ capital-goods of varying de-
grees of usefulness upon land of varying degrees
of productivity. With these three variables
united in varying proportions in the production
of articles which vary in their market value from
place to place and from time to time, the problem
before us is to determine the share of the gross
returns which each factor will receive.
This is by no means a simple problem. There
is a very complex set of forces and conditions
which make it necessary for a given farmer at a
given time and place, to credit a certain propor-
tion of his gross returns to capital-goods, and
another certain share to land ; but at another time
on the same farm or on another farm at the same
152
DISTRIBUTION OF WEALTH
time, or with a different farmer on the same farm
at the same time, the share of the gross returns
received by each factor may be different. The
problem of distribution is consequently so com-
plex and difficult that it will be impossible in this
work to do more than to indicate in a general
way the operation of the forces and conditions
which regulate the distribution of the product
among the factors of production.
Let us first examine the different factors of pro-
duction,— land, capital-goods, and farmers, — and
determine if possible how much each factor must
receive in order that it may be induced to partici-
pate in agricultural production. In this discus-
sion we shall speak of farmers, as synonymous
with labor, for the reason that this will simplify
the discussion, and for the further reason that in
the vast majority of cases most of the farm work
is done by the farmer and his family.
The farmer must receive, at least, enough to
sustain his body in a working condition, and he
will usually demand more than this. He will
usually want to support a family, and this is
essential to the future supply of labor. It may
be said, therefore, that in the long run, the least
return that will induce men to become farmers is
maintenance for themselves and their families
in accordance with the "standard of life,"1 which
1 "The number and character of the wants which a man
considers more important than marriage and family consti-
153
AGRICULTURAL ECONOMICS
seems to them essential to happiness. It is true
that many farmers always receive as their share of
the product, more than this necessary minimum.
This is generally true of the more efficient farm-
ers ; but the marginal farmers may be thought of
as receiving this minimum when long time aver-
ages are taken into account.
There will always be fluctuations ; there will be
times when the demand for farmers is great rela-
tively to the supply, and as a result even the mar-
ginal farmers will receive more than the necessary
minimum which is required to induce them to par-
ticipate in agricultural production. This condi-
tion of affairs would make agriculture a very at-
tractive pursuit, however, and the tendency would
be for men from other pursuits to be attracted into
agriculture; or at least for a smaller proportion
of each generation of farm boys to enter the in-
dustries of the cities, and in the course of time the
competition would drive the profits of the mar-
ginal farmer down to the minimum.
Again, the number of competing farmers may
become too great, so that the returns of the mar-
ginal farmers will be depressed far below the nec-
essary minimum; but this would result in the
elimination of some of the less efficient farmers,
and perhaps others as well, who would decide they
could do better in some other industry. To the
tute his 'standard of life.'" (R. T. Ely, Outlines of Eco-
nomics, p. 181.)
154
DISTRIBUTION OF WEALTH
extent that these marginal farmers are eliminated,
a higher grade of farmers will be found upon the
margin. These new marginal farmers will be
able to make a living for themselves and their
families and give a larger share of the gross
returns to the other factors than could the less
efficient competitors who have been crowded out.
The elimination of some of the farmers would
also relieve to some extent the pressure of compe-
tition. As a result of the lifting of the margin
to more efficient farmers and of this lessened com-
petition the returns to the marginal farmers will
tend to be adjusted to the minimum which the
standard of life of these marginal farmers makes
necessary to induce them to participate in agricul-
tural production.
The share of the product which the more effi-
cient farmers are able to command will be taken
up later, since for the sake of simplicity, it has
been thought best to continue first the discussion
of the conditions and forces which regulate the
distribution of their gross product among the
grades of the factors which are brought together
on the margin, — that is among the least efficient
farmers, and the least productive land in use and
the least productive grades of capital-goods.
On the margin where the least productive of all
of the factors of production are brought together,
there is no chance for a differential return to be
commanded by any of the factors. There is no
iS5
AGRICULTURAL ECONOMICS
return to land except enough to pay for bringing
it into cultivation, and this should perhaps be
counted as return to the capital-goods employed
in bringing the land under cultivation, in which
case the whole product could be said to be divided
between the farmers and the capital-goods. With
this in mind it might seem the simplest explana^
tion of the return to marginal capital-goods, to
say that all of the return except the necessary
minimum demanded by the farmers must be
credited to capital-goods. This may tend to be
true, and yet it explains nothing. It leaves un-
answered the question why it is that less produc-
tive land is not cultivated at a given time, for
the farmers might receive their necessary mini-
mum from such land, although this would result
in a reduction in the return which could be
credited to capital-goods. It becomes evident
therefore that the return to capital-goods is regu-
lated by a set of more or less independent forces.
It is well understood that capital-goods must be
kept intact, that seed grains must be replaced,
that when a machine is broken it must be put in
repair, and when it is worn out it must be replaced,
and that the horses must be fed and cared for ; but
beyond this amount which is necessary for main-
tenance, a certain amount must be paid for the
use of capital-goods. This return is usually ex-
pressed in terms of an annual rate per cent, upon
the value of the capital-goods, but there is no good
156
DISTRIBUTION OF WEALTH
reason why it should not be thought of as the hire
paid for the use of the capital-goods.
The marginal farmer and the marginal capital-
goods must, on the long time average, be main-
tained, and the hire of the capital-goods must be
paid. As land which will not produce this much
will not be brought under cultivation, it is clearly
the return demanded by farmers for labor and the
use of capital-goods which determines the margin
of cultivation, and not the productivity of the
marginal land which determines the amount which
is paid for the use of capital-goods. But why is
it that more must be paid for the use of capital-
goods than sufficient to keep such goods intact?
In other words, why must a hire be paid for the
use of capital-goods ?
First, the supply is limited. The supply can-
not be increased indefinitely without some sacri-
fice of the gratification of present desires. Men
are usually desirous of laying up something for
the future, but they are more concerned with the
gratification of present wants until the latter are
partially satisfied. That is; men value the means
of gratifying their present wants more highly than
they do the means of gratifying the wants of
of the future, and as a result, after saving has
reached a certain point, they will not refrain from
consuming wealth to-day in order that it may be
turned into capital-goods, unless they have the
assurance that a greater amount of wealth will be
iS7
AGRICULTURAL ECONOMICS
returned to them in the future. In old countries
where there is much wealth already accumulated
in the various forms of capital-goods, the present
wants, of the wealthier classes at least, are more
completely satisfied, and future wants are esti-
mated relatively more highly than in a poor coun-
try where present wants are more intense. Hence
the amount of hire which must be paid for the use
of capital-goods will be smaller in wealthy coun-
tries than in countries where little wealth has been
accumulated.
While the fact that the supply of capital-goods
cannot be increased without labor and the fact
that present goods are valued more highly than
future goods explain why something must be paid
for the use of capital-goods, these circumstances
do not account for the fact that men are willing
to pay a price for the use of capital-goods. Men
are willing to pay a hire for the use of capital-
goods because these goods aid in production.
The farmer can stir more ground or reap more
grain in a day, he can produce more goods for the
market in a year, when he uses plows, reapers,
horses, etc., than when he labors unaided by these.
These then are the forces and conditions which
lie behind the supply of and the demand for capi-
tal-goods, and which regulate the amount of hire
which is paid for their use. The greater the op-
portunities for gaining a profit by employing
them, the greater will be the demand for capital-
158
DISTRIBUTION OF WEALTH
goods and the higher the price which will be
offered to induce men to sacrifice present for
future goods. This explains in part the high
price which is paid for the use of capital-goods.
On the other hand, the higher the price the fewer
will be the opportunities for investing capital-
goods with profit, and thus the demand is limited
in part by the conditions of supply.
We have now reviewed the conditions and
forces which seem to determine the distribution
of the gross returns of the marginal farmers
operating marginal capital-goods upon marginal
land, but to complete the theory of distribution it
is necessary to explain the conditions and forces
which determine the distribution of the gross
returns of the more productive grades of the fac-
tors of production. The more efficient farmer
is able to command more than the minimum which
is necessary to the marginal farmer; this is like-
wise true of the more productive grades of capital-
goods, and all the more productive grades of land
afford a return to the owners.
The share of the gross return which is at-
tributed to land varies from place to place because
of variations in the productivity of land. Other
things remaining the same, the more fertile the
soil and the higher the local market prices which
can be obtained for the products of the farm, or —
to state the same thing in other words — the more
productive the land, the keener will be the compe-
AGRICULTURAL ECONOMICS
tition for its use and the higher will be the rent
which the farmers will offer for it. In a progres-
sive society the least productive land which is re-
quired for supplying the market at a given time
will command rent enough to pay for bringing it
under cultivation ; but this rent is, in reality, paid
for the use of capital-goods. Such land is called
marginal land. It has often been called no-rent
land, because no differential rent is paid for its
use, and the differential rent is the only distinct-
ively land rent. All land which is more produc-
tive than the marginal, will have a rent paid for
its use. Because it is more desirable, the farmers
will compete for the more productive land until
the rent rises to a point where they find it equally
desirable to take the less productive land at a lower
rent.
If land were the only factor which varies in
productivity, it would be a very easy matter to
state the law of rent ; for then all of the farmers
and all of the capital-goods would tend to receive
the minimum, which is just enough to enlist in
the industry the least productive grades of these
factors. Under these conditions the total return
minus the necessary minimum to labor and capital-
goods would be credited to land.
This may be illustrated by means of a diagram.
In Figure 4, the line A B represents the various
grades of land arranged in accordance with their
degrees of productivity, the most productive being
160
DISTRIBUTION OF WEALTH
at A and the least productive land in use, or mar-
ginal land, at B. The value of the product is rep-
resented by the perpendicular distance from line
AB to line C Dr. That share of the value of the
FIG. 4
product represented by the perpendicular distance
between lines A B and E E' may be looked upon
as the necessary minimum required to enlist the
capital-goods, and that share represented by the
perpendicular distance between E E' and D D'
may be looked upon as the necessary return to
the farmers. The remainder, measured by the
perpendicular distance between lines D D' and
C D', varying from nothing on the margin to a
very large share of the gross returns on the
most productive land, would then represent the
differential rent of the land.
Attention should be called to the fact that in
the illustration (Fig. 4) the lines E E' and D D'
are not parallel to line A B, that a larger amount
ii 161
AGRICULTURAL ECONOMICS
per acre of land is represented as being attributed
to the farmers and to the capital-goods on the
more productive than on the less productive
grades. This is intended to indicate that even
under the conditions of homogeneous farmers and
homogeneous capital-goods the more productive
grades of land would be farmed more intensively,
and hence a larger amount per unit of land would
be credited to these factors.
The fact that these more productive grades of
land are cultivated more intensively and that a
larger amount is for this reason credited to the
other factors from each acre of land, does not
lessen the amount of rent, but rather increases the
amount which can be paid for the use of the more
productive land. That the best land can, with
profit, be cultivated more intensively when less pro-
ductive land must be resorted to, than when the
supply of best land exceeded the demand; and that
this results in a greater rent being paid for the more
productive land than the surplus over costs which
would result from farming such land to that degree
of intensity which paid best when it could be had
free, was recognized and elucidated by Ricardo.
To illustrate the influence of variations in the
intensity of culture upon the amount of differen-
tial rent which will be paid for the better grades
of land when less productive land must be resorted
to in order to supply the demand for agricultural
products, suppose that a farmer has three grades
163
DISTRIBUTION OF WEALTH
of land to choose from. These three grades of
land are represented by letters A, B, and C (Fig.
5), the latter being marginal land. The curves
Y z
FIG 5
H A I, HB I, and H C I represent the increasing
and diminishing returns to succeeding units of
labor and capital-goods upon the different grades
of land. We have made this somewhat more
simple than the actual conditions by taking a case
where the lines of increasing and diminishing re-
turns have a definite relation to each other. The
largest gross return per unit of labor and capital-
goods will be gained from each of these. three
pieces of land when X units (measured by line
H X, in Fig. 5 ) have been expended. With this
expenditure upon each of the three grades of land,
the value of the product which a given farmer can
produce on A grade land will be represented by
the area H M N X; that of B grade land, by the
area H L O X; and that of C grade land, by the
area H K P X. But, the same amount of labor
and capital-goods will not be applied to the three
163
AGRICULTURAL ECONOMICS
grades of land. It will prove profitable to farm
the more productive land more intensively before
it will prove profitable to farm the less productive
land at all. When it is profitable for a farmer to
apply X units to C grade land it will prove equally
profitable for him to apply Y units to B grade
land and Z units to A grade land.
We are now in a position to see more clearly the
influence of varying degrees of intensity of cul-
ture upon differential rents. In the illustration
the surplus which a given farmer can produce on
A grade land ( Fig. 5 ) , over what he can produce
on C grade land is represented by the area
K M N E, which is greater than the area
KMNP by the area P N E; but the area
K M N P measures the difference in the value of
the product which he could produce on the two
pieces of land with the same outlay. The surplus
which the same farmer can produce upon B grade
land, over what he can produce upon C grade land
is represented by the area K L O D; that of A
grade land over B grade by area L M N E D 0.
Hence, it is not simply differences in productivity
with the same outlay, but it is the differences in
the capacity of the land to yield a surplus, that
determines how much more highly a farmer will
estimate one piece of land than another of the
same area.
The theory of rent would be quite simple if it
could be said that the differential rent of land is
164
DISTRIBUTION OF WEALTH
measured by the amount of surplus over costs
which can be produced upon a given grade of land.
But this is not true. The farmers who are quali-
tatively more efficient find greater opportunity for
the employment of their superior skill and knowl-
edge upon the more productive, than upon the
less productive land. 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, but 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 farm-
ers compete only for the more productive land,
and are willing to pay more for it than the less
efficient farmers can afford to pay. The qualita-
tively less efficient farmers go on competing for
the less productive land until marginal farmers are
shifted to marginal land. Hence, the difference
between the rent of marginal land and that of the
more productive land cannot be measured in terms
of differences in the amount of the surplus which
would exist if land were the only factor which
varies in productivity.
This can be illustrated by means of a diagram.
In Fig. 6 the land is represented as varying in
productivity from left to right, the most produc-
tive land being at the left, and called A grade
land; the least productive being at the right and
called B grade land. (For the sake of simplicity,
165
AGRICULTURAL ECONOMICS
it will be assumed in this illustration, that the
same degree of intensity of culture exists through-
out the area under consideration.) The perpen-
dicular distances represent the value of the prod-
uct. The distance A C represents the value of
the product which the most efficient farmer can
produce upon the most productive land, the dis-
tance B C' represents the value of the product
which the same farmer could produce upon mar-
ginal land. The distance A D represents the
value of the product which the marginal farmer
could produce upon the most productive land, the
distance B Dr represents the value of the product
\vhich the marginal farmer can produce upon
marginal land. (To facilitate the discussion, we
shall call the former the C grade farmer and the
latter the D grade farmer.)
Let it be supposed that the land which is neces-
sary to supply the demand for a certain class of
agricultural products, such, for example, as 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.
Let it be supposed, also, that all of the farmers
who are able to compete for the use of this land
at a given time vary in qualitative efficiency from
C to D (as represented in Fig. 6), that the farmer
who has C degrees of efficiency is qualitatively
166
DISTRIBUTION OF WEALTH
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
FIG. 6
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
can 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
167
AGRICULTURAL ECONOMICS
is willing to pay a differential rent for it equal to
one-half of the product.
Let it be said that the D grade or marginal
farmer's product on B grade land is valued at n
(represented by the line B Dr in Fig. 6), that his
product upon A grade land is valued at 2n (rep-
resented by the 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 prod-
uct of the C grade farmer, who is qualitatively
twice as efficient as the marginal farmer, will be 2n
(line B C') on B grade land, and 411 (line AC)
on A grade land. Thus, while the C grade
farmer can gain 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 2n (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 net
profit will be the same on both pieces of land.
Until rent rises to zn on A grade land (that is, to
point K in Fig. 6, and measured by the line E K) ,
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 differen-
tial rent of A grade land should rise to zn (that
is, to point K), the C grade farmer's personal
profits on A grade land (represented by line K C),
would be the same as that which he could win
168
DISTRIBUTION OF WEALTH
on B grade land (represented by line Df 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; and it will not rise higher than
2M (measured by the line EK), for the C grade
farmer would then prefer marginal land for which
no differential rent is charged.
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 rent of n, all but the
marginal farmers will prefer it to inferior land,
because the extra product, due to superior qualita-
tive efficiency, is greater on the more productive
land. To the extent that the better farmers fol-
low their highest economic self-interest they will
compete for the better land, and the rent of such
land will rise, until, one by one, the less efficient
farmers find it preferable to take less productive
land at a lower rent. The farmers who are quali-
tatively most efficient can pay more for the best
land than any of his competitors can afford to pay
and still receive a larger net profit than he would
receive from the less productive land at the rents
which the less efficient farmers pay for such land.
169
AGRICULTURAL ECONOMICS
When each farmer has taken the land for which
his degree of efficiency enables him to compete
to the best advantage, the marginal farmer will be
found upon the marginal land, the average farmer
upon the average land, and the most efficient
farmer upon the most productive land. The
product resulting from this most economical ap-
plication of efficiency to productivity will be meas-
ured by the area A C D' B (Fig. 6). It will be
noticed that the line C Dr is not a straight line.
This is not a straight line because its distance from
the line A B is determined by multiplying produc-
tivity by efficiency, both of which are decreasing
factors as we go from the most productive to the
marginal land. With regular and close grada-
tion of land and of farmers this line would tend
to be a regular curve. This curve will probably
be irregular, however; for the continuous and
regular gradation of land and of farmers which
would be necessary to produce a regular curve,
gradually falling from C to D', could, perhaps,
never be found.
The line XD', 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 the line D Df, which
line represents the level to which the rent could
rise on the various grades of land if all farmers
possessed the same degree of qualitative efficiency
as the marginal farmers. Point X will be some
170
DISTRIBUTION OF WEALTH
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 2n. Thus
the area E D Df (Fig. 6) represents the differ-
ential rent under the assumption that all farmers
have the same degree of qualitative efficiency as
the marginal farmers, and the area D X D' repre-
sents 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 assumed; namely,
with homogeneous capital-goods, equally intensive
culture on all land, and perfect competition.
The remainder of the surplus represented by
area X CD' would go to the farmers as personal
profits, the amount of personal profit received by
a given farmer depending upon his relative degree
of qualitative efficiency.
Another method of illustrating the distribution
of the proceeds among, the factors of production
is as follows: Suppose six grades of farmers,
represented by letters A, B, C, D, E, and F are in
competition for as many grades of land designated
as ist, 2d, 3d, 4th, 5th, and 6th grade land. Let
us assume that on any grade of land the A grade
farmer can secure a gross return twice as great,
with a given outlay, as the F grade farmer can
secure, and that the gradation in the qualitative
efficiency of the farmers is continuous and regular
from the A grade to the F grade farmer. Let it
171
AGRICULTURAL ECONOMICS
further be assumed that any of these farmers can
secure twice as large a return on the ist grade
land from a given outlay as he can secure on 6th
grade land, and that the gradation of the land is
continuous and regular from the first to the sixth
grade.
With these assumptions in mind let the follow-
ing figures represent the value of the gross prod-
uct which the farmers of the respective grades can
produce as a result of the employment of a given
quantity of labor and capital-goods on the differ-
ent grades of land. To make this illustration in-
clude the factor of variations in intensity of cul-
ture we have taken a fixed amount of expendi-
ture instead of a fixed area of land. If, therefore,
one acre be the area of the 6th grade land on which
this fixed amount of expenditure is made, less than
an acre of the more productive grades of land will
be associated with the given amount of labor and
capital-goods, for the more productive the land the
more intensive the culture.
GRADES OF LAND
Grades of
Farmers.
ISt.
2nd.
3rd.
4th.
sth.
6th.
A
20
18
16
14
12
10
B
18
16.2
14-4
12.6
10.8
9
C
16
14.4
12.8
II. 2
9.6
8
D
14
12.6
II. 2
9-8
8.4
7
E
12
10.8
9.6
8.4
7.2
6
F
10
9
8
7
6
5
Competi-
live rent ... 7.25 5,40 3.75 2.30 1.05 o
It is fair to assume that the F grade or mar-
172
DISTRIBUTION OF WEALTH
ginal farmer when operating 6th grade or mar-
ginal land will just be able to make a living with-
out paying any rent for the use of the land. But
if the F grade farmer can make a living on 6th
grade land when he has no rent to pay, he can
make a living and something more on the 5th
grade land, and, if we think of the figures in the
illustration as representing dollars, the F grade
farmer can afford to pay just one dollar as rent
for the quantity of 5th grade land on which he
would make the same outlay as on an acre of the
6th grade land, for instead of a product worth
five dollars he secures a product worth six dollars.
Following the same reasoning the F grade farmer
could afford to pay two dollars for the 4th grade
land, three dollars for the 3d grade, four for the
2d, and five dollars for the quantity of ist grade
land on which he would employ the given amount
of labor and capital-goods in farming that land to
the most economical degree of intensity.
.When all of the grades of land are viewed from
the standpoint of the A grade farmer, it becomes
apparent that he would be able to make more than
a living on land of any of these grades, and that
he would do as well to pay a rent of two dollars
for the use of 5th grade land, four dollars for 4th
grade land, six for the 3d, eight for the 2d, and ten
for the ist grade land, as to farm the 6th grade
land rent free; and in our illustration we shall
assume that the F grade farmer is needed to sup-
173
AGRICULTURAL ECONOMICS
ply the demand for farmers when the six grades
of land are in use, and as he cannot pay any rent
for its use it is fair to assume that no other farmer
will pay anything for its use. All of the farmers
who possess a higher degree of qualitative effi-
ciency than the F grade farmer are in a position
to pay more for the more productive grades of
land than the F grade farmer can possibly pay,
and still secure a larger net return on their invest-
ments than they can make on marginal or F
grade land when the latter is rent-free. It be-
comes evident, therefore, that the F grade farmer
will, under keen competition, be confined to the
6th grade land and that in a competition for the
other grades of land he is not able to bid high
enough to make it desirable for any of the more
efficient farmers to prefer the 6th grade land.
But the question before us is, how much rent
will the competition among the farmers of the
various grades of farmers induce them to pay
for the various grades of land? Under the hy-
pothesis that the F grade farmer and the 6th grade
land are both needed to supply the demand at a
given time and with a given price level, competi-
tion will leave a minimum return of five dollars
to the F grade farmer when he confines his atten-
tion to the 6th grade land and no rent will be paid
for the 6th grade land. The E grade farmer is
able to secure a return of six dollars on the mar-
ginal land. It cannot be expected, therefore, that
174
DISTRIBUTION OF WEALTH
he will be willing to take less on any other grade.
He can pay one dollar and twenty cents for the
amount of 5th grade land on which the same out-
lay is made as on the acre of the F grade land,
and retain a net return equal the gross return on
the no-rent land. But the F grade farmer can
bid no more than one dollar for the use of this
land, and so far as he is concerned, the E grade
farmer can have the 5th grade land for anything
over one dollar, and to give a small balance let
us say he will offer one dollar and five cents.
If the E grade farmer can secure the use of 5th
grade land for one dollar and five cents per unit
(thinking of the amount of land on which the
given amount of labor and capital is expended on
the various grades of land as a unit of land power)
leaving him a net return of six dollars and fifteen
cents, he will certainly not take less on 4th grade
land. He will cease to bid for the 4th grade
land, therefore, when the rent rises above two dol-
lars and twenty-five cents. When the rent of 5th
grade land is one dollar and five cents the D grade
farmer could secure a net return of seven dollars
and thirty-five cents on that grade of land, and
he could as well pay two dollars and forty-five
cents for 4th grade land, for this would leave him
the same net return as he could win on 5th grade
land, but so far as the competition of his inferiors
is concerned any amount over two dollars and
twenty-five cents, let us say two dollars and thirty
175
AGRICULTURAL ECONOMICS
cents is all he need pay, and this will leave him a
net return of seven dollars and fifty cents which
is fifteen cents better than he could do on the 5th
grade land. To secure the same net return on
3d grade land, the D grade farmer cannot bid
over three dollars and seventy cents for its use.
But the C grade farmer whose net return on 4th
grade land, at a rent of two dollars and thirty
cents, would be eight dollars and ninety cents, can
secure the same net return from 3d grade land
after paying three dollars and ninety cents rent
for its use, so that it will be profitable for him to
outbid the D grade farmer for 3d grade land by
offering three dollars and seventy-five cents.
This leaves the C grade farmer a net return of
nine dollars and five cents, and to secure the same
net return from 2d grade land he can pay no more
than five dollars and thirty-five cents as rent for
2d grade land. But the B grade farmer can as
well afford to pay five dollars and fifty-five cents
for 2d grade as to pay three dollars and seventy-
five cents for 3d grade, and we may assume, there-
fore, that he will outbid the C grade farmer by
offering five dollars and forty cents for the use of
the 2d grade land. This would leave the B grade
a net return of ten dollars and eighty cents. He
could pay seven dollars and twenty cents for ist
grade land, and secure the same net return; but
the A grade farmer could pay anything, less than
seven dollars and forty cents, rather than use any
176
DISTRIBUTION OF WEALTH
of the less productive grades of land at the rents
which any of the other grades of farmers could
afford to pay for those grades of land. It may
be assumed, therefore, that he would pay seven
dollars and twenty-five cents for the ist grade
land.
With the competitive rents determined in this
way the A grade farmer can secure a larger net
return, and therefore a larger net profit, on ist
grade land than on land of any other grade.
This is true also of the B grade farmer on the
2d grade land, and so it continues to be true for
the succeeding grades of farmers on the corre-
sponding grades of land. The A grade farmer's
net return would be twelve dollars and seventy-five
cents, but from this must be deducted the neces-
sary return to capital-goods. The remainder, in
case all the labor is performed by him and his
family, is the net profit. Now since the capital
is usually owned by the farmer, it is the net return
minus the maintenance of the capital-goods and
the farmer's cost of living, which shows the
capacity of the farmer to save from his earnings.
These figures are intended only as an illustra-
tion, but as an illustration they may enable the
student to comprehend the complex character of
the forces which are operating to determine the
amount of rent which must be paid for a given
piece of land at a given time, also how it is that
some farmers can pay high rents and at the same
12 177
AGRICULTURAL ECONOMICS
time make large profits; and, finally, it is hoped
that by this time it has become quite clear that it
is to the interest of each farmer to select that
grade of land which corresponds to his degree of
qualitative efficiency.
In this illustration we have considered compe-
tition in but one kind of agriculture. The more
efficient farmer in one branch of agriculture may
be the less efficient in another. The best shep-
herd may be a poor market gardener and vice
versa. The shepherd \vill be able to win his larg-
est net profit on cheap land, wrhile the market
gardener can do best on expensive lands near the
great cities. Yet the general principle holds that
the best shepherd can win the largest net profit
on the best sheep land, and the best market
gardener on the land best suited to his particular
line of production.
There is also a differential paid for the use of
the more productive forms of capital-goods.
This is usually hidden behind the fact that the
return to capital-goods is usually thought of in
terms of a rate per cent, upon the capital value of
the capital-goods. It might be satisfactory to
think of the returns to capital goods in this way
were it true that the valuations of the different
grades of capital-goods varied exactly as the pro-
ductivity of these capital-goods; but, because of
the variations in the qualitative efficiency of the
farmers, the variations in the values of these goods
178
DISTRIBUTION OF WEALTH
do not correspond to the variations in their pro-
ductivity. In just the same way as in the case of
land, the qualitatively more efficient farmers are
in a position to pay more for the more productive
grades of capital-goods than the qualitatively inef-
ficient can afford, to pay; and the value of the
capital-goods, as is the case in the value of land,
tends to vary with the amount which is paid for
its use.
This may be illustrated by Fig. 6, by simply
replacing the term land by the term capital-goods.
In fact it seems clear that, in considering the situ-
ation at a given time, land and capital-goods
might well be considered together in the illustra-
tion given in Fig. 6 when it is the farmer's sur-
plus due to superior efficiency that is under con-
sideration. It seems that the land and capital-
goods employed in agricultural production, are
alike in that a differential is paid for the better
grades, and that the qualitatively more efficient
farmers can well afford to pay more for the use
of these better grades of the material instruments
of production than the qualitatively less efficient
farmers. Indeed, it would seem that this princi-
ple may be applied quite generally, and that it
explains why the more efficient men in all lines of
economic activity are able to outbid the less effi-
cient for the better facilities for production.
With perfect competition the differential rent
of any grade of land or of any grade of capital-
179
AGRICULTURAL ECONOMICS
goods will be measured by the differential surplus
which the marginal farmer could produce upon
such land, by employing such capital-goods, plus
the further differentials arising from differences
in the efficiency of the farmers.
Variation in productivity is, to be sure, the
primary occasion of differential rents, and if all
farmers possessed the same degree of qualitative
efficiency, the differential surplus would repre-
sent the differential rent, being the additional
amount which all farmers would as willingly pay
for the better land and the better grades of capital-
goods as consent to using the less productive
grades of these material agents of production.
But because of the differences in the efficiency of
farmers, the amount of differential surplus which
a given piece of land or a given horse or machine
will yield is not a definite amount, but varies with
the qualitative efficiency of the farmers ; and com-
petition determines what share of the surplus,
which a given farmer can produce, will actually
be paid as differential rent. The differential rent
of the better grades of the material instruments
of production will be greater than the differen-
tial surplus which the marginal farmer could pro-
duce by using them, but it will be less than the
surplus which the most efficient farmer can
produce.
Fig. 7 is intended to illustrate the distribution
of the gross returns of the agricultural industry,
180
DISTRIBUTION OF WEALTH
among the factors of production. This illustra-
tion is a modification of Fig. 6, and it is assumed
that the factors will be brought together in the
most productive manner, that is, with the quali-
tatively most efficient farmers operating the most
productive forms of capital-goods upon the most
productive land and that these factors are associ-
ated in the proper proportion. Under these con-
ditions the composite units which are made up of
the most productive grades of the factors, will
yield a relatively larger product, in proportion to
their productivity even, than the units made up of
the less productive grades of the factors, and
hence, in the higher grades each factor will receive
the necessary minimum and a further differential
due to superior productivity and to the coopera-
tion of the more productive grades of the factors.
When the subject of distribution is viewed
from the standpoint of industrial progress,
through a long period of years, the most impor-
tant fact to be considered is that the other fac-
tors usually increase more rapidly than does land.
As the farmers and the capital-goods continue to
increase more rapidly than the land, some of the
better grades of these more rapidly increasing
factors are crowded down farther and farther
upon the less and less productive land. This nec-
essarily results in the driving out of business of
some of the lower grades of the farmers and the
capital-goods, leaving upon the margin higher
181
AGRICULTURAL ECONOMICS
grades of these factors which will be able to earn
their necessary minimum upon lower grades of
land, and hence the margin of cultivation will be
FIG. 7
driven down to less productive land by the com-
petition of the increasing numbers of farmers and
the increasing quantities of capital-goods. The
resulting change in the distribution of the gross
product among the factors, is illustrated by the
dotted line in Fig. 7, where it will be noted that
the rent rises as a result of a fall in the returns to
the other factors of production.
It is possible for the rent to rise, however, with-
out any absolute decline in the returns to the
other factors. Changes in the prices of agricul-
182
DISTRIBUTION OF WEALTH
tural products will greatly influence the share
which will be accounted to land. When, as a
result of increased demand for food and clothing,
the prices of agricultural products rise, the share
of the returns of a given farm which may be
credited to land, increases. When, for any reason,
such as the opening up of vast areas of very pro-
ductive land, the prices of agricultural products
fall, the share of the gross returns which can be
paid for the use of land will, other things remain-
ing the same, necessarily fall.
The laws of value and price hold true with
respect to the price which is paid for the use of
land and capital-goods ; but as we have seen, the
conditions as to supply and demand are very com-
plex, and the difficult problems in distribution
arise out of the fact that costs and prices do not
correspond except on the margin where the least
productive of all of the factors are brought to-
gether, and that there are large surpluses over
costs, to be divided. It was one time thought that
all of this surplus should be attributed to land;
but in recent years economists have come to see
that each of the factors is in a position to com-
mand a share of the surplus, that the share se-
cured by each is worked out through supply and
demand, and that the most slowly increasing
factor tends to receive a larger and larger pro-
portion of the surplus.
183
AGRICULTURAL ECONOMICS
LITERATURE
David Ricardo, Principles of Political Economy and Tax-
ation, Chapter II.
T. N. Carver, The Distribution of Wealth.
J. B. Clark, The Distribution of Wealth.
J. R. Commons, The Distribution of Wealth.
J. A. Hobson, The Economics of Distribution.
C. B. Spahr, The Present Distribution of Wealth in the
United States.
184
CHAPTER X
THE PRINCIPLES TO BE FOLLOWED IN ESTI-
MATING THE VALUE OF FARM LAND AND
EQUIPMENTS.
It is easy to say that the price of land, like the
price of any other economic good, is determined
by the forces and conditions which regulate the
demand and the supply ; but this is too general to
be of any help to the farmer who is trying to esti-
mate the value of a particular piece of land.
The net rent, or the share of the gross returns
which, under conditions of free competition, is
credited to land, above what is necessary to keep
the land intact, is the starting point for figuring
the value of a piece of land. When one invests in
land, the thing for which he really pays is the per-
petual right to use the land and to be free from the
payment of rent, or to receive the income which
the land will yield if leased to someone else.
The essential difference between the buying of
a piece of land and the buying of a perpetual an-
nuity bond lies in the fact that while the income
from the latter is fixed in terms of a money
income, the former may rise or fall as a result of
changes in the conditions of competition for the
185
AGRICULTURAL ECONOMICS
use of land, or from changes in the value of the
unit of the standard of value.
Let it be assumed that the net rent of a given
piece of land is three dollars. On the further as-
sumption that this amount will not change, we may
think of this acre of land as a perpetual bearer
of an annual income of three dollars. Three
dollars this year, three dollars next year, and the
next, and so on so long as time shall last. The
total amount of rent which may be received from
this land is incalculable. If there is no limit to
the number of years during which rent may be
received for the use of this land, then the amount
of rent to be received may become infinitely great,
and if one were required to pay down the full
amount of all these possible rents, which the
future years may possibly yield, the price of land
would be such that no man could purchase it.
As a matter of fact, however, the present mar-
ket value of the perpetual rent bearer is often not
more than twenty times the net rent, and it is
seldom more than thirty times the rent. This is
explained by the fact that present wants are esti-
mated more highly than future wants, which leads
to the discounting of future incomes1 "at a rate
that reflects the prevailing premium on the pres-
ent." The rent which will be due one year from
1 Frank A. Fetter, Publications of the Am. Econ. Assn.,
Papers and Proceedings of the Sixteenth Annual Meeting,
Part I., p. 196.
186
VALUE OF FARM LAND
date is discounted at this prevailing rate, and so
it is for all the succeeding rents. The present
values of the succeeding future rents grow smaller
and smaller as the time one must wait for them
becomes greater and greater, until finally the rent
which is due at the end of an infinite period of
time would be infinitesimal.
When the rate of discount is five per cent., for
example, the present valuation of a three dollar
rent which will be due in ten years is approxi-
mately one dollar and eighty- four cents ; the three
dollar rent which is due after twenty years has a
present valuation of about one dollar and twelve
cents; and the three dollar rent which is due in
forty years has a present value of about forty-two
cents. If this process of discounting future rents
be carried far enough the point would finally be
reached where the present value of the future rent
is too small to be taken into account. The pres-
ent value of the rent which is due after an infinite
number of years is infinitesimal. If the pres-
ent values of all these future rents be added to-
gether the sum would be the present capital value
of the land, or the amount of capital which, if
lent at a rate of five per cent, per annum would
yield the same income as the land is yielding at
the present time.
The simple mathematical method of finding
this "sum" is to divide the annual value, that is
the net rent, by the rate which "reflects the pre-
187
AGRICULTURAL ECONOMICS
vailing premium on the present." If the net an-
nual income derived from a piece of land is three
dollars per acre and the rate of discount is five per
cent., the present capital value of the land would
be sixty dollars per acre. Sixty dollars, is, then,
the amount of money which, if lent at five per
cent, would yield an annual income of three dol-
lars. This is usually spoken of as the capital
value of the land.
That this simple method of dividing the three
dollar net rent by the prevailing rate of discount
to find the capital value of a piece of land is
equivalent to finding the sum of an infinite series
of prospective net annual three dollar rents dis-
counted at the same rate may be demonstrated as
follows :
The present value of a dollars due in t years
if the interest be compounded annually at the
rate of r would be / \ \t since X dollars com-
pounded at rate r would give X (i-\-r)*,
and if X (i+r)' =a then X= plTy- If then
the net income of a farm be a dollars a
year its value would be expressed by the
equation: F= -^ +
. >4+ ad inf. This is an infinite "geo-
metrical" progression with first term — ~r — and
188
VALUE OF FARM LAND
ratio — ; — . The limit of the sum of such a
series is which reduces to — . We have
i —
i+r
then the formula for the value: V = — which
is the ordinary method of capitalizing rent.1
As a matter of fact, however, the present capital
value of the land as determined in this way does
not often correspond with the price which is paid
for land. There are several important reasons
for this difference. First it is not certain that the
annual income that can be drawn from sixty dol-
lars will always be three dollars. The rate of
interest may fall to four per cent, which would
reduce the income to be derived from that amount
of money to two dollars and forty cents, while
the annual income from the land would not be
reduced by a lowering of the current rate of
interest. The belief that there is a greater proba-
bility of a decline in the income to be derived
from the money than from the land, often makes
men willing to pay more for land than the amount
of capital which will now yield the same income.
Another reason which leads men to pay more
for land than a money loan which will, at the pres-
1The author is indebted to Prof. E. B. Skinner, of the
Department of Mathematics of the University of Wisconsin,
for assistance in the preparation of this formula.
189
AGRICULTURAL ECONOMICS
ent time, yield the same income, is the belief that
with the progress of society the competition for
the use of land will result in a rise in rents, that,
while there is a tendency for the annual income
which can be derived by lending a given amount
of money to decline, there is at the same time and
under like conditions a tendency for the income of
a given amount of land to increase.
The available land supply of a country usually
increases less rapidly than the population, so that
it becomes necessary to resort to land which is
either less fertile, less favorably situated, or more
difficult to bring under cultivation ; and as a result
of keener competition for the better grades of land
the amount which will be offered for the use of
such land will rise. While this is what usually
happens in the long run, it sometimes happens that
the discovery of great quantities of very fertile
land, and the invention of better means of trans-
portation making this new land more accessible,
will for a time reduce the competition for the
land which was already under cultivation, and the
rent of such land may, for a time, be reduced;
but it is believed that the occasional reactions of
this kind cannot permanently counteract the tend-
ency for the price of land to rise.
The land which yields the highest rent at one
time may be surpassed in the amount of rent
which it will yield at another time, by land which
was formerly let for a smaller rent. This may be
190
VALUE OF FARM LAND
the result (i) of the introduction of a new crop
which thrives best on the land which for other
purposes was counted inferior; (2) it may be the
result of a dense population in a region which had
formerly been sparsely populated ; in other words,
the development of a better home market; (3) it
may be the result of an improvement in the means
of communication which makes the land which
was formerly more fertile but less accessible,
equally accessible, and hence, more valuable; or
(4) it may be the result of a rise in the prices of
agricultural produce, or a fall in the current rate
of interest, either of which would result in a more
rapid increase in the value of land which is more
fertile and accessible, but which requires relatively
larger expenditures to bring it into cultivation,
than in the value of land which is less fertile or
accessible but much more easily brought into culti-
vation. All of these possible variations in the
annual value of land must be properly anticipated
and included in the list of future incomes which
are discounted to find their present values.
Perhaps enough has been said to impress the
thoughtful reader with the fact, that to determine
the value of a piece of land is by no means a
simple matter. When a man sells a piece of land
he transfers his right to a series of annual incomes
which may be greater or less as time passes by,
but which will probably increase as the years go
by. In payment for this land he is to accept
191
AGRICULTURAL ECONOMICS
another income-bearer which may yield a larger
or smaller annual income as the years go by, but
which will probably yield a smaller income in the
future than at present. This circumstance makes
it impossible to do more than approximate the
actual present value of a piece of land.
The presence of so many uncertainties makes
the buying of land partake more or less of the
character of speculation, and during times of pros-
perity the tendency is for men to be optimistic and
over-estimate the probabilities of a rise in rents or
a fall in the rate of interest. On the other hand,
when periods of depression come, the tendency is
for men to underestimate the future possibilities.
As a result of this psychological element, the tend-
ency is for the price of land to rise too high dur-
ing periods of prosperity and to sink too low dur-
ing periods of depression. As many years are
usually required for one of these changes from
undervaluation to overvaluation to take place,
land does not lend itself so readily to speculation
as does wheat, for example ; and yet the man with
plenty of funds which are available at the right
time may win large profits from speculations in
land. Speculation if indulged in at the proper
time may keep the price of land from falling so
low as it might otherwise do in times of depres-
sion, and also from rising so high as it otherwise
might during times of inflated values. This is
true only where the speculator is wise enough to
192
VALUE OF FARM LAND
buy when prices are too low and to sell when the
values rise too high. Unwise speculation in land
may have the very opposite result.
The study of the rise and fall of the price of
land in the United States seems to show that there
are times when the price rises rapidly for a few
years and then remains stationary for several
years. This latter period is usually character-
ized by the fact that sales of land are relatively
few. Land is generally held at the prices which
were reached during the period of rapid sales
when optimistic views of the future forced the
price considerably beyond the present capital
value. If sales are made during this dull period
they are likely to be at a price appreciably lower
than that at which land is usually held, and likely
to be a forced sale. The price of land, then, may
be illustrated by a curve which rises during one
period, remains on the same level or falls during a
succeeding period, and then rises again. When
viewed for a long period of time, the general rise
in land values is evident, but the temporary fluc-
tuations are very important to any one interested
in buying land.
The price of land in any given district is influ-
enced by the number and character of the men who
desire to be farmers in that district. It often hap-
pens that competition for the use of land is keener
in some regions than in others, even though the
land be as fertile, and the prices of agricultural
13 i93
AGRICULTURAL ECONOMICS
products as high in the one place as in the other.
Some districts produce more high grade farmers
each generation than do other districts, and as a
strong motive is required to impel the surplus of
farmers to remove to another district, competition
in the over-populated district forces the rents and
the prices which are paid for land higher and
higher until they are appreciably above the level
of those which are paid for land in other districts
which are capable of producing crops which are
just as valuable in terms of money.
Again, it sometimes happens that land is val-
ued for the social standing which accompanies its
ownership, as well as for the income in money
which it yields. In a country where this is true,
and where, at the same time, there are large num-
bers of persons who have great fortunes and who
are very desirous of attaining to a high social
position, the prices which may be paid for land
often rise far beyond what could be paid if the
series of annual incomes in cash were the only
factor to be taken into account.
Of two pieces of land which will rent for the
same amount, that in one district may sell for a
higher price than that in another because there is
more money seeking investment in the one place
than in the other. A man of wealth will usually
rather have his capital invested in land near where
he lives than at a great distance where he cannot
so readily look after his property, or if he invests
194
VALUE OF FARM LAND
in land at a greater distance he will usually expect
a higher rate of return to counteract the disad-
vantages arising from the distance.
This same principle of capitalization may be
applied to other forms of income bearers as well
as to land. In estimating the value of a given
machine, the farmer may think of the amount of
service he is to get out of the machine during the
next ten years, let us say, on the assumption that
the machine will be worn out in that time. This
is a rather difficult process because the deteriora-
tion of the machine and perhaps, also, the inven-
tion of a better machine to do the same work will
result in a gradual reduction in the usefulness of
the machine; and yet, if he is to invest wisely in
the various forms of capital-goods, the farmer
should attempt to estimate the value of the series of
uses which may reasonably be expected to be got-
ten from the particular instrument of production
during the time which it shall be at all serviceable,
and then find the present value of these future
uses by discounting them "at a rate that reflects
the prevailing premium on the present."
This capital value of the instrument represents
the maximum price which the farmer can afford to
pay, but does not, of course, necessarily represent
the market price of the instrument of production.
The market price may be greater or less than the
capital value obtained in this way, for the instru-
ment of production may have as many valuations
AGRICULTURAL ECONOMICS
as there are different grades of farmers to use it
and different grades of uses to which it may be
put by a given farmer. In order to get a capital
value that will correspond more or less closely to
the market value of the various forms of capital-
goods it will be necessary, therefore, to arrive at
the competitive price which will be paid for the
use of a given capital-good during the series of
years of its usefulness, and then find the present
value of the series of incomes, in the same way as
has been done in the case of land. But since it
is not common in this country to let horses, tools
and machinery to farmers for a hire, this method
of capitalization is less practical to the farmer
when applied to capital-goods than when applied
to land.
The cost of producing the machine or the horse
is an important element in determining the price
which must be paid for it in order that it may be
produced. On the other hand, the usefulness of
the machine or the horse to the farmer forms the
basis for his estimating whether or not he can
better afford to pay the market price or do with-
out them. It may be true even that the capital
value of the instrument, when calculated on the
basis of its usefulness to a given farmer, may be
greater than its market value and yet it might be
unprofitable for the farmer to buy the particular
horse or machine, because other means of securing
the same end might prove more profitable.
196
VALUE OF FARM LAND
The theory of capitalization is especially use-
ful in the consideration of the value of farm land
because the value of a given piece of land has no
particular relation to the cost of bringing such
land under cultivation. The income received by
the landlord is largely a surplus which is credited
to land because it is scarce, rather than because
it costs any definite amount to improve the land.
Land is also much more permanent in character
than are capital-goods, and for this reason, also, it
lends itself with more facility to the above method
of capitalization.
These a-re some of the most important principles
and conditions which should be kept in mind in
the consideration of the values of farm land, and
of farm live stock and equipment. The prospec-
tive buyer of land will do well to bear in mind the
advice of Cato, a Roman agricultural writer, who
is quoted by Pliny1 as saying, "Do not be too
eager in buying a farm. In rural operations
never be sparing of your trouble, and, above all,
when you are purchasing land. — A bad bargain
is always a ground for repentance."
LITERATURE
Frank A. Fetter", The Principles of Economics, Chapter 15.
1 Pliny's Natural History, Book XVIII, Chapter 6 ; "Bohn's
Library" edition, Vol. IV, p. n.
197
CHAPTER XI
THE FARMER'S MEANS OF ACQUIRING LAND.
Section I. Free land. — Hitherto the progress
of American agriculture has been powerfully in-
fluenced by the presence of vast areas of govern-
ment lands which were easily secured, easily
brought into cultivation, and which gave large
returns upon investments. The presence of these
vast areas of cheap land of great fertility in a
country where labor was scarce led to the inven-
tion of many labor saving devices until America
became noted the world over for her agricultural
machinery; but, above all, the presence of free
land has made the oppressions of landlords im-
possible. The farmers have been able to take up
valuable government lands. This means of
acquiring land ownership has been very impor-
tant from the time the first settlers landed in the
New World until the present time. When, in the
earlier days, land became scarce in Massachusetts,
emigration to Connecticut set in, and when the
best lands in both of these colonies were occupied,
there still remained unoccupied, good land in New
York. When the small farmers of Virginia were
MEANS OF ACQUIRING LAND
crowded out by the great planters, they found un-
occupied lands in North Carolina, and later they
followed Boone into the wilderness of Kentucky.
In time the occupation of the Mississippi valley
was completed, and in more recent years, since the
great plains have been made easily accessible by
railways, the settlement of new land has gone on
at an exceedingly rapid rate.
That the acquisition of landownership was an
easy task for the American farmer of the earlier
days is indicated by the following quotation taken
from a description of the settlements along the
Monongahela in 1772 and 1773 : "Land was the
object which invited the greater number of these
people to cross the mountains, for as the saying
then was, 'It was to be had here for taking up' ;
that is, building a cabin and raising a crop of
grain, however small, of any kind, entitled the
occupant to four hundred acres of land, and a
preemption right to one thousand acres more
adjoining, to be secured by a land office warrant."1
In 1790 Alexander Hamilton proposed a plan
for the disposition of the public lands which reads
as follows : "In the formation of a plan for the
disposition of the vacant lands of the United
States there appear to be two leading objects of
consideration : one, the facility of advantageous
sales, according to the probable course of pur-
1 The Settlement of the Western Country, by Reverend
Joseph Doddridge, In Hart's American History Told by Con-
temporaries, Vol. II, p. 387.
199
AGRICULTURAL ECONOMICS
chases; the other the accommodation of indi-
viduals now inhabiting the western country, or
who may hereafter emigrate thither. The for-
mer, as an operation of finance, claims primary
attention; the latter is important, as it relates to
the satisfaction of the inhabitants of the western
country. It is desirable, and does not appear im-
practicable, to conciliate both. Purchasers may
be contemplated in three classes : moneyed indi-
viduals and companies who will buy to sell again ;
associations of persons who intend to make set-
tlements themselves; single persons or families,
now resident in the western country or who may
emigrate thither hereafter. The two first will be
frequently blended, and will always want consid-
erable tracts. The last will generally purchase
small quantities. Hence a plan for the sale of
the western lands, while it may have due regard
for the last, should be calculated to obtain all the
advantages which may be derived from the two
first classes."1
The government was slow in formulating the
plan which finally became most significant in the
conversion of the public domain into a nation of
farms. The American statesmen of the Eight-
eenth Century looked upon the western lands "as
an asset to be cashed at once for payment of cur-
rent expenses of government and extinguishment
1 See The Public Domain, by Donaldson, p. 198.
200
MEANS OF ACQUIRING LAND
of the national debt."1 This desire to convert the
public domain into cash lecj to the sale of land in
large tracts. Under the ordinance of May 20,
1785, surveyed lands were offered in lots as large
as a whole township of 32 sections of 640 acres
each, for not less than $i per acre.2 Under an
Act passed May 18, 1796, which provided for the
survey of certain lands in the present state of
Ohio, surveyed lands were to be offered at public
sale in sections of 640 acres, and in lots of eight
such sections each. The minimum price was then
fixed at $2 per acre.3 Prior to May 10, 1800,
1,484,047 acres of land had been sold from the
public domain for the benefit of the United States.
From these sales was realized $1,201, 725. 68.4
Under an Act of May 10, 1800, land offices
were opened in the Northwest Territory. The
minimum price was kept at $2 per acre. Lands
were offered for three weeks at public sale in sec-
tions and half sections, and what remained at the
end of this period was to be sold privately, as
wanted, at the minimum price. During the next
twenty years the net sales of government lands
were 13,642,536 acres, from which the sum of
$27,900,379.29 was realized.5 In 1820 the mini-
mum price of land was reduced to $1.25 per acre.
1 See The Public Domain, by Donaldson, p. 196.
2 Ibid., p. 197.
3 Ibid., p. 200.
4 Ibid., p. 201
5 Ibid., p. 203.
201
AGRICULTURAL ECONOMICS
The revenue idea was gradually abandoned and
the settlement of the western country came to be
looked upon as the principal end in view in the
disposition of the public domain.
The preemption system, which gave the prefer-
ence to actual settlers in the sales of land at the
minimum price, was embodied in sixteen special
Acts between 1801 and 1841. At the latter date
a general Act was passed which, with minor
changes, remained in force until 1891. The
actual settlers were permitted to enter upon tracts
of land not larger than 160 acres nor less than
40 acres before such lands had been offered at
public sale. The requirements were that the per-
son should reside in a dwelling upon the tract, im-
prove and cultivate a part of the land, and after
a limited period pay $1.25 per acre.
"The preemption system," says Donaldson,1
"arose from the necessities of settlers, and
through a series of more than 57 years of experi-
ence in attempts to sell or otherwise dispose of
the public lands. The early idea of sales for reve-
nue was abandoned and a plan of disposition for
homes was substituted. The preemption system
was the result of law, experience, executive orders,
departmental rulings, and judicial construction.
It has been many-phased, and was applied by
special acts to special localities, with peculiar or
additional features, but it has always and to this
1 See The Public Domain, by Donaldson, p. 215.
202
MEANS OF ACQUIRING LAND
day [1880] contains the germ of actual settle-
ment, under which thousands of homes have been
made and lands made productive, yielding a profit
in crops to the farmer and increasing the resources
of the Nation."
The Homestead Act of 1862 was the final step
in the direction of free land for actual settlers.
This law was the result, in part at least, of the
agitations of the Free Soil Democrats. They
claimed "that the public lands of the United
States belong to the people, and should not be sold
to individuals, nor granted to corporations, but
should be held as a sacred trust for the benefit of
the people, and should be granted in limited quan-
tities, free of cost, to landless settlers."1
The homestead law enables the landless farmers
to secure a quarter-section, 160 acres, of land and
acquire a title to the same by maintaining resi-
dence thereupon and improving and cultivating
the land for the continuous period of five years.2
"The homestead act," says Donaldson,3 writ-
ing in 1880, "is now the approved and preferred
method of acquiring title to the public lands. It
has stood the test of eighteen years, and was the
outgrowth of a system extending through nearly
eighty years, and now, within the circle of a hun-
1 See The Public Domain, by Donaldson, p. 332.
a Circular from the General Land Office showing the
manner of proceeding to obtain title to public lands, 1904,
3 See The Public Domain, by Donaldson, p. 350.
203
AGRICULTURAL ECONOMICS
dred years since the United States acquired the
first of her public lands, the homestead act stands
as the concentrated wisdom of legislation for set-
tlement of the public lands. It protects the gov-
ernment, it fills the states with homes, it builds up
communities, and lessens the chances of social
and civil disorder by giving ownership of the soil,
in small tracts, to the occupants thereof. It was
copied from no other nation's system. It was
originally and distinctively American, and re-
mains a monument to its originators."
Under the homestead law 233,043,939 acres
had been entered up to June 30, 1904.
From 1873 to 1891 a Timber Culture Act was
in force. This Act, as first passed, enabled "any
person'' to obtain not more than 160 acres of land
by planting 40 acres of timber and properly car-
ing for the same for ten years. The number of
acres of timber required was finally reduced to 10,
and the period of cultivation to eight years. The
privilege came to be restricted, however, to per-
sons twenty-one years of age, heads of families,
citizens of the United States, or one who has filed
his declaration of intention to become such. The
law was a failure from the standpoint of timber
culture, but in all 44,229,950 acres of land were
entered by this method.
The total area included in farms was more
than doubled between 1860 and 1900. The acre-
age in farms was 407,212,538 in 1860, and in
204
MEANS OF ACQUIRING LAND
1900 it was 838,591,774. The importance of free
land in this increase in the total area of land in
farms is shown by the fact that between January
i, 1863, and June 30, 1900, 188,149,032 acres of
land were entered under the homestead laws. It
is estimated that public lands had been disposed of
by the government prior to June 30, 1860, to the
extent of 417,587,322 acres;1 whereas 524,509,-
414 acres have been disposed of since that date.
The following figures show the number of acres
of land disposed of by the government for each
year from 1863 to 1904. In column A is given
the acreage of original homestead entries. In col-
umn B is given the area disposed of for cash, the
total acreage of original entries under the Home-
stead Acts and the Timber Culture Acts, the total
acreage located with agricultural college and other
1 Donaldson (Public Domain, p. 519) says: "The disposi-
tion of the public domain from its origin to June 30, 1883, is
estimated at about 620,000,000 acres." From this number
has been subtracted the sum of the amounts annually dis-
posed of each year from June 30, 1860, to June 30, 1883, or
202,412,322 acres. It will be noted that the total amount dis-
posed of from the origin of the public domain to June 30,
1904, according to these figures is 942,096,736 acres. Whereas
according to the report of the Land Office for 1904, the total
area appropriated prior to June 30 of that year was 794,794,384
acres. This discrepancy is easily accounted for by the fact
that considerable quantities of the land selected by railways
or entered by individuals under the various Acts, was restored
to the public domain and became subject to entries and selec-
tions a second time ; 794,794,384 acres represents the net
amount disposed of for the whole period, but it is impossible
to ascertain the net amount disposed of each year, so the
amounts disposed of each year, without regard to the amounts
restored to the public domain, are taken as representing the
importance of this means of acquiring land.
205
AGRICULTURAL ECONOMICS
kinds of
scrip, with military
bounty-land war-
rants, and
selected by states and railways.
A.
Original Homestead
B.
Entries.
Total.
Date.
Acres.
Acres.
1863
1,040,989
2,966,699
1864
I,26l,593
3,281,866
1865
1,160,533
4,513,738
1866
1,892,517
4,629,313
1867
1,788,043
7,04I,H5
1868
2,328,923
6,655,742
1869
2,737,365
7,666,152
1870
3,698,910
8,095,413
1871
4,600,326
10,765,705
1872
4,671,332
11,864,976
1873
3,793,613
13,030,607
1874
3,518,862
9,530,873
1875
2,356,058
7,070,271
1876
2,875,910
6,524,326
1877
2,178,098
4,849,768
1878
4,418,345
8,686,179
1879
5,26o,III
9,333,383
1880
6,045,571
14,792,372
1881
5,028,101
10,893,397
1882
6,348,045
14,309,166
1883
8,171,914
19,430,033
1884
7,831,510
27,531,170
1885
7,415,886
20,995,516
1886
9,145,136
22,124,564
1887
7,594,350
25,858,038
1888
6,676,616
24,485,834
1889
6,029,230
17,036,673
1890
5,531,679
12,798,837
1891
5,040,394
10,477,700
1892
7,716,062
13,664,019
1893
6,808,792
11,891,144
1894
8,046,968
10,406,101
1895
5,009,491
8,406,849
1896
4,830,915
13,209,523
206
MEANS OF ACQUIRING LAND
A.
Original Homestead B.
Entries. Total.
Date. Acres. Acres.
1897 4,452,290 7,839,117
1898 6,206,558 8,453,897
1899 6,177,587 9,182,413
1000 8,478,409 13,453,888
1901 9,479,275 15,562,796
1902 14,033,246 19,488,535
1903 11,193,120 22,824,300
1904 16,171,266 16,405,822
Total 233,043,939 518,027,830
From the above table it will be noted that dur-
ing the decade from 1890 to 1900, the amount of
land disposed of by the government was much
smaller than for the decade from 1880 to 1890.
This falling off was looked upon at the time as
suggesting that all the more desirable lands had
been selected from the public domain. Since
1900, however, the number of acres disposed of
each year has been much greater, — rising to al-
most twenty-three millions in the year ending June
30, 1903. In 1902, nearly four and one-half mil-
lions of acres were disposed of in Oklahoma, and
slightly more than two and a half millions in
North Dakota. There were five states in which
more than one million acres of land w.ere disposed
of in 1902, namely, Wyoming, Montana, Oregon,
Washington, and Colorado. In 1903, nearly
three millions of acres were disposed of in each
of the two states, Florida and North Dakota, two
millions in Wyoming, and between one and two
207
AGRICULTURAL ECONOMICS
millions in Colorado, Mississippi, Oklahoma,
Oregon, and Washington. During the past ten
years more land has been disposed of by the gov-
ernment in Oklahoma than in any other state or
territory. North Dakota ranks second in this
respect. These facts suggest that the opening of
Indian reservations to white settlers has been the
most prominent factor in bringing about an in-
crease during the last few years in the number of
acres disposed of by the government.
That the free distribution of farms will soon
reach its limit is shown by the fact that three-
fourths of the total land area of the United States,
exclusive of Alaska and the insular possessions,
has been appropriated or reserved. Out of the
total area of 1,900,947,200 acres, there yet remain
about 473,836,000 acres unappropriated and unre-
served. Of this 270,267,760 acres have been sur-
veyed. This land which is still open for appro-
priation is found principally in Arizona, Califor-
nia, Colorado, Idaho, Montana, Nevada, New
Mexico, North Dakota, Oregon, Utah, and Wy-
oming. Most all of the land which is desirable
for agricultural purposes has been appropriated
or reserved. When an Indian reservation is now
thrown open to settlers there are many applicants
for every desirable piece of land. In the summer
of 1904 there were in one case 106,308 persons
registered with the hope of drawing farms where
208
MEANS OF ACQUIRING LAND
there were but 2,412 pieces of land of 160 acres
each for distribution.1
The presence of unoccupied lands of good
quality which has, hitherto, made the task of
acquiring landownership an easy one in this coun-
try, will be of less and less significance as the
years go by, and other considerations will become
more and more important. This leads us to study
the importance of gift and inheritance as means of
acquiring landownership.
Section II. Gift and Inheritance. — A vast
amount of wealth passes on from generation to
generation by gift and inheritance. Hence it is
not necessary, in order to maintain the class of
landowning farmers in a country where this class
is already established, that each succeeding gen-
eration of farmers should save from the profits
of their industry sufficient wealth to purchase
their farms, and to hand this accumulated wealth
over to the preceding generation of landowners.
This would be necessary, however, in order to
reestablish a class of landowning farmers in one
generation in a country where landlordism has be-
come universal. In England, where most of the
land is owned by a comparatively small number of
landlords, the estates are handed down from gen-
eration to generation and thus remain the property
of the landlord class; and in that country it is
1 General Land-Office Report, 1904, p. 13.
14 209
AGRICULTURAL ECONOMICS
unusual indeed for a tenant farmer to undertake
to purchase a farm. In Germany, where peas-
ant proprietorship is the rule, the farms are
handed down from father to son by inheritance,
and thus the property is kept in the hands of the
tillers of the soil. The conditions with respect
to inherited wealth are, therefore, of great impor-
tance in determining the status of farmers with
respect to landownership.
In the United States it is a matter of common
observation that farmers who are able to do so,
assist their sons in buying farms. This assist-
ance may be relatively very great in the case of a
wealthy farmer who has a small family; and
again it may be very small in the case of a farmer
in moderate circumstances, who has a large num-
ber of children among whom he wishes to distrib-
ute his assistance. Often the home farm is
greatly enlarged by purchasing a "forty" here and
an "eighty" there while the boys are growing to
manhood, and then parceled out as the young men
wish to establish homes for themselves. Again,
when the parents are gone, the remainder of their
accumulated wealth passes by inheritance to their
sons and daughters and helps very greatly in the
enlargement of their farms as their growing fami-
lies make larger farms desirable.
The movement of population from country to
city, which has been so great in recent years in
210
MEANS OF ACQUIRING LAND
this country, results in the movement of a vast
amount of wealth away from the agricultural in-
dustry, which must be replaced from some source
if the wealth of farmers is not to decline. The
general principle may be thus stated: The
greater the amount of land and other forms of
wealth acquired by one generation and trans-
mitted to the farmers of the next, and the more
evenly this wealth is distributed, the greater the
ease with which the ownership of land may be ac-
quired by the succeeding generations of farmers ;
but the larger the farm families of a given com-
munity, and the larger the percentage of each
succeeding generation who seek a livelihood in
other industries, the greater the amount of wealth
which will be drawn from agriculture into other
industries by gift and inheritance, and the smaller
the part which inherited wealth will play in the
acquisition of landownership.
The number of persons employed in the various
other occupations has increased much more rap-
idly than has the number engaged in agriculture.
This is shown by the following table which gives
the proportion of those engaged in all gainful
occupations, which were employed in "agricul-
tural pursuits."1
1 Twelfth Census of the United States, 1900, Special Re-
ports, Occupations, pp. xxx, 1.
211
AGRICULTURAL ECONOMICS
Percentage
Date Engaged in
Agriculture
1820 87, 1
1840 77-5
1870 47-5
1880 44-3
1890 39.2
1 900 35-6
Perhaps the most important explanation of this
more rapid increase in the percentage of those
engaged in other occupations than agriculture, is
the transfer of a share of the agricultural popula-
tion to the other industries. This has often been
spoken of as the movement from the country to
the city. Men who have long been farmers
sometimes move to the cities and enter other occu-
pations, but what is more significant than this is
the movement of the farm boys from country to
city. A large percentage of the boys who are
brought up in the country are educated and sent
into the city, where they enter occupations of
every description. A large percentage of the men
who control the industries of cities to-day were
one time farm boys.
This movement from country to city has been
especially rapid in the last twenty years and that
for two reasons : First, agricultural methods
have been transformed by the introduction of
labor-saving machinery, until a much smaller per-
centage of the total working population is re-
quired to produce the same supply per capita of
212
MEANS OF ACQUIRING LAND
food stuffs and raw materials. Second, the
manufacturing industries have been developing
rapidly during the same period, giving oppor-
tunity for a share of the increasing farm popu-
lation to find remunerative employment in the
industries of the cities. To quote Dr. A. C.
True, "Between 1870 and 1890, speaking rela-
tively and in round numbers, two million men
gave up farming and went to join the great army
of toilers in our cities. Taking their families into
account, six million people from the farm were
added to the population of the town. . . . Men
leave the farms because they are not needed there.
The introduction of labor saving machinery and
rapid transportation has produced the same result
in agriculture as in manufactures. A smaller
number of men working in our fields turn out a
much greater product than the greater number of
laborers could possibly secure in olden times, and
the products of all lands are easily carried where
they are needed. . . . Within the past twenty-five
years, invention has gained the mastery in agri-
culture as in other arts. The brain of man has
triumphed over his hand here as elsewhere."1
If only the poor moved from country to city,
the total wealth of the country would be affected
but little by this movement of population. But
the rich farmers are quite as apt to move to the
cities as are the poor ones, in fact they are per-
*A. C. True, The Arena, Vol. 17, Pp. 538-9-
213
AGRICULTURAL ECONOMICS
haps more likely to do so, for they are in a posi-
tion to live from the rent of their farms as many
retired farmers are doing in nearly every town
of the country. The sons of the well-to-do farm-
ers are more likely to receive an education and to
be attracted to other pursuits than are the sons
of poor farmers; on the other hand, it may be
true in many cases that the son of a poor farmer
would be more likely to seek employment in the
city because his chances of getting a start in the
country are not so good as those of the young man
with a well-to-do father to aid him.
This stream of population is carrying a vast
amount of wealth from country to city every year.
This movement of wealth from country to city
has rightly been given as one cause of an increase
in the percentage of tenancy, for it transfers to the
city the owners of many farms, and these farms
are cultivated by tenants until some farmer is
able to acquire its ownership by transferring to
the city-owner an equivalent amount of wealth.
Thus while gift and inheritance are economic
conditions of great importance in determining the
status of farmers with respect to landownership,
and make any rapid change in their status in this
regard impossible, some other means of accumu-
lating wealth must be available if the present per-
centage of landowning farmers is to be main-
tained. This leads to the investigation of savings
214
MEANS OF ACQUIRING LAND
in agriculture as a means of acquiring landowner-
ship.
Section III. Savings. — The process of saving
from the earnings of many years and making a
purchase, is a means of acquiring landownership
which is of especial significance in the considera-
tion of the conditions which make it possible for
tenant farmers to become landowners. The ma-
jority of the tenants are able to save from their
earnings, because their net returns are more than
enough to cover the expenses of living. When
long periods of time are taken into consideration,
the prices of agricultural products tend to be such
that the total product of the least capable farmer
who can remain permanently in the business will
equal his cost of living and all other annual ex-
penditures, including rent and normal returns on
permanent investments. This is true partly be-
cause long-time-average prices are a most impor-
tant factor in determining the degree of efficiency
which is necessary for making a living by farm-
ing, and all who do not prove themselves efficient
to that degree must leave agriculture to those who
are more capable ; again, it is true partly because
the long-time-average price must be' such as will
encourage the production of sufficient produce to
supply the effective demands of the people, and
the least capable farmer who is required to pro-
duce this supply must receive prices which will
enable him to live in accordance with his idea of
215
AGRICULTURAL ECONOMICS
a living, to pay rent, wages (unless he and his
family do all the work, in which case this item is
included in a living), wear and tear on machin-
ery and normal returns on permanent investments.
It is true, certainly, that, at any given time,
there are those who are producing at a loss, others
who are just able to make both ends meet, and
still others, — and ordinarily this class includes
the vast majority, — who are able to make an extra
profit because of their superior ability. This will
be easily understood if we refer to the figures
which are available showing the cost of producing
maize.1 From the figures published by the Illinois
Experiment Station, it is possible to compile a
list showing the variations in the cost of produc-
ing maize, which list shows that in the vast ma-
jority of the cases reported the cost of producing
the maize was far below the market price. The
items included under costs are : breaking stalks,
plowing, disking, harrowing, rolling, planting,
cultivating, husking, seed maize, and rent. The
numbers are averages for counties; but as the
average number of returns per county was not
more than four, the process of averaging by no
means eliminated the variations, and the figures
show wide differences in the costs of producing
maize.
The following figures show the costs, per
1 Bulletin No. 50 of the Illinois Agricultural Experiment
Station, Table i.
216
MEANS OF ACQUIRING LAND
bushel, of producing maize in Illinois as presented
in Bulletin No. 50. Before each statement of
costs is placed in parenthesis the number of re-
turns averaged. The county averages are so
arranged that they read in succession from the
highest to the lowest cost of production. (2)
38.8, (2) 31.5, (i) 29.5, (2) 28.5, (i) 26.8,
(2) 25.8, (i) 25.4, (2) 25.4, (4) 23.9, (2) 22.2,
(i) 22.1, (2) 22.0, (2) 21.8, (i) 21.0, (i) 20.5,
(6) 20.4, (6) 19.7, (2) 18.8, (2) 18.6, (3) 18.3,
(1) 18.2, (4) 18.2, (5) 18.2, (2) 17.7, (5) 17.6,
(4) 17.6, (5) 17.5, (4) 17-4, (8) 17-3, (6) 17-3,
(9) 17.3, (6) 17.3, (2) 17.2, (4) 17-2, (2) 17.0,
(3) 16.9, (3) 16.9, (12) 16.9, (2) 16.8, (8)
16.7, (6) 16.6, (i) 16.3, (3) 16.1, (4) 16.1, (i)
16.1, (i) 15.6, (i) 15.6, (3) 15.6, (23) 15.5,
(3) !5-3> (3) 15-2, (i) 15-2, (4) 15-2, (2) 15.1,
(2) 15.1, (7) 15.0, (4) 15-0, (3) i4-9> (2) I47>
(1) 14.6, (4) 14.6, (2) 14.2, (8) 14.2, (4) 14-0,
(8) 13.5, (2) 13.4, (2) 13.2, (2) 12.7, (i) 12.4,
(2) 12.4, (i) 12.2, (i) u.8, (6) 1 1.6, (6) 11.3.
These figures show a variation in the cost of
producing maize, ranging from 38.8 to 11.3 cents
per bushel. Could the returns of the separate
producers be compared, instead of the county
averages, a wider variation in costs would doubt-
less be found.
This differential gain, or profit due to superior
ability is the condition which, even where gift
and inherited wealth are insignificant, make it
217
AGRICULTURAL ECONOMICS
possible for farmers to accumulate wealth and to
become the owners of farms. It is true, certainly,
that the more efficient may live much better than
the least capable, or marginal farmers, and thus
the habits of life may reduce the power of the
more efficient farmers to save from their profits.
But the condition which gives rise to this differ-
ential gain certainly makes it possible for the
more efficient tenant farmers to buy land.
The greater the number of those who have
gained a degree of efficiency above that of the
marginal farmers and the greater the difference
between the degree of efficiency of the majority
of farmers and that of the marginal farmers, the
greater is the differential gain which will go to
farmers as personal profits, and the better able
they will be to become landowners. On the other
hand the more homogeneous the farmers who sup-
ply the market, that is, the smaller the number
who have gained a degree of efficiency above that
of the marginal farmer and the less this degree
of difference, the smaller is the total differential
profit and the less able are tenant farmers to ac-
cumulate sufficient wealth to buy a farm.
Section IV. Credit. — It is a common practise
in the United States for farmers to borrow money
to invest in land. When a young man has saved
enough money to pay some share, say half or two-
thirds of the price of the farm, he borrows the
remainder and makes an investment, a mortgage
218
MEANS OF ACQUIRING LAND
being given to secure the loan. This enables the
farmer to buy land much sooner than he could
if he were required to save the entire amount be-
fore making the purchase. Where too high a
rate of interest is not charged, it is often more
desirable to pay interest than to pay rent ; for the
difficulty of adjusting the relations between land-
lord and tenant is in this way removed, and the
farmer is free to improve the land as he chooses,
knowing the benefits will be his own.
A study of the mortgage indebtedness of farm-
ers in the United States, in 1890, showed that
1 8.6 per cent, of all the farm families occupied
encumbered farms. The total encumbrance of
farm homes amounted to $1,085,995,960, which
was thirty-five per cent, of the total value of the
encumbered farms, and 8.2 per cent, of the total
value of all farms.1 An investigation of the dis-
tribution of farm mortgages2 showed that
throughout the southern states where the percent-
age of tenancy was very high, the percentage of
encumbered farms was very low; that the six
states having the highest encumbrance on farms
were New York, Iowa, Illinois, Kansas, Ohio,
and Pennsylvania ; the total encumbrance of these
states being $553,964,594, or 51 per cent, of the
total for the United States; yet with this high
total encumbrance, the mortgages represented
1 Eleventh Census, Report on Farms and Homes, p. 58.
2 Ibid., pp. 58, 66, C9.
219
AGRICULTURAL ECONOMICS
only 37.25 per cent, of the value of the encum-
bered farms, and 9.86 per cent, of the total value
of all farms in these six states. Thus while a
large per cent. (51.) of the farm-mortgage in-
debtedness of the United States is concentrated on
a small area, there is also a large per cent. (42.3)
of the farm values concentrated on the same area.
The following quotation from the Census Re-
port, throws much light upon the reasons why
mortgages are placed upon land :
As a result of inquiries made in 102 selected counties,
distributed throughout the United States, the conclusion is
that 80.13 per cent, of the mortgages in force were made to
secure the purchase price of real estate and to make real
estate improvements, when these objects are not compli-
cated with other objects, and that the original amount of
these mortgages is 82.66 per cent, of the total original
amount of all mortgages in force. If to these objects are
added the objects of business and the purchase of various
articles of personal property of the more durable kind, such
as domestic animals, wagons, farm machines, when not com-
bined with other objects, the mortgages are 89.82 per cent
of the entire number in force, and their original amount is
94-37 Per cent, of the total original amount of all mortgages
in force The mortgages distinctly representing a loss
of wealth, or wealth soon to be consumed, are embraced in
the description of farm and family expenses, and their num-
ber is 5.4 per cent, of the total number of mortgages in force,
while their original amount is 1.73 per cent, of the total
original amount A distinction must be observed be-
tween the cause and the consequence of mortgages. The
mortgage, in its motive, is for the most part a mere business
venture, and, so far as foreclosures show, for the most part
220
MEANS OF ACQUIRING LAND
a successful one. It becomes a misfortune when for any
reason it becomes a business mistake.1
These figures, it is true, refer to real-estate
mortgages generally; but there is no reason for
thinking that the mortgage is used for other than
the securing of the purchase price of real estate in
the case of farm mortgages than in the case of
other real estate mortgages. In general, we
would be inclined rather to think that farm mort-
gages were more likely to be given to secure the
purchase price than the mortgages on city lots, for
example, where the total value of the lot might be
relatively small compared with the value of the
business which might be established thereon, and
which might be an occasion for desiring to mort-
gage the real estate to secure funds to extend the
business. In general, the conclusion which
should be drawn seems to be that the mortgages
on farms are in the vast majority of cases used as
a means of making the transition from tenancy to
landownership.
The evidence seems to show, also, that the
farmers are usually successful in their use of the
mortgage as a means of acquiring the ownership
of,land. In Illinois, Michigan, Minnesota, and
New Jersey, from one-third to one-half per cent.,
only, of the farm mortgages are foreclosed each
1 Eleventh Census of the United States, 1890, Report on
Real Estate Mortgages, p. 310.
221
AGRICULTURAL ECONOMICS
year;1 and the average duration of farm mort-
gages in the United States is about five years.2
From this we may conclude that in the above
named states not much more than from one and
two-thirds to two and one-half per cent, of the
farm mortgages are foreclosed. But we cannot
argue from this that from ninety-seven and one-
half to ninety-eight and one-third per cent, of the
mortgages are duly paid, out of the profits of agri-
culture. Many cases will come to the mind of
the reader, where the unsuccessful aspirants to
landownership have sold their mortgaged farms
in order to pay off the mortgage and save a part
of their original investment. Howrever, it is fair
to say that the vast majority of such adventures
prove successful.
A classification by age groups of the owners of
farm homes, in the United States, may be ob-
tained for the years 1890 and 1900, which gives
the percentage of the owned farm homes which
are encumbered. This classification is shown in
the following table :3
1 George K. Holmes, Quarterly Journal of Economics, 1896,
Vol. X, p. 49-
2 Eleventh Census, Report on Farms and Homes, p. 109.
8 These figures were calculated from the Report on Farms
and Homes for 1890, and from Vol. II of the census for 1900.
222
MEANS OF ACQUIRING LAND
TABLE 5. THE PERCENTAGE OF OWNED FARM HOMES
WHICH WERE KNOWN TO BE ENCUMBERED, IN THE
NORTH CENTRAL DIVISION, IN 1890 AND
1900, CLASSIFIED BY THE AGE
OF THE OWNERS.
A(,- Percentage Encumbered
1890 1900
Under 25 years t 40.7 43.6
25 to 34 years 49.5 48.3
35 to 44 years 49.1 48.3
45 to 54 years 44.5 41.5
55 years and over , 32. i 32.2
From these figures it will be seen that the per-
centage of encumbrance increases from youth to
middle age, and declines from middle age to old
age. This fact, and also the relation between the
increase in the percentage of mortgages and the
decline in the percentage of tenancy, is shown
more clearly in the following table in which the
one state of Illinois is considered, Illinois being
the one of the northern states in which the per-
centage of tenancy is the highest :
TABLE 6. THE PERCENTAGE OF OWNED FARM HOMES
WHICH WERE KNOWN TO BE ENCUMBERED, AND THE PER-
CENTAGE OF ALL FARM HOMES WHICH WERE KNOWN
TO BE HIRED, IN THE STATE OF ILLINOIS,
FOR THE YEAR 1900.
A_- Encumbered Hired
Aee Homes Homes
Under 25 years 40. i 74.64
25 to 34 years 47-9 63.25
35 to 44 years 46.2 42.50
45 to 54 years 38.8 29.8
55 to 64 years 31.2 18.29
$5 years and over 21.9 10.60
223
AGRICULTURAL ECONOMICS
When we consider the mortgage in all of its
relations it is apparent that this is one of the
important means of acquiring landownership ;
and while it sometimes proves disastrous, it is
practically indispensable in our rural organization,
and on the whole it may be looked upon as an
institution friendly to the interests of the farmers.
Section V. The taxation of mortgages. — It
has been noted by economists that the market price
of land is often greater than the capitalization of
the net rent at the current rate of interest. That
is, men are willing to take a lower return on in-
vestments in land1 than on loans, [even where the
security is a farm mortgage. This is said to in-
crease the difficulty of paying off farm mortgages.
The man whose farm is mortgaged must pay, for
example, six per cent, for the use of money which,
as an investment in land, is yielding him no more
than four per cent.
With the Ricardian theory of distribution in
mind, which assumes that all farmers possess the
same degree of efficiency, economists have con-
cluded that this discrepancy between the net rent
and the interest would make it practically impos-
sible for the farmers to pay off their mortgages.
It will be readily understood from the discussion
of profits due to superior ability, that all but the
less efficient farmers are able to counterbalance
this loss by earning personal profits, so that the
fact of the discrepancy is not so disastrous as has
224
MEANS OF ACQUIRING LAND
been supposed by the economists ; yet this discrep-
ancy has an important retarding influence upon
the movement from tenancy to the unencumbered
ownership of land.
This difference between net rent and interest
is due to many causes. Many of these causes
have already been discussed in the chapter on the
price of land ; but we wish to emphasize especially
the influence of double taxation in this connec-
tion. Double taxation, the taxing of both the
farm and the mortgage upon the farm, tends to
increase the difference between the rate which
must be paid upon the loan and the returns re-
ceived upon investments in land. The man who
lends money upon a mortgage wants at least as
large a return as if he had purchased the land
himself. Had the man who lent the money pur-
chased the land and rented it, he would have paid
the land tax out of the net rent. If he lends the
money and has to pay tax at the same rate on the
mortgage, he will demand interest equal, at least
to the net rent of that proportion of the farm rep-
resented by the face of the mortgage. This
means that the farmer will have to pay interest
equal to the net rent and then pay the land tax
besides; thus paying more in interest and in the
tax, by the amount of the tax, than he would have
paid as a tenant. To tax a farm mortgage is,
therefore, to tax a farmer for using the mortgage
as a means of acquiring landownership.
15 225
AGRICULTURAL ECONOMICS
Section VI. The need of a system for obtain-
ing credit on land, the District Credit Associations
in Germany. — The farmers of the United States
are in need of a good credit system. Not only is
it important that the young farmers who wish to
go in debt for land should be able to borrow money
at a low rate of interest; but it is equally impor-
tant that the tenant farmers should be able to
invest their savings in a profitable manner, until
they have accumulated sufficient capital to enable
them to invest in land. It is well known that the
country bankers are not willing to pay more than
four per cent, for the savings which the farmers
may deposit with them ; and that these same bank-
ers will not lend money to the same men, on the
best of security, — the farm mortgage, — for less
than six per cent, with the interest paid semi-
annually in advance. It is also true that the
length of time for which the farmers wish to bor-
row money is usually longer than that for which
the bankers wish to put their money out; in fact,
the lending of money on mortgages is not the
class of investment which seems most congenial to
the ordinary banker.
The banks are of far less importance in the mak-
ing of loans to farmers for the purpose of buying
land, in most communities, than are the well-to-
do and the retired farmers of the neighborhood.
Nearly every community has at least one such
man in it. While there are many exceptions,
226
MEANS OF ACQUIRING LAND
these men are usually close-fisted, and more or less
miserly in character. They are not willing to
take any risk. They lend to the men whom they
know. They take mortgages on land, the value
of which they can readily ascertain. Some of
these men, perhaps the most of them, deal honor-
ably ; but they charge a higher rate of interest than
the farmers can well afford to pay. But while
some, perhaps the most, of these men who lend
money to the farmers deal honorably, there are
men in this business who have rightly been called
"land sharks." These men watch for a chance to
foreclose a mortgage and get a farm for much
less than its real value. Having the farm in their
possession they wring all they can from the tenants
who are so unfortunate as to contract for the land,
or they sell it to some farmer who gives a mort-
gage in part payment; this done the land shark
watches his chance to get the farm again for much
less than the price for which he sold it, as he had
done before, and so the process is continued until
untold damage is done to his fellowmen.
Besides these moneyed men who live in the
neighborhood and lend money to the farmers,
there is usually some one who acts as the agent of
some large insurance company, and whose busi-
ness it is to lend the funds of the company to the
farmers. These loans are secured by mortgages.
The company is in no hurry for the money, and
has no use for the land. The main objection to
227
AGRICULTURAL ECONOMICS
this means of borrowing money is the rate of
interest, which is usually higher than it should be,
and higher than the farmers would have to pay
for the use of money if they had the benefit of a
good credit system.
But neither the local money lender nor the
agent of the insurance company provide the farm-
ers with a means of investing their savings. The
young farmer who saves but a few hundred dol-
lars each year, cannot hope to lend this money
on a mortgage, because those who wish to borrow
money to invest in land generally desire a larger
sum at one time. Hence the farmer finds the
country bank with its low rate of interest, about
the only chance for investing his savings during
the years when he is trying to accumulate enough
capital to enable him to invest in land. When
the time has come for him to make an investment
by paying half of the value of a piece of land from
the savings of many years, he is embarrassed by
the fact that while he has been able to get no
more than four per cent, for the use of his money,
he must pay six per cent, for the money which
he wishes to borrow. This should certainly be
enough to convince the farmer that something
is wrong. The important question is, Can any-
thing be done to remedy this condition of affairs ?
Something has been done in other countries,
and there is no reason why something cannot be
done in this country to give the farmer a better
MEANS OF ACQUIRING LAND
credit system. More than a hundred years ago
institutions were established in Germany for the
purpose of lending money to the farmers at a low
rate of interest; and the years have proved the
wisdom of this course of action. The most im-
portant institutions for making loans to farmers,
in Germany, are the district cooperative credit
associations (Lands chaf ten) which are public, or
semi-public institutions for the purpose of lending
money on mortgages. These are organizations
of landowners, who by combining their resources
into an unlimited company are able to borrow
money at a very low rate, — at a rate comparable
to that for which the government can float its
bonds. As the institution is not intended for
profit, the loans are made to landowners at a rate
just enough higher than that paid by the institu-
tion to cover the costs of carrying on the business.
Money is loaned on mortgages to the farmers and
in order to raise the money for such loans, the
institution is permitted by public authority to issue
mortgage bonds to the value of the mortgages
it holds. As all the members of the associa-
tion are jointly and severally liable to the full
value of their lands, the bonds are considered
excellent investments, and are floated at a very
low rate of interest.
When the money has been lent to a farmer and
a mortgage given to secure the loan, it is the regu-
lar thing to collect a small amount as a partial
229
AGRICULTURAL ECONOMICS
payment each year until the whole amount is paid.
If, for example, the rate of interest charged by
the institution is four per cent., five per cent, will
be collected each year. Four per cent, is interest
and the one per cent, is a partial payment which
accumulates with interest until at the end of a
little over forty years sufficient has been paid in to
cancel the debt. It is also possible for the more
thrifty farmers to make other payments which
shorten the period required for canceling the debt.
In some cases, these partial payments must be paid
in mortgage bonds, which can be bought at the
market price.
These mortgage bonds make a safe and ready
means of investing the farmers' savings. In
them the farmer finds a safe investment which is
as permanent as he may desire to have it, and at
the same time an investment on which he can
realize at any time in case he decides to invest in
land. The German form of the institution may
not exactly meet our needs, but it is certainly true
that the principle of association is especially
desirable in any system of land credit.
Not only do such institutions make it possible
for the young farmers to invest their savings until
they are ready to buy, and then to borrow money
to finish paying for the land, but they make it
more desirable for the retiring farmers to sell their
land, as they can invest in bonds which are as safe
as the investment in land and pay practically the
230
MEANS OF ACQUIRING LAND
same returns. Thus it is that a good credit sys-
tem is the best means of precluding the presence
of the tenant problem.
The safety of these institutions is insured by the
fact that they are district associations. Each in-
stitution operates only within a very limited and
well defined field, so that the officials are able to
know the men and the land values throughout
the district.
The good effect of this credit system is evinced
by the fact that, in 1895, only 16.42 per cent, of
the farms of Germany were composed entirely of
leased land; and only 12.38 per cent, of all the
land included in farms was leased land. Indeed,
Germany is a nation of landowning farmers,
while in France 47.2 per cent, of the cultivated
area is occupied by tenants, and in England the
landowning farmer is rarely found.
Tenancy in Germany is largely among the occu-
piers of the very large and of the very small
farms. This is shown in the following table :
TABLE 7. PERCENTAGE OF THE FARMS OF VARIOUS SIZES
IN GEPMANY WHICH WERE COMPOSED SOLELY
OF LEASED LAND, IN 1895.
Under 5 acres 19.91
5 to 12.35 acres 3-54
12.35 to 49.4 1.97
49.4 to 247 acres 4.64
247 acres and over 25.68
Not only is the percentage of tenancy low, but
the statistics fail to prove any important change
231
AGRICULTURAL ECONOMICS
in this regard in recent years. In 1882, 15.71
per cent, of the farms were composed solely of
leased land, and in 1895 the percentage was 16.42 ;
but at the same time, 12.88 per cent, of all land in
farms was leased land in 1882, and only 12.38
per cent, in 1895. It would appear, therefore,
that there was little change in the status of the
farmers with respect to landownership during this
period.
That this high percentage of landowning farm-
ers is due in a large degree to the good system of
land credit, is indicated by the fact that the farms
of Prussia, are mortgaged to about half their
market value. And yet it may be that in this
high percentage of indebtedness there lies a dan-
ger. The indebtedness on land in Prussia in-
creased twenty-four per cent, during the thirteen
years from 1883 to 1896; and it may well be
feared that while the forms of landownership have
been retained the real ownership is gradually slip-
ping away from the farmers as surely as it is in
our own country.
Even if the good credit system is not all that is
needed to enable the tenant farmers to become
landowners in sufficient numbers to stop the de-
cline in the percentage of landowning farmers, yet
it is certainly an important method of facilitating
the acquiring of landownership on the part of the
farmers, and in this way it is a means of check-
ing to some extent the decline of the class of land-
232
MEANS OF ACQUIRING LAND
owning farmers in the United States. Gift, in-
heritance, and profits, aided by a good credit sys-
tem are the most important means of acquiring the
ownership of land. Now that the government
has practically exhausted its supply of good farms,
and competition is driving the price of land higher
and higher, it becomes more and more important
that every facility be provided the farmer for
making the most of the means which yet remain
for acquiring the ownership of land. The farmer
should have every facility for acquiring a knowl-
edge of the facts and principles which underlie
his art, in order that he may so operate his farm as
to win large profits from which to save money to
invest in land. He should be provided, also, with
a credit system such as will enable him to invest
his savings with profit, and provide an economical
source of funds, such as will avoid high rates of
interest and double taxation, when it is desirable
to borrow money to invest in land.
233
AGRICULTURAL ECONOMICS
PROBLEM ILLUSTRATING THE FOREGOING PRINCIPLES.
I. Four farmers, A, B, C and D, are in competition for
four grades of land, ist, 2nd, 3rd, 4th. The following fig-
ures represent the value of the produce which the farmers
of each grade can produce on the land of different grades
as a result of the expenditure of six dollars' worth of labor
and capital.
Grades of Land.
Grades of Farmers.
I.
II.
ill.
IV.
A
13-5
12.
10.5
9
B
12.
10.67
9-33
8
C
10.5
9-33
8.17
7
D
9-
8.
7-
6
(a) How much differential rent would be paid for the
amount of land employed in each case (allowing 5 cents
as a margin in each case) ?
(b) Supposing that the six dollars are expended upon
one acre in case of the fourth grade land, and that the third
grade land is farmed 5 per cent, more intensively than the
fourth grade, and the second grade 10 per cent, and the
first grade 15 per cent, more intensively than the fourth
grade, how much would the rent per acre be on each grade
of land?
(c) Supposing that the net rent is go per cent, of the
gross rent, and that the current rate of interest on safe loans
is five per cent., what would be a fair capitalization of the
income of each piece of the land?
(d) Supposing that all farmers live equally well, and
leaving out of account the influence of variations in quan-
titative efficiency, how long would it take each man to pay
for the land which he cultivates by saving from his profits
if the land can be purchased at its capital value ?
234
CHAPTER XII
TENANCY AND LANDOWNERSHIP IN THE
UNITED STATES.
Less than two-thirds of the whole number of
farms in the United States are cultivated by their
owners. According to the census for 1900,
twenty-two and two-tenths per cent, of the farms
were operated by share tenants, thirteen and one-
tenth per cent, by cash tenants, one per cent, by
managers, nine-tenths per cent, "by owners and
tenants," seven and nine-tenths per cent, by "part
owners," and fifty-four and nine-tenths per cent,
by owners. The following table shows the per-
centage of all farms which were operated by these
different classes of farmers in the United States
and in the geographic divisions of the country, as
shown by the census for I9OO.1
*N. B. — The following instructions to the enumerators ex-
plain the significance of the terms used in the following table :
"OWNER. — If a farm is cultivated by a person who owns
all or a part of it, by a man whose wife owns all or a part of
it, by a widow or widower, by the heir or heirs thereto, or by
the trustees or guardian for such heirs, write 'owner.' For
census purposes a settler on government land who has not
'proved up,' a person who has bought land on a contract for a
235
AGRICULTURAL ECONOMICS
TABLE 8. TENANCY AND LAND OWNERSHIP IN THE UNITED
STATES IN 1900.
Part Own"s Mana- Cash Share
rs Owners T™J?nt| gers Tenant! Tenant!
United States 54.9 7.9 .9 i.o 13.1 22.2
Geographic divisions
North Atlantic 72.3 4.0 .9 2.0 9.8 n.o
North Central 57.9 12. 1 1.2 .9 7.5 18.4
South Atlantic 49.3 4.9 .6 .9 18.0 26.3
South Central 44.8 5.2 .8 .6 17.3 31.3
Western 69.6 10.1 .6 3.1 7.7 8.9
Alaska and Hawaii 30.5 6.1 5.6 54.9 2.9
This table shows that the percentage of tenancy
is the highest in the Southern divisions and the
lowest in the Western division. Farms operated
by managers are relatively most abundant in the
Western and in the North Atlantic divisions. In
the West the farms operated by managers are
largely cattle and sheep ranches which are con-
ducted for profit, while in the East these farms
deed, or a person who holds over for redemption, is an owner
and must be so marked.
"OWNER AND TENANT. — If a farm is cultivated jointly by its
owner and by one or more other persons working for a share
of the farm products, write 'owner' after the name of the
owner, and 'share' after the tenant on shares.
"MANAGER. — If the frnn is cultivated for its owner, or pub-
lic institution, by a salaried manager, superintendent, or
overseer, write 'manager.'
"CASH TENANT. — If the farm is cultivated by a tenant who
pays a fixed rental in money, or a stated amount of labor or
farm commodities (not a proportionate share of all), write
'cash.'
"TENANT ON SHARES. — If the farm is cultivated by a tenant
who pays for its use a share (as one-third, one-half, or other
proporti-i) of the crops raised, write 'share.'" (See Twelfth
Census of the United States, 1900, Vol. V, p. 759).
TENANCY AND L AND O W N ERS H I P
represent, in many cases, the country homes of
wealthy families.
The three classes, farms operated by, "owners,
part owners, and owners and tenants," may be
grouped together as including the farms on which
the owners have a direct share in the manage-
ment of the land. These three classes of farms
represented 63.7 per cent, of all farms in the
United States ; while the percentage was 78.2 in
the North Atlantic division, 71.2 in the North
Central division, 54.8 in the South Atlantic, 50.8
in the South Central, and 80.3 in the Western
divisions.
The cash and share tenants, taken together,
operate 35.3 per cent, of the total number of farms
in the United States. These rented farms repre-
sent 30.2 per cent, of the "improved area" in
farms, and 23.3 per cent, of the total area in
farms. These same farms represent 28.4 per
cent, of the total value of the farm land and
buildings, being 30.1 per cent, of the total value
of all farm land (exclusive of the value of build-
ings), and 22.7 per cent, of the value of all farm
buildings.
Section L The decline in the percentage of
landowning farmers in the United States. — There
were no statistics available on the subject of land-
ownership, in the United States, prior to 1880.
The census of 1880 showed that 74.44 per cent.
237
AGRICULTURAL ECONOMICS
of the farms were operated by owners, while 25.56
per cent, were operated by tenants. This 'condi-
tion of affairs gave rise to much discussion con-
cerning the probable future of the American
farmer. Some writers considered tenancy a
transitionary stage to landownership, while others
contended that those who once had owned land
finally lost it and became tenants, — that in time
tenancy would become general.
In 1886, David B. King said:1 "While there
are exceptions, and tenants are found who are un-
thrifty, or whose lot is a hard one, as a rule the
American tenant farmer prospers, and in very
many cases passes from the tenant to the land-
owning class. It is a decided advantage to many
an agricultural laborer and farmer's landless son
that numbers of owners of farms have become so
prosperous that they do not care to till the soil
themselves [and for this], or, for other reasons
rent their land. It often happens that a young
man, engaged in agriculture or other labor, by
thrift and economy, lays by enough to stock a
small farm which he rents 'on shares' or for a
fixed sum. In a few years he saves enough to
buy the property, paying perhaps one-half of the
purchase money at once, and the remainder in
annual payments extending through several years.
The former owner is secured by a mortgage on
the farm. By the time the man has reached mid-
1 North American Review, Vol. 142, pp. 256-7.
238
TENANCY AND L A N D O W N ERS H I P
die life he owns the farm free of debt. ... It is
not surprising that the casual observer, seeing
many owners apparently deeply in debt, should
be alarmed at the state of things. On closer ob-
servation one finds, however, that in most cases,
the hard-working tenant and the interest-paying
owner are both prosperous and rapidly becoming
independent."
Mr. Henry Strong, whose business it was to
sell railroad lands and lend money on farm mort-
gages, said;1 "Just after the panic of 1873, and
during the years 1874, 5, and 6, I loaned several
hundred thousand dollars in Illinois and Iowa
upon farm mortgages, and all of these loans, with
two exceptions, were paid. These exceptions
were in cases of large farmers, who were speculat-
ing in cattle in the Chicago market, failed in busi-
ness, and turned over the mortgaged lands to me,
aggregating about three thousand acres of mostly
cultivated farms, which I divided up and rented to
about a dozen tenants. These lands were after-
wards nearly all bought by these tenants, and so
far as I know, owned by them or their grantees.
.... I could cite a great many similar instances."
This quotation, which was published in the same
number of the same magazine as that quoted from
Mr. David King, corroborates the generalizations
made by the latter.
But while many held this view there were
8 North American Review, Vol. 142, p. 251.
239
AGRICULTURAL ECONOMICS
others who believed that the movement was rather
from free ownership of farms to encumbered
ownership, and finally to the ranks of the tenant
class. In a later number of the same magazine
Henry George responded to the articles by Messrs.
King and Strong as follows : "Tenancy is not
the normal state of man, and is so far from being
the primary condition of American agriculture
that we have been accustomed to look on the
American farmer as necessarily the owner of the
acres he tilled. Mr. Strong would have us think,
and Professor King really seems to think, that
tenant farming is, in the natural order of things,
the intermediary stage through which 'Agricul-
tural laborers' are enabled to pass into a condition
of landowners, just as, in the older handicrafts the
condition of journeyman was the intermediary
condition between that of apprentice, with which
all craftsmen must begin, and that of master
workman, to which all could aspire. The truth is
just the reverse of this. Tenant farming is the
intermediary stage through which independent
tillers of the soil have in other countries passed,
and in this country are now beginning to pass, to
the condition of agricultural laborers and chronic
paupers.
"But sufficiently startling as is the fact that in
1880, more than one- fourth of American farms
were cultivated by tenants, this of itself does not
fully indicate how largely our agricultural popu-
240
TENANCY AND L AN D O W N ERSHI P
lation have already been divorced from the soil.
Tenancy is only the later form of the disease ; the
earlier form is the mortgage."1
Three sets of statistics on tenancy and land-
ownership, those for 1880, 1890, and 1900, are
now available, and a comparison of these figures
shows that there has been a decline in the per-
centage of landowning farmers in the United
States since 1880. The extent of this decline is
shown in the following table :2
TABLE 9. TENURE OF FARMS IN THE UNITED STATES.
•PJ . Percentage of Farms Operated by
Owners Cash Tenants Share Tenants
1880 74.5 8.0 17.5
1890 71.6 10. o 18.4
1900 64.7 I3.I 22.2
This table shows a decline of nine and eight-
tenths in the percentage of landowning farmers
during the last two decades of the Nineteenth Cen-
tury ; and the decline has been more rapid during
the decade from 1890 to 1900 than during the
preceding decade.
This decline in the percentage of landowning
farmers does not necessarily imply, however, that
farmers who once owned land have lost it and
become tenant farmers. The ownership of land
is ever changing. If all farmers were to cease ac-
quiring the ownership of land for one generation,
there would be no landowning farmers left; and
1 North American Review, Vol. 142, p. 393.
2 Twelfth Census, Vol. V, p. Ixxvii.
16 241
AGRICULTURAL ECONOMICS
this could happen without a single farmer becom-
ing bankrupt and losing his farm.
The decline in the percentage of landowning
farmers is due largely to the fact that a decreas-
ing percentage of the succeeding generations of
young farmers are able to acquire land. This is
shown in the following table :
TABLE 10. PERCENTAGE OF PERSONS OWNING AND HIRING
FARM HoMES.1
1890 igoo
Owned Hired Owned Hired
Under 25 years 32.6 67.4 27.8 72.2
25 to 34 years 49.8 50.2 45-3 54-7
35 to 44 years 64.0 36.0 64.4 35.6
45 to 54 years 72.3 27.7 70.7 29.3
55 years and over 82.2 17.8 81.4 18.6
This table indicates that nearly three-fourths of
the farmers under twenty-five years of age are
tenants ; that the percentage of tenant farmers de-
clines, and the percentage of landowning farmers
increases, as we pass from the younger to the
older age periods, until less than a fifth of the
farmers who are fifty-five years of age and over
are tenants.
Statistics of this kind were first collected in
1890, and while they showed the status at that
time and suggested a movement from tenancy to
landownership, they did not prove the existence
of such a movement. By comparing the figures
for 1890 with those for 1900, this movement is
1 Twelfth Census, Vol. II, p. ccxi.
242
TENANCY AND L AN D O W N ER S H I P
clearly shown. The occupiers of farm homes,
who were from 25 to 34 years of age in 1890,
were from 35 to 44 in 1900. By comparing these
occupiers at the two dates, we find an increase in
the percentage of home owners, from 49.8, in
1890, to 64.4, in 1900. Of the farm-home occu-
piers belonging to the age period from 35 to 44 in
1890, and to the age period 45 to 54, in 1900, 64
per cent, were owners at the earlier date, and 70.7
per cent, at the latter.
These figures indicate a constant movement
from tenancy to landownership. This, however,
is a commonplace fact recognized by all who
actually observe agrarian movements. This
movement is necessary. Young farmers start in
with little capital, and through gifts, inheritances,
or savings from their profits, they gradually ac-
quire ownership. But, from generation to gen-
eration, a smaller percentage of the farmers are
able to make this transition. Notice in the above
table that of the occupiers of farm homes who
were less than 25 years of age, a smaller percen-
tage were owners in 1900 than in 1890. This is
true for every age period given in the table except
one ; the reverse being true for the period from 35
to 44. This suggests that the decline in land-
ownership is due to the inability, or disinclina-
tion of the succeeding generation to acquire land-
ownership so generally as their predecessors.
If we wish to know why it is becoming more
243
AGRICULTURAL ECONOMICS
and more difficult for a farmer to acquire the
ownership of land, we must study those forces and
conditions which enable the farmer to buy land,
and also the conditions which retard his making
investments in land. If we wish to improve the
conditions with respect to the ownership of farms,
we should devise some means of improving the
farmer's facilities for making such acquisitions.
Section II. Land values and land ownership. —
That progress in society which results in a rise in
land values, tends to make it more difficult to buy
a farm out of the savings from personal profits.
This may be given as an important factor in
bringing about the decline in the percentage of
landowning farmers. It may be that the farmer
will be able to save a larger sum of money each
year, and, yet, not be able to pay for a farm so
readily after a rise in land values as before; be-
cause more money would be required to pay for
the land. If the rise in land values kept pace with
the rise in the value of farm produce, and no more,
so that the profits due to personal ability would
rise in the same proportion as land values, the
amount of time required for saving the money
with which to buy a farm would remain the same.
But as a matter of fact the progress which makes
a demand for farm products at an increased price
is usually accompanied by an increase in the agri-
cultural population, and hence a larger number of
farmers would be competing for the use of the
244
TENANCY AND LAND 0 W N ERS H I P
land, so that a larger proportion of the product is
credited to the land, and while the efficient farm-
ers may be able to save more money each year
than formerly, their savings will not increase
so rapidly as will the annual value of the land.
More time will be required, therefore, to save the
amount necessary to pay for a farm of a given
size. Hence, with the progress which brings con-
tinually rising land values, a smaller percentage
of each generation of farmers will be able to ac-
quire the ownership of land, and this will result in
a gradual decline in the percentage of landowning
farmers.
A great and unexpected change in prices has a
marked influence upon the farmer who is paying
off the mortgage on his farm. A rise in prices
enables him to pay off the mortgage in a much
shorter time than if prices had remained the same
as when the debt was contracted. A fall in prices
makes it very difficult to pay a debt. The returns
from the land fall below the amount that was ex-
pected when the debt was contracted and a larger
share of the gross returns of the farm is required
to pay the interest and a smaller surplus is left,
which may be used in paying off the mortgage.
When the price of wheat went down, about thirty
years ago the price of land in England, and in
parts of the United States, went down more than
half. Farmers who had purchased land and given
mortgages often found their farms worth no
245
AGRICULTURAL ECONOMICS
more, and sometimes even less than the face of
the mortgage. To pay the interest was a great
burden, and many farmers were forced to sell,
often for little more than enough to pay the mort-
gages. Thus it is seen that while the ultimate
result of rising prices is to make it harder to
acquire landownership, the immediate result may
be the opposite, and again, that while cheap land
is conducive to landownership, the immediate
effect of a lowering of land values is to reduce
many landowning farmers, who have encumbered
their lands with mortgages as a means of buying
land, to the ranks of the tenant class.
In the northern states there seems to be some
relation at the present time, between the value of
farms and the percentage of tenancy. This rela-
tion is shown in the following table which gives
the average value per farm (of farm land and
improvements, including buildings), and the per-
centages of tenancy, in the North Atlantic and
North Central divisions :
TABLE n. THE VALUE OF FARMS AND THE PERCENTAGE OF
TENANCY IN THE NORTHERN DIVISIONS
AND STATES, IN igoo.1
Geographical Divisions Percentage Average Value
and States of Tenancy of Farms
North Atlantic 20.8 $3,656
New Jersey 29.9 4,693
Pennsylvania 26.0 4,006
New York 23.9 3,917
1 Twelfth Census, Vol. V, Tables 5 and 12.
246
TENANCY AND L AN D O W N ER SHI P
Geographical Divisions Percentage Average Value
and States of Tenancy of Farms
Rhode Island 20.1 4,206
Vermont 14.5 2,509
Connecticut 12.8 3, 615
Massachusetts 9.6 4,190
New Hampshire 7.5 2,391
Maine 4.7 1,627
North Central 27.9 4,354
Illinois 39.3 6,683
Nebraska 36.9 4,746
Kansas 35.2 3,7l8
Iowa 34.9 6,550
Missouri 30.5 2,962
Indiana 28.6 3,793
Ohio 27.5 3,746
South Dakota 21.8 4,184
Minnesota 17.3 4,329
Michigan 15.9 2,966
Wisconsin 13.5 4,042
North Dakota 8.5 4,385
From the above table it will be seen that, in the
North Atlantic division, the state in which the
average value of farms is highest is also the state
in which the percentage of tenancy is highest, and
that the state which shows the lowest farm values,
shows, also, the lowest percentage of tenancy.
Yet, when the division as a whole is considered,
the relation between farm values and the percen-
tage of tenancy becomes very much confused. It
is hard to understand why the percentage of ten-
ancy is so low in Massachusetts, for example,
where land values are relatively high.
When the North Atlantic division is compared
247
AGRICULTURAL ECONOMICS
with the North Central division, the relation be-
tween farm values and tenancy seems to sustain
the general proposition that a higher percentage
of tenancy is generally associated with high land
values than with low land values. It is also true
that the state with the highest average farm values
in the North Central division is the one with the
highest percentage of tenancy. When the four
states which lie in the heart of the corn belt, Illi-
nois, Iowa, Indiana, and Ohio, are compared, the
same relation holds true ; but other states such as
Missouri and North Dakota seem to throw this
relation into confusion. And when the new
states, Kansas and Nebraska, are compared with
an old state like Massachusetts the influence of the
more recent supply of government land in the
new states seems to be much more than counter-
balanced by some other forces.
By comparing the northern part of Wisconsin
with the southern part of that state, the two fac-
tors of low land values and recent settlement are
brought into comparison with high land values
and longer established settlements. While the
average percentage of tenancy in the state of Wis-
consin seems very low (13.5 per cent.), espe-
cially in comparison with that of the state of Illi-
nois (39.3 per cent.), it will be found upon analy-
sis that this low average for the state is due, in
a large degree, to the extremely low percentages
of tenancy in the northern counties, where there
248
TENANCY AND L AND O W N ERSH I P
is much cheap and unoccupied land. There are
eighteen counties in the northern part of the state
in which the percentage of tenancy is below five.
These counties, with their farm values and per-
centages of tenancy are given in the following
table :
TABLE 12. THE RELATION BETWEEN TENANCY AND LAND
VALUES IN THE NORTHERN COUNTIES OF WISCONSIN.
Number of
Farms in
Counties. the County.
Burnett 1,198
Iron 83
Price., 885
Taylor 1,168
Shawano 3,140
Kewaunee 2,193
Lincoln 924
Marathon 4,376
Florence 191
Marinette 1,300
Manitowoc.... 4,073
Door 2,209
Oconto 2,241
Washburn 449
Ashland 489
Vilas 83
Bayfield 465
Oneida 350
While the percentage of tenancy is low in the
northern part of Wisconsin it is relatively high in
the southern part. The fourteen counties which
showed the highest percentage of tenancy, in
1900, form a solid block in the southern part of
249
Percentage
Operated by
Tenants.
Average Value
of Farms and
Improvements
I.I
1,029
1.2
1.7
1.8
2.2
1,459
i,or6
1,345
2,376
2.4
2,920
2.4
3-1
1,494
1,961
3-2
1,202
3-5
3-8
1,754
4,304
4.0
2,231
4.0
4.2
4-5
4-8
2,114
1,169
1,645
1,411
4.9
1,025
4.9
1,112
AGRICULTURAL ECONOMICS
the state. These counties are given in the follow-
ing table :
TABLE 13. TENANCY AND LAND VALUES IN THE SOUTH-
ERN COUNTIES OF WISCONSIN.
Number of Percentage Average Value
Farms in Operated by of Farms and
Counties County Tenants Improvements
Rock 3,829 35.4 6,769
Milwaukee... 2,576 31.2 10,342
Walworth 2,754 29.7 7,703
Kenosha 1,298 29.1 7,387
Lafayette 2,501 27.6 6,610
Green 2,540 26.4 6,589
Dane 6,346 26.2 6,125
Racine 2,118 24.8 6,478
Columbia 3,439 24.0 5,208
Grant 4,219 20.7 5,106
Waukeshaw.. 3,549 20.0 6,595
Iowa 2,547 18.9 5,319
Jefferson 3,453 18.2 6,365
Dodge 4,994 18.1 7,313
These tables show clearly that, in general, the
percentage of tenancy is high, in the state of Wis-
consin, in the districts which have been longest
settled and where land values are relatively high.
And yet, there are here, as in the other compari-
sons, many exceptions to the general rule; and
this makes it necessary to emphasize the fact that
many forces are operating together in bringing
about the condition with respect to landownership
and tenancy.
Section III. Landownership and tenancy
among the negroes. — In the southern states where
the percentage of tenancy is high, in comparison
250
TENANCY AND L AND O WN ERS H I P
with that of the northern states, the value of land
is relatively low. Other factors have evidently
had more to do in determining the situation here
than the influence of land values. The average
value of farms is $4,354 in the North Central di-
vision, while it is only $1,628 in the South Cen-
tral division, whereas the percentage of tenancy is
48.6 in the latter and only 27.9 in the former divi-
sion. The negro seems to be an important factor
in the problem of tenancy and landownership in
the southern states. In the following table is
given the percentage of all farms, which are occu-
pied by tenants; the percentage of all farms op-
erated by white farmers, which are occupied by
tenants; the percentage of all farms operated by
negro farmers, which are operated by tenants ; and
the average value per farm of all farm land and
improvements :
TABLE 14. TENANCY AND LAND VALUES IN THE SOUTH-
ERN STATES.1
Divisions
and
States
Percentage
of all
Farms
which are
operated
by Tenants
Percentage
of Farms
operated
by White
Farmers,
which are
rented
Percentage
of Farms
operated
by Negro
Farmers,
which are
rented
Average
value
of all
Farms
South Central..
48.6
37-8
77-4
ll,250
South Atlantic .
44-3
33-1
70.2
1,254
Georgia
en Q
44.8
86.0
8l5
oy.y
57.7
£ft'<~>
37. Q
84.9
603
Mississippi
O/ • '
62.4
O/ ;7
72. Q
83.6
688
Louisiana. .
WW««f
57.0
O '^
32.1
83.8
1,217
1 Twelfth Census, Vol. V, Tables 5, 6 and 7.
251
AGRICULTURAL ECONOMICS
From the above table it will be seen that the
situation in the South can be explained, in part
at least, in terms of the negro population. It is
relatively a short time since the freedmen started
with nothing, and the fact that a small percentage
of them, even, now own the land which they culti-
vate is in itself an encouraging fact. In the South
Central division 26.8 per cent, of all farms are
operated by negroes, and while the percentage of
tenancy for all farmers in this division is 48.6
that for the negro farmers is 78.5. In Alabama,
where 42. i per cent, of the farms are operated by
negroes, the percentage of tenancy for all farms
was 57.7, while that among negro farmers was
84.9 and that among white farmers was 37.9. In
Mississippi, where 62.4 per cent, of all farms
were operated by tenants, 83.6 of the negro farm-
ers were tenants, while only 32.9 per cent, of the
white farmers were tenants.
In Adams county, Mississippi, where 92.4 of
all farmers are negroes, the percentage of tenancy
is 87.9, whereas in Hancock county, where 91.7
of all farmers are whites, only 8.5 per cent, of the
farms are operated by tenants. Again, Issaquena
county, where 95.7 per cent, of all farmers are
negroes, 90.3 of all farms are operated by tenants.
This is sufficient to illustrate the general principle
that where the negro farmers are very numerous
the percentage of tenancy runs higher than where
the white population dominates. Both the white
252
TENANCY AND L AN D O WN ERSHI P
and the negro farmers are more commonly tenants
where the negroes are most numerous. In the
states containing the black belt the percentage
of tenancy among the negroes is relatively high.
The present situation with respect to tenancy
and landownership among the negro farmers, is
described in a recent census bulletin in the follow-
ing terms :* "Present conditions in the farm life
of the southern negro can be understood only by
bringing to mind the historic development. Be-
fore the war the southern plantation consisted of
the owner, from 20 to 200 slaves, and several
hundred acres of land. . . . One of the most strik-
ing features in connection with plantations such
as these is their large area. . . . Between 1850 and
1860 the average size of the plantations in the
cotton growing South increased from 427 to 431
acres; leaving out Texas, whose ranches in 1850
were not really farms, the increase was from 353
to 408 acres, or 15.7 per cent/'
"The situation of the farming population in
the black belt to-day shows four well defined eco-
nomic classes. There is the farm laborer who
receives for his work, at the end of the year, cer-
tain fixed wages, varying from $30 to $60.
Some receive also a house, perhaps with a garden
spot, and have their supplies of food and clothing
advanced ; in such cases the supplies must be paid
1 Negroes in the United States, Bulletin 8, Bureau of the
Census, pp. 78 to 82.
253
AGRICULTURAL ECONOMICS
for, with interest, out of the money wages. An-
other class of laborers are contract hands — i. e.,
laborers paid by the month or year and fed and
supplied by the landowner. Such laborers receive
from 30 to 40 cents per day during the working
season ; they .are usually unmarried persons, many
being women, and when they marry they become
metayers, or occasionally, renters.
"The cropper is entirely without capital, even
in the limited sense of food or money to keep him
from seed time to harvest; all he furnishes is
labor, while the landowner furnishes house, land,
stock, tools, and seed. At the end of the year
the cropper gets a stipulated portion of the crop ;
out of his share, however, comes payment, with
interest, for food and clothing advanced him dur-
ing the year. Thus we have a laborer without
capital and without wages, and an employer
whose capital consists largely of food and other
supplies advanced to laborers — an arrangement
unsatisfactory to both parties, and in vogue usu-
ally on poor land with hard pressed owners.
"Above the cropper comes the share tenant who
works the land on his own responsibility, paying
rent in cotton, and supported by the crop lien sys-
tem. The great mass of the negro population is
found in this class. After the war this plan at-
tracted the freedmen on account of its larger
freedom and its possibility for making a surplus.
If the rent fixed was reasonable, this was an incen-
254
TENANCY AND LANDOWNERS HIP
tive to the tenant to strive; on the other hand,
if the rent was too high or if the land deteriorated,
the result was to discourage and to check the
efforts of the tenant.
"The renter for a fixed money rental belongs in
the highest of the emerging classes. The advan-
tages possessed by this class are their freedom to
choose their crops and the increased responsibility
which comes through having money transactions.
While some of the renters differ little in condition
from the metayers, yet on the whole, they are a
more intelligent and responsible class and are the
ones who eventually become landowners."
As to the distribution of the landowning negro
farmers and the conditions which have been con-
ducive to the acquiring of landownership on the
part of the freedmen the following may be quoted
from the same source as the above : "In the states
along the northern border of the South, .... the
per cent, of owned farms among negro farmers is
comparatively high, varying from 40.5 in Dela-
ware to 72 per cent, in West Virginia. In
Georgia, Alabama, Mississippi, and Louisiana the
percentage is very low, ranging from 13.7 per
cent, in Georgia; to 16.3 per cent, in Mississippi;
in South Carolina the percentage is somewhat
higher (22.2) but is still below the average for
the country. These five states are in the heart of
the South; they comprise the greater part of the
black belt ; in each of them negroes form between
255
AGRICULTURAL ECONOMICS
45 and 60 per cent, of the total population, and
negro farmers between 35 and 60 per cent, of all
farmers. Collectively they contain almost one-
half (47.5) of the total negro population of the
United States."
"In states where negroes are relatively less nu-
merous the percentage of ownership is higher.
This suggests the inference that where the negroes
are massed, tenancy is the prevailing form of farm
tenure; but it is not so clear that we have here a
direct relation of cause and effect. These states
are all cotton growing states. The massing of
negroes, tenant farming and cotton culture appear
to be correlated facts, the first resulting from the
last, and the second and the last acting as recipro-
cal cause and effect to the crop lien system. In
Florida, which has a percentage of negro popula-
tion (43.7) almost as high as that of Georgia
(46.7) the percentage of ownership among col-
ored farmers is high (48.4) because of the greater
ease of acquiring fertile land in a newly settled
state. For the same reason, in Texas, where nine-
tenths of the negro farmers make cotton their
principal crop, the percentage of ownership (30.7)
though not high, is above the average for the
country."
In South Carolina the government lands were
sold on favorable terms. In North Carolina
there was a thrifty free negro element. Virginia
"had developed slavery furthest and brought a
256
TENANCY AND LAND OWN ERSHI P
larger body of negroes to a considerable degree of
culture and civilization before 1861 than had any
other state. It also bore the main brunt of the
war, and the breaking up of estates gave the
negroes a chance to buy." Hence it will be seen
that such considerations as government lands,
efficiency of the farmers, etc., are important fac-
tors in determining the percentage of tenancy
among the negroes as well as among the white
farmers.
Section IV. The Ownership of rented farms.
— The ownership of these rented farms is not con-
centrated in the hands of a few wealthy persons as
is the case in England, but is widely distributed.
In collecting the data for the Census of 1900, an
attempt was made to ascertain the names and resi-
dence of the owners of rented farms. As a result
of this inquiry, the residence of the owners of
95.6 per cent, of all farms in the United States
(exclusive of Alaska and Hawaii) were reported.
"Of the 1,934,346 farms in the United States
for which the names and post-office addresses of
the owners were reported, the owners of 1,523,-
863, or 78.8 per cent, resided in the same county
in which their farms were located; 307,656, or
15.9 per cent., in the same state but not in the
same county; 102,827, or 5.3 per cent., outside of
the state; [and 1,097, or -OS1 Per cent> in foreign
countries] . Many residing in the same state, but
17 257
AGRICULTURAL ECONOMICS
not in the same county, had homes very near
their rented farms. This was notably the case
with farms located near county lines. Such
owners can hardly be classed as non-residents,
and the very small per cent, of rented farms
owned by non-resident landlords would have been
still further reduced if it had been practicable to
exclude such owners.
"The Western division had the smallest pro-
portion of rented farms whose owners resided in
the county where their rented farms were located.
.... The South Central and South Atlantic divi-
sions had the largest proportion of owners resid-
ing in the county where their rented farms were
located. . . . The North Central division had the
largest, and the Western the next largest, propor-
tion of rented farms with owners residing outside
of the state."1
Eighty per cent, of the owners of rented farms
in the United States owned but one rented farm
each, and fifty-two per cent of the rented farms
were owned by persons who owned but one rented
farm. The situation in this regard is made clear
by the following tables, which show the per cent,
of the number of rented farms and of the number
of owners of rented farms classified by the number
of farms owned by one person :2
twelfth Census of the United States, 1900, Vol. V, p.
Ixxxvii.
2 Ibid., p. Ixxxviii.
258
TENANCY AND L AND O W N ER S H I P
PER CENT. OF THE NUMBER OF RENTED FARMS CLASSIFIED
BY NUMBER OF FARMS OWNED BY ONE PERSON
Geographic 3 ajld 5 a,nd I0
nSBrtass. *• *a- ;l: ;
The United States 52.0 14.8 n.6 9.7 6.0 5.9
North Atlantic...
82.0
9
•7
3
.6
2
.2
i.
0
i
•5
North Central
73-7
13
•7
6
•9
3
•7
I.
2
0
.8
South Atlantic . . .
39-3
17
•4
16
.1
14
•3
7-
8
S
.1
South Central
35-8
15
•4
14
•5
13
•4
9-
7
ii
.2
Western
76.6
10
.0
c
.7
7
.7
2.
7
2
.1
Alaska and Hawaii
j\j*\j
91.7
5
.0
O
3
• O
•3
O
• /
O
Foreign Countries
63.7
8
•7
7
• 7
4
•3
7-
7
7
•9
PERCENTAGE OF THE NUMBER OF OWNERS OF RENTED FARMS
CLASSIFIED BY NUMBER OF FARMS OWNED
BY ONE PERSON
3 and 5 and 10 and 20
d d d Farma
The United States 80.0 11.4 5.4 2.3 0.7 0.2
North Atlantic...
92.8
5-5
1-3
0.3
0 I
O.O
North Central....
88.4
8.2
2.6
0.7
O.I
0.0
South Atlantic . . .
70.4
15-5
8.6
4-1
i.i
0.3
South Central ....
70-3
15-1
8.6
3-9
i.S
0.6
Western
01. 1
c.o
I.O
0.8
0.2
O.I
Alaska and Hawaii
27 x * x
96.5
O *:?
2.6
* *:7
0.9
Foreign Countries
88.6
6.1
3-0
I.O
0.9
0.4
It will be noted that the ownership of rented
farms is more concentrated in the southern states
than in other parts of the United States. This is
explained in the census report as follows : "Orig-
inally, great areas of land in the South were held
in large plantations and operated by slave labor.
After emancipation that form of labor was super-
259
AGRICULTURAL ECONOMICS
seded by some form of contract leasehold, by
which the former slaves or wage laborers were
given charge of .... small tracts of land, upon
which they were to raise crops."
Thus we find that while more than a third of
the farmers of the United States hire the land
which they cultivate, these hired farms are so gen-
erally held by men who live near by, that the rela-
tion of landlord and tenant is generally a personal
one, and the problems of absenteeism and of con-
centration of ownership which have been so per-
plexing in certain other countries have as yet been
of little significance in the United States. Never-
theless the statistics for the last twenty years show
a significant increase in tenancy, and it is to be
expected that the men who have made fortunes in
the great industries of the cities will eventually
invest some of their savings in landed estates, and
in this way bring forward problems from which
we have hitherto been comparatively free.
Section V . The relations between landlords
and tenants in the United States. — Thirty-five and
three-tenths per cent, of all the farms in the
United States, exclusive of Alaska and the insular
possessions, were occupied by tenant farmers in
1900. In all 2,024,964 farms were operated by
this class of farmers. Of these, 1,273,299 or 62.8
per cent, were operated by share tenants and 751,-
665 or 37.2 per cent, by cash tenants. A farm
was said to be operated by a cash tenant if culti-
260
TENANCY AND L AND O WN ERS H I P
vated by a tenant who paid "a fixed rental in
money, or a stated amount of labor or farm com-
modities/' and by a share tenant if operated by a
tenant who paid "for its use a share (as one-third,
or one-half or other proportion) of crops raised."1
Share tenancy. — Share tenancy is preferred by
many tenant farmers because the risk is less. The
thought of paying a fixed rent whether the crop
is large or small and whether the prices are high
or low is not attractive to the majority. And
again, many of the tenants do not possess suf-
ficient wealth to enable them to own all of the
stock necessary to operate a farm on a cash basis.
The landlords who live in close proximity to
the land which they let, and who have time to
devote to its supervision, usually prefer a share of
the crop because they find it more profitable to
them. The share system is more profitable to
the landlords largely because of the close super-
vision which they give to the farms let on shares.
Many of the tenants are young and inexperienced,
and are willing to leave the general management
of the farm to the landlord, who is very likely to
be an elderly farmer, and the fact that he has a
farm to let suggests that he has been a successful
farmer. All tenants are not so willing to be di-
rected by their landlords, but if they pay a share
of the products as rent the landlord's right to give
advice is apparent, whereas, if cash is paid there
1 Twelfth Census, Vol. V, p. 759.
261
AGRICULTURAL ECONOMICS
seems to be no good reason why the tenant should
not do as he likes. The principle being estab-
lished that the landlord has a right to direct more
or less definitely the operations of the farm, as
in the case o'f share tenancy, the landlord has little
difficulty in so directing the management of the
farm as to preserve the fertility of the land. The
choice of crops, and the organization of the field-
system are subjects which the share tenant is usu-
ally willing to leave to the landlord, and in many
cases the landlord controls the field operations in
the minutest detail. For example, the depth to
which land is to be plowed, the time of sowing,
planting, harvesting, etc. ; the number of times a
field of Indian corn should be cultivated, etc., are
details to which the landlord often gives his atten-
tion under this system of letting land. The land-
lord is willing to exert himself for these purposes
because his profits are increased by such activity.
Another reason often given by landlords for
preferring a share of the crop to a cash rent, is
that, in a country where most of the tenants have
little wealth, a share of the product proves more
profitable to the landlord, in the long run, because
he shares the benefit of an extra large crop and
gets something out of the smallest one, whereas in
case he is receiving a fixed rent, the tenant gets
all the advantage of an extra large crop, but in
case of a crop failure the tenant is often unable
to pay the fixed rent and the landlord has to stand
262
TENANCY AND L AND O W N ER S H I P
the losses when the crops are short without get-
ting the advantage of the extra large crops.
Where the tenants are men of considerable wealth
this is a matter of less importance.
Again, it is said that the collection of the rent is
an easier matter where a share of the crop is given.
"Farmers will give a fifty cent chicken for a
church dinner when they would not think of giv-
ing as much as twenty-five cents in cash," says an
Iowa farmer who has tried both systems, and he
continues, "They will give the landlord his share
of the farm products much more cheerfully than
pay him cash."
The share rent adjusts itself to changes in the
value of the products without any change in the
contract. This is looked upon by some farmers
and landlords as a reason of first importance for
adhering to the share system.
Participation of the landlord in the manage-
ment of the farm, is the chief reason for the suc-
cess of share tenancy in this country. This point
has been emphasized over and over again in the
communications received from men who are in a
position to know. Share tenancy is, as a rule,
more profitable to the landlord only when the farm
is under his immediate supervision. If the man-
agement must be left entirely to the tenant farmer
the cash system is usually preferable to the land-
lord. If the tenant is a capable manager, so that
the supervision of the landlord adds nothing to
263
AGRICULTURAL ECONOMICS
the product, then it is better for the tenant to pay
a fixed rent and secure the extra profits due to his
superior ability.
The methods of letting land for a share of the
products are so very numerous that to describe
all the forms of share tenancy is practically im-
possible. In this connection we shall attempt
no more, therefore, than to outline briefly some of
the methods in common use in the North Central
states.
Perhaps the simplest form of share tenancy
arises where one farmer has more land than he
cares to cultivate while some of his neighbors have
less than they wish to cultivate. This leads to a
form of share tenancy in which persons living on
their own farms and in their own houses simply
enter the fields of the landlord to grow a crop of
grain or to make hay on shares. The usual
method is for the tenants to furnish seed, teams,
tools and machinery. In some cases the bill for
binding twine and the threshing bill are paid en-
tirely by the tenant and sometimes these bills are
divided between landlord and tenant in the same
proportion in which the grain is shared. The
landlord's share of the crop varies in different
parts of the country from one-third to one-half of
the grain, to be put into the landlord's bin or
delivered at the market. When meadows are let
in this way one-half or more of the hay is deliv-
ered to the landlord in the mow or in the stack.
264
TENANCY AND L AND O WN ER S H I P
Under this system, the landlord has absolute con-
trol of the kinds of crops to be grown and of the
system of crop rotation. The land is usually let
for but one year. A serious objection to this
system of letting land is the fact that a large share
of the product is taken from the land and sold or
fed out on another man's land.
The share system becomes somewhat more com-
plex when the landlord furnishes a house and barn
and garden-patch for the tenant. If the tenant
desires to keep but little live stock, let us say a
team, a cow, a few hogs, and some poultry, his
living upon the place will not make a great differ-
ence in the system ; but if he desires to keep suffi-
cient live stock to consume his share of the crop,
and especially if he wishes to keep cattle, the sys-
tem becomes more complicated. The tenant's de-
mand for pasture land is often met by leasing to
him for a cash rent, a certain amount of land to
be used for grazing purposes. The feeding of
the crop on the farm is an important advantage of
this method of letting land. In tenancies of this
description, the contracts are most commonly
drawn for but one year with the understanding
that a satisfactory tenant may renew his contract
indefinitely.1
In the United States, tenant farmers are largely
young men, however, who do not as a class pos-
sess a great amount of wealth which can be in-
1 See Appendix A at the end of this chapter.
265
AGRICULTURAL ECONOMICS
vested in live stock. In the dairy districts, espe-
cially, it is common, therefore, for the landlord
to furnish a part of the live stock. In some in-
stances the landlord furnishes a given number of
cows, and other kinds of live stock, while the
tenant furnishes the horses (the number to be
kept being limited by the contract), the tools, ma-
chinery, etc., necessary to operate the farm.1 In
other instances the "stock and land" lease is so
arranged that the landlord and the tenant each
owns a half interest in all of the live stock, tools,
machinery, etc., necessary to operate the farm.
The tools and machinery are sometimes furnished
by the tenant, and in other cases each party owns
a half interest in them, in fact there exists the
greatest variety of arrangements between land-
lords and tenants.2 The management of the
farming operations is usually under the close
supervision of the landlord. The product is usu-
ally shared equally by landlord and tenant. This
form of tenancy is essentially a partnership in
which the labor is balanced against the land.
The landlords are usually unwilling to enter
into an agreement to let land on this plan for more
than one year, unless they know the tenant. On
the other hand, it is well understood by both
parties that it would be unprofitable to enter into a
partnership of this kind for but one year. It is
1 See Appendix B at the end of this chapter.
2 See Appendix C at the end of this chapter.
266
TENANCY AND L AN D O WN ERSHI P
common, therefore, where the landlord and the
tenant are acquainted with each other, for ten-
ancies of this kind to be entered upon for three, or
five year periods, with the understanding that the
tenant is to remain for a much longer period if
satisfactory to both parties.
Where land is let for a share of the crop there
are so many details which must be agreed upon by
both parties, that troublesome differences of opin-
ion are likely to arise. It is quite generally
agreed among those concerned, however, that
where difficulties arise between landlords and ten-
ants, it is usually due to the fact that one or both
of the parties is too grasping. A grasping land-
lord drives the tenant to use dishonest means in
order to make both ends meet. The landlord
who is willing to give his tenants a fair chance,
and then insists on good farming and honest busi-
ness, and discharges every tenant at once who is
very inefficient and not strictly honest, will have
little trouble with his tenants.
Time and again, landlords have said to the
writer that if both parties would observe the
golden rule there would be no occasion for trouble
between landlords and tenants. There is occa-
sion, very often, for the use of the golden rule in
the relations between the share tenant and his
landlord. This is true because of the close rela-
tions into which they are thrown in the manage-
ment of the farm. The landlord may think that a
267
AGRICULTURAL ECONOMICS
certain field of Indian corn should be cultivated
one time more than the tenant cares to cultivate
it. The tenant may figure that his share of the
additions to the crop due to the extra cultivation,
will not remunerate him for the extra effort. In
a case of this kind, however, the fair minded
tenant should be willing to give as many cultiva-
tions to the crop as he would if he owned the land,
and this is all a fair minded landlord should ask.
Cash tenancy.1 — Cash tenancy is usually con-
sidered by economists as a step in advance of share
tenancy. "This method of putting out lands to
farm," says Turgot,2 a French writer, whose
work was published in 1770, "is the most advan-
tageous of all, both to the proprietors and to the
cultivators; it establishes itself everywhere where
there are rich cultivators in a position to make the
advances of the cultivation; and as rich cultiva-
tors can provide the land with much more labor
and manure there results from it a prodigious in-
crease in the produce and revenue of estates. In
Picardy, Normandy, the neighborhood of Paris,
and in most of the provinces of the North of
France, the lands are cultivated by cash tenants.
In the provinces of the South they are cultivated
by share tenants; the provinces of the North of
1 See Appendix D at the end of this chapter for copy of a
Wisconsin cash lease.
a Reflections on the Formation and the Distribution of
Riches (Economic Classics, edited by W. J. Ashley), p. 24.
2,68
TENANCY AND L AN D O WN ER SH I P
France are likewise incomparably richer and bet-
ter cultivated than those of the South."
While only a little more than a third of the
tenant farmers of the United States pay a cash
rent, this form of tenancy has been increasing
more rapidly in recent years than has share ten-
ancy. In 1880, 31.1 per cent, of farms operated
by tenants were operated by cash tenants ; in 1890,
35.1 per cent. ; and in 1900, 37.2 of all such farms
were let for a cash rent.
Landlords who live too far from their land, or
are too busy, to give it the needed supervision for
making share tenancy a success, usually prefer
to let their farms for a cash rent. It is claimed by
many landlords that the tenants devote much
greater care to their farming under the cash sys-
tem of letting land. The feeling that every extra
bushel of grain and every extra fork of hay is all
his own will naturally make the tenant more
painstaking than he would be if only a part of
these products were to be added to his own
profits.
This desire to obtain as large a return as pos-
sible is, at the same time, the greatest source of
trouble in adjusting the relations between land-
lords and tenants. The tenant who has a con-
tract for but one year is inclined to look too
strictly to securing as large a profit as possible
for that one year without any regard to the future.
As a result of this short-sighted economy, too
269
AGRICULTURAL ECONOMICS
large a proportion of the land is often devoted to
exhausting crops and the larger profit of the one
year is obtained at the expense of the profits of
future years. The cash tenant sacrifices the long-
time-average returns in order that his net profit
for the one year may be increased.
By proper regulations with respect to the pro-
portion of the land which shall be devoted to cer-
tain crops, this difficulty can be more or less suc-
cessfully overcome, but such regulations are al-
ways annoying to the tenants. The granting of
a lease for several years is thought by many to be
all that is necessary to meet the difficulties arising
from the short-sightedness of the tenants, but
many landlords object to making a contract for a
period of any great length. With all the diffi-
culties which may beset this system, cash tenancy
is preferable to share tenancy wherever the man-
agement of the farm is to be left almost entirely
to the tenant, and where agriculture is extensive
and where the use of commercial fertilizers is un-
known the letting of land for cash is a fairly suc-
cessful method.
Where intensive culture and the use of com-
mercial fertilizers have become necessary the ten-
ant problem takes on a more acute form. If we
would study to advantage the problems which
arise under these conditions, we must turn our
attention to an older country than our own, where
the tenant problem has been a more serious one,
270
TENANCY AND L AN D O W N ERS H I P
and whence we may learn from the experience of
others the remedies which are fast becoming
necessary to good relations between landlords and
tenants in this country. The further discussion
of the tenant problem will be deferred, therefore,
until the next chapter in which the experience of
the English in adjusting the relations between
landlords and tenants will be taken up.
APPENDIXES TO CHAPTER XII
APPENDIX A
LEASE USED IN LETTING THE FARMS OF THE ESTATE OF
HIRAM SIBLEY, F. A. WARNER,, MANAGER.
There are more than one hundred leased farms belonging
to the Estate of Hiram Sibley, Sibley, Illinois. Mr. F. A.
Warner has the reputation of being an unusually successful
manager of landed estates, and we are very glad, for this
reason, to be able, through his courtesy, to include a copy
of the lease which he uses.
Farm No
THIS INDENTURE, Made and entered into this first day
of March, A. D., 190. ., between the ex-
ecutors of the Estate of Hiram Sibley,
parties of the first part, and
party of the
second part : Witnesseth, That the par-
ties of the first part have this day de-
mised, leased and to farm let, and by
these presents do demise, lease and to
farm let to the party of the second part
the following described land, situated in
the County of Ford, and State of Illinois :
'I. Description The quarter of section in
of land. Town North Range cast
of the Third Principal Meridian.
271
AGRICULTURAL ECONOMICS
2. Period of To Have and to Hold the same to said
lease. party of the second part for one year,
commencing on the first day of March,
190. ., for and during and until the first
day of March, 190. .,
3. Rent share And the party of the second part cove-
of crops. nants with the parties of the first part to
pay as rent for said premises two-fifths
(2-5) part of the corn, two-fifths (2-5)
part of the oats and other small grain and
one-half (%) part of all kinds of straw
raised or grown upon said premises.
4. Labor, etc., The said party of the second part
by tenant. agrees to furnish all necessary teams,
implements, seed and labor to properly
prepare and cultivate said land, and all
crops thereon, in extra good and farmer-
like manner; to put in said crops in
good order as early as the season will
admit, to harvest said crops as soon as
they are sufficiently matured, and to
promptly deliver the rent share thereof
to said party of the first part in such man-
ner and at such times as hereinafter spec-
ified.
5. Acreage and The party of the second part hereby
kind of covenants to farm acres in corn,
crops. acres in oats, acres in pas-
ture and lots, and further agrees to sow
acres of the oats land in red clover,
each party to furnish one-half (%) the
clover seed.
6. Planting and Corn to be planted in check rows on
cultivation land to be prepared as party of the first
of corn. part may direct, and to be cultivated at
least three times, twice the way the corn
was planted and once crosswise, during
proper season.
272
TENANCY AND LAND OWN ER SHI P
Manner and The said party of the second part here-
time of deliv- by covenants and agrees that he will
ery of rent deliver the rent share of the corn, as
corn. stated above, to said party of the first
part, in crib at Sibley Station, Ford
County, Illinois, clean husked and in
good condition, and before any other
share, part or portion of said crop shall
have been gathered, and to complete de-
livery of said rent portion before the first
day of January, 190.., and to remove
from the fields the remainder of said corn
crop before the first day of February,
190. ., and that he, the said party of the
second part, shall divide said crop of
corn by the rows as standing in the field
in a just, fair and equitable manner.
Sixteen (16) rows for rent share and
twenty-four (24) rows for tenant's share.
The counting and laying out of the rent
rows and the tenant's rows shall be done
before the fifteenth day of October, 190. .,
and the tenant's rows shall be marked by
cutting out four (4) or more hills of
each row on one end of the tenant's
share.
Harvesting The said party of the second part
and delivery agrees to properly stack on said premises
of seed small all small grain as soon as sufficiently dry
grain, straw. after being cut, and at his own expense
to thresh the same before the first day of
October, 190. ., and to divide said oats
at the threshing machine, using tallies
furnished by party of the first part, and
to deliver the rent portion to said party
of the first part, at Sibley, Illinois, and to
properly stack the rent share of the straw
as it comes from the threshing machine.
Also to stack in good manner on said
18 273
AGRICULTURAL ECONOMICS
premises, as directed, the rent portion of
hay grown thereon.
p. Ditches to be All open ditches to be cleaned out by
cleaned. the party of the second part, with team
and scraper, when directed by said first
party. All willows or other trees or
shrubs growing in open ditches to be dug
out by the party of the second part. All
tile outlets to be kept open and in repair
by said second party.
JO. Weeds in The said party of the second part to
highways to mow all weeds on highways adjoining
be mowed. said premises, to the center of the trav-
eled road, during the first ten days of the
month of September, 190. ., such mowing
to be done upon that side of said high-
ways as adjoins said land.
11. First party Said party of the first part also reserves
may plow the privilege of plowing the stubble or
stubble stalk ground on said premises when said
ground. party of the second part may have secured
the crops or grain grown thereon, and
may enter on said premises at any time
for purposes of improvement, or for any
12. Right of reasonable purpose which said party of
entry re- the first part may deem proper ; and un-
served. less otherwise agreed in a written con-
tract, the use of the stalk and stubble
ground shall belong to and be vested in
the said first parties, or be at their dis-
posal as they may deem most advan-
tageous to their interests.
13. Meadows And further it is agreed, that no mead-
and pas- ows or pastures shall be plowed or
tures not to broken up during the term of this lease
be plowed. without the written consent of said first
parties.
The said party of the second part
agrees to keep said premises free from
274
TENANCY AND L ANDO W N ERSHI P
14. Burrs and burrs, Canada thistles, bull nettles, bur-
weeds to be dock and other noxious weeds by pulling
destroyed, out and destroying all such weeds before
hedges, etc., the 20th day of August, 190. ., to prop-
kept clear, erly cut or trim during August and Sep-
manure to tember the hedges belonging to said land,
be spread, and pile and burn1 all brush resulting
etc., deliv- therefrom, to keep clear of weeds and
ery of pos- trash all hedges, turn rows and ditches
session on the said land; to spread when and
without where directed all manure that may
notice. accumulate on said premises ; to keep in
good repair all fences and outbuildings
on said premises ; to properly care for all
hedges, trees and shrubbery of all kinds ;
and to deliver the free and full posses-
sion of said premises (with fences,
buildings and other appurtenances there-
with belonging, in as good condition as
when received, except the natural wear
from careful usage and the elements) to
said parties of the first part, their succes-
sors or assigns, on the first day of March,
A. D., 190. ., without any further demand
or notice.
75. Not to sub- It is especially covenanted and agreed
let. that the said party of the second part
shall not sub-let said premises or any
part thereof, without the written consent
of the parties of the first part. The
16. Stock con- party of the second part also covenants
fined. that no live stock of any character shall
be permitted to run at large on said
premises, nor to be turned into said
premises, except within a properly en-
closed pasture, and said party of the sec-
ond part further agrees to pay in cash,
on or before September 1st, 190. ., to
said parties of the first part the sum of
275
AGRICULTURAL ECONOMICS
17. Pasture four dollars ($4.00) per acre for in-
rent. closed pasture and for all parts of said
premises from which the stipulated share
rent is not received, and land sown to
clover and remaining in clover second
year the sum of two and fifty one-hun-
dredths dollars ($2.50) per acre for first
year, and said land to be used for hay
and seed only. Each succeeding year the
rent to be same as pasture land.
All cash payments of rent to draw
interest at the rate of seven per cent, per
annum after the date when due until
paid.
18. Material to All materials for improvements of any
be hauled. kind to be hauled at the expense of sec-
ond party, and no claim for labor or for
materials will be recognized by first
parties, excepting as agreed in writing to
be endorsed on this lease.
It is understood and agreed that no
buildings or sheds of any kind shall be
attached to buildings belonging to parties
of the first part without the consent of
said first parties.
19. Lien for The party of the second part covenants
rent. and agrees that the parties of the first
part shall have a first lien and claim on
all the products of said land, during said
term, to secure the payment of said rent,
and the taking or giving of any "notes or
other security for said rent shall in no
wise affect said lien, but shall be taken
and considered as additional security to
said landlord's lien.
And it is further understood and agreed
that if party of the second part shall
abandon said premises, or shall fail from
any cause to comply with all his agree-
276
TENANCY AND L AN D O W N ER SH I P
20. Premises to ments herein, the said parties of the first
revert to part may at any time, when such aban-
first party donment or failure occurs, take actual
in case of possession of said premises and buildings
abandon- thereon, which said party of the second
went. part agrees to surrender, and said first
parties- may employ other persons to tend
said crop and harvest or gather the same,
and may remove and sell the same at pub-
lic or private sale and apply the proceeds
thereof to the expense and cost of carry-
ing out the provisions of this lease and
the payment of said rent hereby reserved,
and all advances, and if the proceeds of
the crops as aforesaid shall not be suffi-
cient to repay said first parties all the
money so expended, the said party of the
second part agrees to refund to said
parties of the first part such deficiency on
demand out of any other property be-
longing to the said second party.
21. First party And it is further expressly agreed be-
way termi- tween the parties hereto, that if any de-
note lease fault shall be made of any of the coven-
fey default. ants and agreements herein contained to
be kept by party of the second part, this
lease shall at the election of the parties of
the first part be null and void.
22. Superin- And it is further understood and agreed
tendence of that all the farm work on said premises
farm work. during said term shall be under the direc-
tion and supervision of the parties of the
first part, their agent or superintendent.
The cost of all seed or grain for feed
furnished by first parties is to be consid-
ered as advances, and added to the rent
herein reserved.
All the foregoing covenants and agree-
277
AGRICULTURAL ECONOMICS
23. Considers- ments on the part of said party of the
tion. second part, form the consideration of
this lease, and together constitute the rent
herein reserved.
Witness the hands and seals of the
parties aforesaid the day and year first
above written.
APPENDIX B.
COVENANTS FOUND IN WISCONSIN LEASES WHERE LIVE
STOCK is LET WITH THE LAND.
After describing the land, giving the time of entry which
is sometimes October i, sometimes i/iarch i, and sometimes
April i, and the term for which the lease is drawn, which
varies from one to five years, the following covenants are
inserted :
The landlord agrees to furnish for the use of said farm
during said lease, from twenty-five to thirty cows, one bu>l,
eight head of brood sows, one boar, all grass seed that is
required and one-half of all feed for said stock.
The tenant agrees to do all the work required to operate
said farm in a workmanlike manner.
Also to put in such crops as shall be mutually agreed
upon.
Also to haul out and distribute upon said farm, at places
most needed, all manure made thereon, and at such times
and at such places as shall be designated by the landlord.
The tenant agrees also, to work the highway taxes as-
sessed on said farm and property for the year 190. .
The tenant further agrees to furnish the teams and all
farming utensils necessary to work said farm in the best
possible manner. (It is common where the horses thus fur-
nished by the tenant, are fed out of the common stores of
feed, to limit the number of horses that can be kept, and if
the number be increased beyond this limit to charge the
tenant for the feed thus used.)
Also one-half of all tke feed necessary to feed the stock
heretofore described.
278
TENANCY AND LANDOWNERSHIP
Also to milk said cows and to take proper care of all of
said stock.
The milk from said cows is to be delivered free of
charge by said tenant to such creamery or cheese factory as
shall be for the best interest of both parties, and the money
derived therefrom is to be equally divided between the land-
lord and the tenant.
All feed of every description raised on said farm during
the term of this lease is to be fed out upon said farm if it
can be fed profitably, except in case any wheat is raised
thereon, the same to be equally divided after threshing, each
party to have one-half, and the half belonging to the land-
lord is to be stored by the tenant in the granary situated on
said farm.
It is agreed that all grain, feed and repairs necessary
for the use of said farm and stock is to be hauled by the
tenant free of charge.
It is mutually agreed that one-half of the bills for bind-
ing twine and for threshing shall be paid by each party to
this contract.
The tenant is to do all the work in putting up necessary
fences on said farm, the landlord to furnish the materials.
The tenant further agrees to take all necessary steps to
prevent any washouts on said farm, by using proper care in
plowing and to seed such places as are likely to be washed
out.
It is further agreed by and between said parties that all
the hay, corn fodder, straw, and other rough feed raised
upon said farm and not fed out at the expiration of this
compact is to be the property of the landlord.
Also that all grain raised upon said farm that can be
profitably fed to the stock shall be so fed and the surplus,
if any remain at the expiration of this contract, is to be
equally divided between said parties.
Also that the increase from said stock shall be sold at
such time or times as shall be deemed to the best interests of
both parties and the proceeds equally divided.
Also that when stock or grain is sold it is to be deliv-
ered on the market by the tenant.
279
AGRICULTURAL ECONOMICS
It is agreed that the tenant is to have the exclusive use
of one cow. Also one acre of ground for garden purposes.
At the expiration of this contract said tenant agrees to
deliver peaceable possession of said farm together with the
stock described herein to said party of the first part.
In witness whereof, etc.
APPENDIX C
COVENANTS FOUND IN A COMBINED LEASE AND PARTNER-
SHIP USED IN WISCONSIN
This indenture made this day of March,
190. ., between of the city of ,
county of , state of , party of the
first part and of said city, county, and state
party of the second part.
WITNESSETH that , party of the first
part, agrees to rent his farm, etc. [Here follows the de-
scription of the farm which consists of acres of
arable land and acres of pasture land], to
party of the second part.
It is agreed between these contracting parties, that they
are to buy and own all personal property that is needed and
used in conducting operations on this farm and share alike
equally all profits and losses resulting from same.
It is agreed that the said party of the second part is to
perform or pay for the performance of all labor used in
conducting operations on said farm except it be for the re-
pairing or painting of buildings which the party of the first
part must be holden for unless they be minor repairs.
Also that said party of the second part is to build and
keep in good repair all fences on said farm and all material
used for same to be furnished by party of first part at his
own expense.
Also all grass seeds are to be furnished by party of the
first part.
Also that said party of the second part is to work or pay
the road tax, party of the first part is to pay all taxes on
realty, and the taxes on personal property to be paid jointly.
TENANCY AND LANDOWNERSHIP
Also the bill for threshing grain or seeds, for binder
twine, harness repairs, blacksmith work and veterinary hire
to oe paid jointly.
It is agreed also that all ditches forming on the land are
to be properly filled at the proper time by the party of the
second part.
Also that all noxious weeds, including bull thistles to be
cut at the proper time and the weeds of any description on
the highways adjoining the above described land to be cut
to the middle of the road by party of the second part.
Also all flood wood and debris lodging along the banks
of the creek from freshets to be removed by party of the
second part. All brush and debris in the grove on said
farm to be kept gathered up and burned by party of the
second part. All dead trees in said grove to be used by
party of the second part for fire wood, if he wants the
same, also all refuse from buildings and fences not fit for
use again.
Also all brush and weeds of any description, growing in
fence corners on said farm to be kept cut by party of the
second part.
It is further agreed that no stock shall be allowed in the
pastures or meadows while the frost is leaving the ground
or until the ground is fairly settled.
It is also agreed that the party of the first part is to have
the use of teams for his private use at any time he wishes
when they are not in use on the farm, party of the second
part to have the same privilege.
Also that no grain or feed is to be sold off the above
farm without the consent of both parties to this contract.
Also that the said lease of the above described land is to
run from March . .. 190. ., for the term of years,
and at the termination of said lease, should a dissolution
be agreed upon, all personal property to be equally divided
between said parties. [There are various methods used in
dividing the property at the termination of a partnership of
this kind. One method is to have the property appraised
by disinterested parties and then retained by the one or the
other party as the case may be, who pays to the other party
281
AGRICULTURAL ECONOMICS
one-half the appraised value of all such property. Another
method is to put the property up at public sale and divide
the proceeds equally between the contracting parties. Still
another method is to have the tenant divide all of the live
stock of each kind and all of the other personal property
which is held in common, into two lots and then the land-
lord takes his choice of the lots.]
APPENDIX D
A WISCONSIN CASH LEASE
This Indenture, made and entered into this day
of March, 190. ., by and between , of the city
of , county of and state of Wis-
consin, party of the first part and , of the
county and state aforesaid, party of the second part,
Witnesseth : that the said party of the first part, for and
in consideration of the rents, covenants and agreements
hereinafter mentioned, reserved and contained, on the part
and behalf of the party of the second part, their heirs,
executors, administrators and assigns, to be paid, kept and
performed, hath demised and to farm let, and by these
presents doth grant, demise and to farm let, unto the said
party of the second part that certain farm. [Here follows
description of the farm to be let.]
To have and to hold the said demised premises for the
term of three years, said term beginning March I, 190. .,
and ending with the last day of February, 190. . ; then to be
fully completed and ended unless previously terminated ac-
cording to conditions hereinafter mentioned.
Yielding and paying as rent therefor to the said first
party, his heirs, .executors, administrators or assigns, the
sum of Sixteen Hundred Eighty Dollars ($1680.00), accord-
ing to the tenor and effect of six certain promissory notes,
of even date herewith, due and payable as follows :
Number one, for $280.00 due Nov. I5th, 1903
Number two, for $280.00 due Feb. I5th, 1004
Number three, for $280.00 due Nov. I5th, 1004
Number four, for $280.00 due Feb. i5th, 1905
282
TENANCY AND LAND OWN ERSHI P
Number five, for $280.00 due Nov. I5th, 1905
Number six, for $280.00 due Feb. I5th, 1906
It is expressly stipulated and agreed, by and between the
parties hereto, that on or before November I5th, of each
year, during the continuance of this lease, the said second
party, their heirs or assigns, will secure to the said party
of the first part, his heirs or assigns, to the entire satisfac-
tion of the latter, the payment of the above mentioned notes
for the year's rent next succeeding the year in which said
security is given.
The said second party covenants and agrees to cultivate
the plow-land on said farm in a good farmer-like manner;
not to grow any one kind of grain more than two successive
seasons on the same piece of the plow-land without special
permission of the first party; to keep at least 80 acres of
the said demised premises, not including "orchard lot,"
house and barn yard, seeded down to grass for meadow and
pasture; to "fall-plow" all the "stubble land" immediately
after the grain is cut and before the weeds become grown
rank on the same, except in the fall of the year 1904; to
keep all hollows and ravines, on said farm, seeded down to
grass to prevent washing thereof, and in case it should be
discovered that a "wash" has commenced in any of said
hollows or ravines said second party agrees to haul and
place in such "wash" straw, manure, brush or whatever may
be necessary to prevent further washing, and, after plowing
or otherwise covering same with soil, to sow grass seed on
the same, said seed to be furnished by the first party; to
protect, trim and prune orchard and shade trees in a proper
manner and as directed by the first party; to keep fences,
buildings, wells, cisterns, windmill, pumps, tanks, and all
other improvements on said premises in as good repair and
condition as the same are now in, or may be put in, during
said term, all free of charge to lessor except that lessor
agrees to pay for new materials, should any be necessary;
that they will not stable or confine or permit any livestock
within any buildings on said premises not built or intended
to be used for such purposes.
Skould lessor decide to erect any buildings or fences of
283
AGRICULTURAL ECONOMICS
make any improvements on said farm which will be for the
use and benefit of the lessees, during said term, the said
lessees hereby agree to haul all materials and otherwise as-
sist to the extent of their ability; and should lessor, at any
time, have men employed, making improvements on said
premises who do not live in the immediate neighborhood, it
is hereby agreed and understood that they shall be fur-
nished, free of charge, with bed and board by said lessees.
After threshing the grain, said lessees agree to stack the
straw in a proper manner and to have all straw and stalks
which are raised thereon, fed out and converted into manure
on said demised premises, no straw or stalks to be taken off
the farm without special permission from the said lessor;
lessees further agree to haul out and spread on said land,
where most needed, all manure which is sufficiently rotted
for fertilizing purposes.
Lessees further agree to take special pains to keep the
buildings and yards clean and tidy, not allowing straw,
manure or any other litter to be scattered around, thus mak-
ing the premises present a better appearance and reducing
the liability of accident on account of fire.
. If at any time, the parties to this lease decide to seed
down for use as pasture or meadow, any part of said prem-
ises, it is understood and agreed that the first party will
pay for the grass seed decided necessary to do such seeding,
and that the second party will, free of charge, perform the
labor necessary in seeding down said land. In case lessees
desire to break up any sod, either meadow or pasture, on
said farm, which would thereby reduce the number of acres
herein agreed to be kept under sod by said lessees, they
hereby agree to seed down at their own expense for seed
and labor, in a good farmer-like manner, as many acres of
some other part of the plow-land as they have broken up of
sod, and in the same year, all of such breaking and seeding
to be done after obtaining permission of the lessor. The
said lessees further agree to take extra pains to sow good
clean seed on said farm; to keep the land clear of all ob-
noxious weeds and burrs, pulling and digging the same as
required by law. Also, to work out or pay the highway tax
284
TENANCY AND L AND O WN ER S H I P
on said premises, at the proper time each year, free of
charge to lessor and to deliver the overseer's receipt for
same to the first party.
The second party agrees to pay the rent promptly at the
time specified in the above mentioned rent notes ; to deliver
up possession of said premises peaceably and quietly and
in as good repair and condition as the same are now in, or
may be put in, reasonable use and ordinary wear and tear
excepted, at the end of said term.
The first party expressly reserves, for himself or his
agent, the right to enter said premises at any time, to view
the same, to plant trees, erect buildings or fences or to
make any improvements he may see fit, also for the purpose
of plowing or hauling and spreading manure on any part
of the premises, at any time after the grain is cut or the corn
picked in the fall of the last year that the said second party,
their heirs or assigns, put in a crop on said farm.
The first party reserves the right to sell the said demised
premises, or any part thereof at any time in the term of this
lease and the said lease shall terminate and become null
and void on the first day of March next after such sale.
The first party agrees that, in case of such termination of
this lease, he will return to the second party all of the above
mentioned rent notes which become due after said first day
of March last above referred to.
This lease is understood and agreed to be not assign-
able by the said lessees.
In case of failure to perform or fulfill any of the cove-
nants, conditions or agreements of this lease, to be done and
performed by the said lessees, the said lessees will forfeit
all rights under this lease, and the said lessor, his agent or
assigns shall have full authority to re-enter said premises
and oust said lessees, all notice under the statutes or other-
wise being expressly waived; but in case the said lessees
shall faithfully and punctually comply with all the cove-
nants, conditions and agreements herein contained, on their
part, they are to have peaceable and quiet enjoyment of said
premises to the end of said term. Witness our hands, etc.
CHAPTER XIII
THE ADJUSTMENT OF THE RELATIONS BE-
TWEEN LANDLORDS AND TENANTS
IN ENGLAND
So long as a country has an abundant supply of
productive land, and its agriculture is character-
ized by the extensive exploitation of the natural
fertility of the soil, the adjustment of the relations
between landlords and tenants is a comparatively
simple matter. But when some of the elements
of this original fertility have begun to show signs
of exhaustion, or when the increasing demands of
a growing population make it necessary that each
acre of land shall yield a larger product, so that
it becomes necessary to introduce a more intensive
system of culture, involving investments which
cannot be realized upon for several years, then it
is that the tenant problem becomes a serious one.
The same progress which makes intensive
farming necessary, tends also to augment the num-
bers of those who must hire the land which they
cultivate. With the growth of population, com-
petition for the use of land becomes more and
more keen and drives the price of land higher and
higher. This makes it ever more and more diffi-
LANDLORDS AND TENANTS
cult for the succeeding generations of farmers to
acquire the ownership of land. Hence with the
progress of society the tenant problem becomes
more general as well as more difficult to solve.
England is preeminently the land of tenant
farmers. Less than fourteen per cent, of the
farm land of that country is reported as oper-
ated by its owners, and in most cases such land
is operated by hired farmers, or bailiffs as they
are called. About eighty-six per cent, of the
farm land of England is operated by tenants who
pay a fixed rent for its use. Share tenancy is
not practised in England.
It was more than a century ago that the prog-
ress of English industrial society had reached the
stage of development where intensive agriculture
was socially desirable, and also profitable to the
farmers where their relations to the land were so
adjusted as to guarantee to them just returns
upon their investments. The earliest attempts at
improving the agriculture of the country at once
brought forward the tenant problem. In 1649,
Walter Blith wrote r1 "If a tenant be at ever so
great pains or cost for improving of his land, he
doth thereby but occasion a great rack upon him-
self, or else invest his landlord with his cost and
labor gratis, or at best lies at his landlord's mercy
for requital, which occasions a neglect of good
1Thorold Rogers, Work and Wages, pp. 458-459-
287
AGRICULTURAL ECONOMICS
husbandry to his own, the land, the landlord, and
the kingdom's suffering."
For more than a century the rural economists
of England have been trying to solve this problem.
Hence it is in England that the tenant problem
can best be studied in the light of history.
Prior to the introduction of the new agriculture,
which movement became important during the
latter half of the Eighteenth Century, the tenant
farmers of England usually held their lands "at
will," without any written agreements. Under
this tenure, the common law and the customs of
the estates formed the only tie between owners
and tenants, and either party could bring the
tenancy to a close, by giving six months' notice to
the other.1 Towards the close of the Eighteenth
Century, it became a common custom, where land
was held from year to year, to draw up legal
agreements, by which the tenants bound them-
selves "to the fulfillment of certain clauses and
conditions."2 But the most significant move-
ment of this period was that in favor of leases for
a term of years. The rural economists of that
time were quite generally of the opinion that long
leases were necessary wherever the farmers were
expected to make investments in or upon the land,
such as require several years to yield their full
1 Loudon, Encyclopedia of Agriculture, p. 764 ; also, W.
Marshall, Landed Estates, 1806, p. 378.
2H. E. Strickland, Agricultural Survey of the East Rid-
ing of Yorkshire.
LANDLORDS AND TENANTS
return. It was stated in 1799, that the improve-
ments which had taken place in England prior to
that time had been almost entirely due to the cus-
tom of granting twenty-one year leases, and that
where it was uncommon to grant leases for long
periods of years, agriculture remained in a back-
ward condition.1
During the early years of the Nineteenth Cen-
tury the English Board of Agriculture published
a series of surveys which set forth the conditions
of agriculture in every county of the kingdom.
This material, supplemented by the other agricul-
tural writings of the time, makes it possible to
present, in considerable detail, the history of the
attempts to solve the tenant problem in England
by the introduction of long leases.
From these surveys it appears that the greater
part of the tenant farmers of England one hun-
dred years ago held their farms "at will," without
written agreements, or "from year to year" under
written agreements. In either case they might be
thrown out of the possession of their farms on six
months' notice, at the pleasure of the landlord.
But while this was the dominant form of land
tenure throughout the greater part of England,
the use of long-term leases had greatly increased
during the latter part of the Eighteenth Century,
and leases varying in duration from three to
1 Brown, Agricultural Survey of West Riding of York-
shire, p. 30 ; also, Arthur Young, Survey of -Norfolk, p. 47.
19 289
AGRICULTURAL ECONOMICS
twenty-one years were found in every county.
Twenty-one-year leases were much used in the
eastern counties, and leases running from seven to
fourteen years were quite common in the western
and southern counties. The county of Norfolk,
the home of the new agriculture, was preeminently
the land of long leases. Arthur Young wrote of
this county : "The great improvements which
for seventy years past have rendered Norfolk
famous for its husbandry, were effected by means
of twenty-one-year leases, a circumstance which
very fortunately took place on the first attempt to
break up the heaths and warrens in the northwest-
ern part of the county. ... In general it may be
held for sound doctrine in Norfolk, that an estate
can neither be improved, nor even held to its for-
mer state of improvement, without long leases."1
This view was held, also, by that most competent
agricultural writer of the time, William Marshall,2
who wrote as follows on this same subject, in
1795 : "Marling is the principal improvement
of a Norfolk farm, but who would marl on a
seven years' lease? Where much marling is to
be done, fourteen years is too short a term."
In some places, it is true, the old and simple
system of holding land from year to year was
thought to be entirely satisfactory. It was re-
ported that great estates were let in full confidence
1 Survey, p. 47.
2 Rural Economy of Norfolk, Vol. I, p. 68.
290
LANDLORDS AND TENANTS
without leases in the East Riding of Yorkshire,
"where a lease was never asked for, probably
never wished for," because the tenants were
"equally secure" when holding their farms from
year to year.1 In Staffordshire the conditions
were much the same.2 In Derbyshire, the Duke
of Devonshire granted no leases, "but owing to
his fair treatment of tenants" improvements were
carried on extensively ; but the other landlords of
the county were not able to inspire such confi-
dence.3 Arthur Young, who was the champion
of long leases, laid down the general rule, that
upon rich soils where no improvements are nec-
essary, "the want of leases cannot be material ; but
where liming, marling, draining, fencing, etc., are
demanded, the want of a lease will often be the
want of the improvements."4
But while "tenancy at will" or "from year to
year" was quite satisfactory where no improve-
ments were to be made, or where the landlords
were able to win the confidence of their tenants,
the surveyors reported quite generally that the
security of long leases was necessary to induce the
farmers to carry on the needed improvements.
In remarking upon the lack of security to the
investments of tenants in England, at that time,
James Anderson says "an unprejudiced person,
1 Survey, p. 72.
2 Ibid., p. 31-
8 Ibid., p. 35-
*Ibid., Lincolnshire, pp. 57-60.
291
AGRICULTURAL ECONOMICS
who should attentively consider the whole system
of conduct pursued by landed proprietors, and
the ideas that in general prevail in this respect,
would believe that agriculture was an employment
which it was deemed to be a good policy to re-
press above all others/'1
John Tuke, who for many reasons favored
the letting of land from year to year, says in his
report on the North Riding of Yorkshire : "Ex-
perience, nevertheless, teaches us, that under some
landlords, especially those in straitened circum-
stances, .... or where considerable improve-
ments are to be made at the expense of the
tenants, it is more advisable to be under greater
certainty, though attended with greater rent."2
The desirability of increasing the number of
twenty-one-year leases in the West Riding of
Yorkshire was stated very forcibly by Robert
Brown, who believed that without long-term
leases improvements could not be made.3 In
Derbyshire improvements were thought to be
much retarded because the tenants lacked the se-
curity of long term leases.4 In Lincolnshire,
where leases for a term of years were very rare,
it was generally believed that, while improve-
ments had been carried forward fairly well, long-
term leases would result in much greater improve-
1 Agriculture, Vol. 3, p. 92.
8 Survey, p. 55.
8 Ibid., p. 30.
'Ibid., Vol. Ill, p. 638.
292
LANDLORDS AND TENANTS
ment.1 In Leicestershire, the yeomen farmers
were improving their lands, but the tenant
farmers were slow to make improvements owing
to the lack of long-term leases. It was said that
•while in many cases the present landlords could
be trusted by the farmers, the estates might
change hands at any time and that a new lord
usually meant a different ordering of affairs.
The phrase, "New lords, new laws," was current
in Leicestershire.2 In 1784, William Marshall
was of the opinion that, in the midland counties,
it was of little importance whether land was held
under a lease for a term of years, or from year to
year, — such was the confidence of the tenantry in
the landlords. An instance is given of a young
man who held a large farm from year to year, and
who proceeded to improve the land in various
ways. Five years later the following note was
added to the earlier statement: "Unfortunately
for the tenant, in this instance, his farm is now on
sale, and the very expensive improvements which
he has been making, are, probably, in a great
measure sunk."3
It was thought that farmers would be more
enterprising in Shropshire, if more leases were
granted.4 In Worcestershire, it was believed,
both by the landlords and by the tenants,
1 Survey, p. 57.
2 Ibid., p. 341.
8 Rural Economy of the Midland Counties, Vol. II, p. 52.
4 Survey, p. 137.
293
AGRICULTURAL ECONOMICS
that, where improvements were to be made, a
lease for a term of years was necessary.1 John
Priest, the author of the Buckinghamshire Sur-
vey, made a plea for long leases, especially where
improvements were to be made.2 In Cambridge-
shire, where most of the farms were held on yearly
tenures the lack of certainty of tenure was much
felt.3 In general the tendency was for the tenant
farmers who held their farms from year to year,
to adhere to the old customs and to attempt no
new improvements ; for the saying :
He that havocs may sit,
He that improves must flit,
expressed a common belief among the tenant
farmers of that day who held their land from
year to year.4 The farmers and the rural econo-
mists of the time were quite generally agreed that
the adoption of long-term leases throughout the
land was essential to the introduction of the de-
sired improvements in agriculture.5
The long-term lease of one hundred years ago
reached its highest degree of perfection in the
county of Norfolk.6 The two main objects to be
secured by the covenants of the lease were : first,
to guarantee to the tenant the continued posses-
1 Survey, p. 38.
2 Ibid., p. 83.
8 Ibid., p. 38.
* R. E. Prothero, English Farming, p. 58.
'Hunter's Georgicol Essays, (1804), Vol. 6, Essay XXXVI.
'See Appendix to Chapter XIII, for Mafsba-H's description
of the Norfolk fease.
294
LANDLORDS AND TENANTS
sion of the farm for a period sufficiently long to
encourage investments in improvements, espe-
cially such improvements as are made in and upon
the soil by careful tilth and by the addition of
artificial fertilizers, and second, to secure the land-
lord against improper use of the property during
the last few years of the tenancy so that the farm
would be returned to the landlord in good con-
dition. "No department of the management of
an estate gives more uneasiness to both landlord
and tenant," says Marshall, "than do removals,
or exchanges of tenants; and every covenant
which facilitates this unpleasant business is
valuable."1
In the Norfolk leases the greater number of the
covenants which restrict the farmer in his opera-
tions, pertain to the last three years of the ten-
ancy. This was true to a greater or less extent
in the other counties where long term leases were
in use. This method of laying down restrictions
seems to have been based on the belief that the
interest of the tenant would lead him to farm in
accordance with the rules of good husbandry until
the last few years of the tenancy, at which time he
could increase his own profits by exhausting the
soil and leaving the farm in bad condition for the
incoming tenant.
We wish to call especial attention to a cove-
nant given by Marshall as found in the Norfolk
1 Rural Economy of Norfolk, second edition, Vol. I, p. 69.
295
AGRICULTURAL ECONOMICS
leases, which forbids the taking of more than two
grain crops without a whole year's fallow, a crop
of turnips, or "a two years' lay." Writing nine
years later than Marshall (1804), Arthur Young
gives the following clause among "new cove-
nants" in use in the county of Norfolk. The
tenant "shall not sow any of the lands with two
successive crops of corn, grain, pulse, rape or tur-
nips for seed,"1 without the consent of the land-
lord. The rule that two grain crops should not
be grown in succession on the same piece of land
became an established custom in most of the
grain-growing districts of England. This rule
was in harmony with the Norfolk four-course
system of crop rotation. In this four-course sys-
tem, a fallow crop, that is a cultivated crop, usu-
ally a root crop, is followed by a crop of spring
grain with which clover or grass seeds are sown.
After harvesting the hay the next season, the
field is plowed and put into condition for fall
grain which is the fourth crop in the course. For
more than a century this system has been the most
highly approved of all systems of crop rotation in
use in England. This same system was intro-
duced into Germany by Albrecht Thaer.
A study of the leases in use in the various
counties of England at the close of the Eighteenth
Century, does not give so favorable an impression
as do the descriptions of the Norfolk system.
1 Agriculture of Norfolk, p. 50.
296
LANDLORDS AND TENANTS
The limitations and restrictions as to the crops
which could be grown, and as to the system of
crop rotation, were often of such a character as
to make them injurious to the interests of the
farmers. These regulations were likely to be of
such a character as would make it impossible for
the farmers to adjust their farming to the de-
mands of the times. In the Vale of Gloucester,
for example, where nearly all of the land was as
yet in the common fields, the tenants were re-
quired "to fallow the arable land, every third or
fourth year; according to the established course
of husbandry of the township." And again, "not
to sow hemp, flax, or rape seed on any part of the
premises. Nor, otherwise, to cross-crop; but to
sow the same corn and grain, from year to year,
according to the best and most usual course of
husbandry used in the respective townships."1
In writing on the subject of the restricting
clauses, generally found in the leases of his time,
Robert Brown says : "The restrictions imposed
during the time he occupies his farm, prevent the
farmer from changing his management, or of
adapting his crops to the nature of the soil he
possesses. Agriculture is a living science which
is progressively improving, consequently what
may be esteemed a good course of cropping at one
time, may, from experience and observation, be
*W. Marshall, Rural Economy of Gloucestershire, Vol. I,
p. 25.
297
AGRICULTURAL ECONOMICS
afterwards found defective and erroneous. That
particular covenants in a lease are obstacles to
improvements cannot be disputed; for the very
nature of a covenant supposes that the practise to
be regulated by it had arrived at its ne plus ultra,
and could not be mended. These covenants or
restrictions subsist more or less irf every lease we
heard of; and the shorter the lease the more nu-
merous they are. . . . General rules of manage-
ment are very proper in leases, such as, to keep the
farm in good order, to consume all the straw
raised upon it, and to sell no dung. These restric-
tions we will allow; and every good farmer will
follow them whether he is bound to do so or not.
Nay, we will go farther — if leases of a proper
duration were granted, it is very reasonable that
the property of the landlord should be protected
by restricting clauses for the three years previous
to their expiration. But after all, it will be found
that no clause can be inserted, besides the general
ones already mentioned, that will serve to enhance
the value of the land, except obliging the farmer
to leave a proportional quantity of such land in
grass at the expiration of the lease, and specifying
the manner in which that land is to be sown down.
Other clauses serve only to distress the farmer,
but will never promote the interests of the land-
lord."1
All the agricultural writers of the time were by
1 Agricultural Survey, W . R. Yorkshire, pp. 42-44.
298
LANDLORDS AND TENANTS
no means in full agreement with Robert Brown in
his views on the subject of leases. Leases seem
to have been in best repute in the eastern counties,
where they were usually for a term of twenty-one
years. Mr. Bailey is quoted as saying, in crit-
icism of Mr. Brown's position as stated above,
that, "if the proprietors of land were sure of al-
ways getting tenants that would act properly there
would be no need of restricting covenants; but
this is not always the case, and there are many
instances of estates being much injured by ex-
hausting crops where tenants were not properly
restricted. That many covenants are useless or
hurtful I readily admit; but covenants may be
so framed, that a tenant shall have ample liberty
to take such crops as he shall think proper, and to
propose such modes as shall benefit himself with-
out injuring his landlord."1
It was quite generally agreed that long leases
properly drawn, were extremely desirable from
the standpoint of the farmer, wherever improve-
ments were to be made. But the landlords were
not so generally of the opinion that long term
leases were a good thing. Many landlords
claimed that it made the tenants too independ-
ent.2 But a more important objection was
found in the fact that while a lease of sufficient
1 Agricultural Survey, W. R. Yorkshire, p. 50.
2 Staffordshire, Survey, p. 30 ; Leicestershire Survey, pp. 51-
52 ; NortkarHptonshire Survey, p. 45.
299
AGRICULTURAL ECONOMICS
length would enable the tenant to make improve-
ments, it was hard to arrange matters so that the
tenants would not exhaust the land at the end of
the tenancy. It often happened that a tenant
would bring the land into good tilth and to a high
degree of fertility during the early years of his
tenancy, and then take as nearly everything out
of it as possible during the last few years of the
lease.
Another objection to the granting of leases for
long terms became quite general between 1790
and 1815. The landlords objected that as a
result of rising prices during the period covered
by the leases, they sustained great losses. It was
maintained by the landlords of Surrey, for exam-
ple, that by letting land for a term of fourteen or
twenty-one years or any longer period, the owners
of the land actually received, "almost every year
during the currency of the lease, and certainly in
the latter years of it, a less rent than he did at
the commencement, from the depreciation in the
value of money."1 And for this reason the land-
lords were objecting to the granting of leases.
Even in the county of Norfolk, where the twenty-
one year lease had proved so beneficial, the land-
lords objected to long leases because it so often
happened that soon after a farm was rented the
prices of agricultural produce would rise so much
higher than when the lease was taken, that the
1 W. Stevenson, Agriculture of Surrey, p. 98.
300
LANDLORDS AND TENANTS
tenants were "under-rented" for a series of years.1
The basis for complaint on this ground is shown
by the fact that the average price of wheat was
about twice as high for the five years from 1809
to 1813 as for the five years from 1790 to I794.2
A statement of the tenant problem and the solu-
tion proposed by an eminent rural economist of
the time will be interesting in this connection.
In his work on Landed Estates, published in 1806,
William Marshall reviews the existing forms of
land tenure.3 "The tenant holding at will";
"holding from year to year, under a written agree-
ment, with specified covenants"; "leases for a
term of years, as seven, fourteen, twenty-one, or
greater number of years" ; and says :
Objections are urged against each of these species of
tenancy. The depreciation of the circulating value of
money, and the consequent nominal rise, in the rental value
of lands, has rendered long leases greatly disadvantageous
to proprietors : while annual holdings are not only discour-
aging to tenants ; — especially to men of exertion and capital
— but are a bar to the improvement, and a clog on the pros-
perity of an estate: beside being, in the first instance, un-
friendly to the interests of proprietors; inasmuch as they
lower the fair rental values of their lands.
Some years ago, on perceiving the antipathy which had
gone forth among men of fortune, against granting leases
for long terms, and being well aware of the disadvantages
of annual holdings, it occurred to me that agreements for
occupying from three years to three years, instead of from
year to year, would be an eligible species of tenancy :-
1 Marshall, Rural Economy of Norfolk, Vol. I, p. 67.
2 Prothero, English Agriculture, Appendix I.
a Pp. 378 to 382.
AGRICULTURAL ECONOMICS
which is the same thing, granting leases for six years cer-
tain; with a condition that if neither party give notice to
quit, before the expiration of the first three years, then the
term to be prolonged to nine years; and so on, from three
years to three years .... until three years after notice has
been duly given, by either party to the other.
This gives room for a tenant "to turn his hand in," and
a loose to his exertions. He has, in reality, a fresh lease of
six years granted him, every third year. This is sufficient
to encourage him to keep his lands, continually, in a hus-
bandlike state. And if he execute at his own expense, any
of the higher improvements, such as [improving waste
lands, etc.] it is but reasonable that he should have, when-
ever he may quit his farm, an equitable remuneration for
the remainder of such improvements. Thus, the tenant is
placed on sure ground. He may till, manure, and improve,
with much the same confidence, as if the lands in his occu-
pation were his own property.
In return for such advantages, the tenant cannot re-
fuse to covenant, that, during the last three years of his
term, he will manage his farm in a husbandlike manner,
and, at the end of the term, will leave it in such a state of
cultivation and repair, as will induce a good tenant to take
it, at a full rent ; — or suffer the proprietor to put it in such
a state, at his (the outgoing tenant's) expense.
An estate which is under lease, on these principles, and
under attentive management, cannot be let down to an un-
profitable state. It must continually remain under a
regular course of husbandry, and in a state of cultivation
and repair. If the acting manager do his duty, even the
changing of tenants cannot interrupt its prosperity. The
incoming tenant (under attentive management) steps into
his farm, with the advantages that he would have enjoyed,
had it been under his own direction for the three preceding
years.
But, with a lease on this principle, and with a proper
choice -of tenants, removals can rarely happen. What super-
intendent, who knows the difficulty of procuring a good
tenant, would wish to discharge him? And no such tenant
302
LANDLORDS AND TENANTS
will readily leave the farm he is settled upon, if he find
proper treatment. Even should notice be given, in conse-
quence of any misunderstanding between the parties, three
years allow time for reflection; and, before they expire, re-
sentment may die away, and cordiality be restored. If,
however, either party remain dissatisfied, he has an easy
way of dissolving the connection. Or if a proprietor or a
superintendent is desirous to make fresh arrangements on
an estate ; or to regulate its rent roll, by the existing value
of money ; he need not wait many years to fulfill his desire.
For if the tenant in occupancy will not agree to pay a fair
rent, he has three years before him to choose one who will ;
— another valuable advantage of the tenancy proposed.
Thus, a lease on this principle has a decided preference
by a proprietor, to long leases. And its advantage over an-
nual holdings is not less considerable. The lands of an
estate are well worth from five to ten -per cent, more, to a
tenant, under the former, than under the latter, tenancy.
So that, beside the conveniences mentioned, a proprietor
may be immediately adding very considerably to his in-
come, by this principle of management.
This species of tenancy I have had the happiness of
being the means of introducing, upon some considerable
estates, in England, in Wales, and in Scotland; with, I
believe, the mutual satisfaction of the men of fortune who
possess them, and of their tenants.
• While this system proposed by Marshall might
solve the problem of adjusting the amount of rent
to changes in real rental values, and while it
might encourage the tenant to make such im-
provements as he could realize upon in three
years, it had laid down no scheme for determin-
ing the value of unexhausted improvements, and,
indeed, does not even propose that a tenant
shall have remuneration for the investments made
303
AGRICULTURAL ECONOMICS
upon the land during the last three years, and on
which, if he farms in a husbandlike manner, he
cannot realize all of the benefit. Thus it seems
that Marshall failed to solve the most permanent
difficulty which the tenant problem presented;
for the unsettled condition of the money market
became less important in the course of time, while
the problem of unexhausted improvements has
been of increasing importance as the years have
gone by.
Various methods were devised, in different
parts of England, for keeping the tenants from
leaving the land in an exhausted condition at the
termination of their leases. It was the custom on
one estate in Shropshire to lease the land for
twenty-one years "certain," and for seven years
more at the option of the landlord. At the end
of the twenty-one-year period, a new contract of
the same kind might be entered into, if terms
could be agreed upon, or the tenancy might be
brought to a close, but the important condition
was that if the tenant had reduced the land to a
very low degree of fertility he could be forced to
keep the farm for seven years longer at the old
rent. Even if this system had succeeded in pro-
tecting the landlord, it failed even to recognize
the right of the tenant to unexhausted improve-
ments.
The system which subsequent history has
shown to be the most effective means of keeping
304
LANDLORDS AND TENANTS
the farmers from exhausting the land during the
last few years of the tenancy, is that reported in
the Yorkshire Survey. The system was that of
granting remuneration to the retiring tenant for
all his investments on which time had not yet
allowed him to realize their full returns ; the ten-
ant was then left free to farm as he pleased so
long as he conformed to the rules of good hus-
bandry. One of the examples of this system is
as follows :
The landlord covenants to allow the tenant, on quitting
his farm, what two indifferent persons shall deem reason-
able, for what is generally called full tillage and half tillage,
being for the rent and assessment of his fallow ground, the
plowing and the management of the same ; the lime, manure,
or other tillage laid thereon ; the seed sown thereupon ; the
sowing and harrowing thereof ; also for the sowing, harrow-
ing, manuring, and managing any turnip fallow which he
may leave unsown ; also for any clover seed sown on the
premises; and harrowing and rolling in of such seed; and
for every other matter and thing done and performed in a
husbandrylike manner on such fallow lands, in the two last
years of the term ; also for the last year's manure left upon
the premises ; and for any manure and tillage laid upon the
grass land.1
During the period of rising prices prior to
1812, the farmers were anxious to rent land on
long leases. It is said that at that time, "good
tenants always wanted leases," that "they were
galloping after one another to take leases at any
rent."2 After the close of the Napoleonic wars,
1 W. R. Yorkshire, p. 40.
2 Parliamentary Papers, 1833, Vol. V, questions 7420 and
8462.
20 305
AGRICULTURAL ECONOMICS
prices fell back almost to their old level. The
average price of wheat was just about half as
high for the five years from 1821 to 1825, as for
the five years from 1809 to 1813. With this fall
in prices the farmers became even more averse to
the taking of long leases than the landlords had
previously been. One after another the wit-
nesses before the Parliamentary Committee on
Agriculture, in 1833, bore testimony to the fact
that the farmers were objecting seriously to tak-
ing long leases, because they did not know how
soon they might be unable to pay the rent, as their
capacity to pay the rent depended upon such un-
certain prices. The farmers were in doubt as to
how much protection they were to have from the
competition of foreign producers. But without
regard to this, they knew that the prices of agri-
cultural products had been falling for several
years in succession and they were unable to tell
when the limit would be reached.
With depressed prices the landlords found new
reasons for objecting to long leases. This was
the time, one might think, for the landlords to
regain what they had lost during the period of
rising prices, but they found it rarely happened
that the tenants were able to stand the losses in-
curred by falling prices. The farmer could not
be forced to live up to his contract, if he was
losing money. It was said that leases were bind-
ing upon the landlords but not upon the tenants.
306
LANDLORDS AND TENANTS
The fall in prices seemed to demoralize the
farmers, so that the landlord was never certain
that his tenant would not disregard the contract
in case of a fall in prices, whereas the tenant
would certainly remain to reap the benefits in case
of a rise in prices.
The remedy which was often prescribed for the
evils of fluctuating prices, was the introduction
of "corn rents."1 By this it is not meant that the
farmer was to give a certain share of his crop to
the landlord as rent, but that he should pay as rent
the value of a certain fixed amount of grain.
The rent was figured on the basis of what was
called in Scotland the "fiars prices of the county."
In Scotland the sheriff of each county was bound
to summon a jury once each year to examine
on oath, a number of witnesses, such as farm-
ers, grain dealers, brewers, etc., and accord-
ing to the evidence thus obtained, to fix the
"fiars prices" of the different grades of grain.
This system was quite generally resorted to in
Scotland during the period of falling prices.
Corn rents were advocated by the English rural
economists of the time, and were introduced with
success in a few instances in the western counties ;
but this system failed to gain general favor among
the farmers and landlords of England.2
1 Parliamentary Papers, 1833, Vol. V, questions 2594-96 ;
2601-2609.
2 Ibid., questions 328 to 331; 347; 10438; 10448; 10454;
I059I-95-
307
AGRICULTURAL ECONOMICS
The use of long leases declined rapidly in Eng-
land during the period following the close of the
continental wars. In those counties where they
had been most numerous and most beneficial, the
farmers came to prefer short leases or even ten-
ancy from year to year. The long lease as a
means of solving the tenant problem had been
"weighed in the balances and found wanting."
Yet it must be admitted that long leases had done
a great deal of good in promoting improvements
in English agriculture and now that the prices of
agricultural products were depressed the farmers
did not find it profitable to farm their lands so
intensively as formerly even if they had long term
leases. Thus, the tenant problem was of less
importance in the minds of the farmers for a
series of years, until the return of prosperity again
raised the question of investments in improve-
ments and the means of securing just returns
upon such investments.
The period from 1836 to 1875 was one of gen-
eral prosperity for English farmers, and by 1850
the tenant problem was receiving the attention of
Parliament. The use of long leases had gradu-
ally declined during the first half of the Nine-
teenth Century, and while there were agricultural
economists who still advocated this means of se-
curing to the farmers legitimate returns upon
their investments, there was a very prevalent dis-
like to long leases on the part of both parties con-
308
LANDLORDS AND TENANTS
cerned. Yet it was generally recognized that
security to the tenant's investments was essential
to the promotion of that degree of intensity of
culture which was most profitable in the long run
both to the tenant and to the landlord.1
The long period lease had proved so unsatisfac-
tory that especial attention was now given to the
perfecting of the "year to year" agreement. The
custom of "tenant-right," which had proved sat-
isfactory in Lincolnshire, formed the basis for
the hope that tenants holding their farms from
year to year might be given that degree of security
which would promote good agriculture.
The introduction of agricultural improvements
came rather later in Lincolnshire than in many
other parts of England, but when the transition
did come it was "rapid and striking, perhaps more
so than in any other county in England."2 These
improvements were made, too, without the pro-
tection of long time leases. They were made
under the protection of the Lincolnshire system
of tenant-right. "It was very fortunate," says
Gaird, "that when the time for [the introduction
of agricultural improvements] arrived, the lead-
*To avoid the necessity of making specific references in
great numbers it will simply be stated that the discussion of
this period is based upon a Parliamentary Report on Agricul-
tural Customs, Parliamentary Papers, 1847-8, Vol. VII; and
Caird's English Agriculture in 1850 and 1851. In these
sources the material here used is indexed under "tenant-
right."
2Caird, English Agriculture, p. 194.
309
AGRICULTURAL ECONOMICS
ing landlords [of Lincolnshire] were liberal and
intelligent men. . . . They saw the advantage of
encouraging tenants to embark their capital
freely; and as leases were not the fashion of the
county, they gave them that security for their
invested capital, which is termed 'tenant-right,'
or compensation for unexhausted improvements.
Though this tenant-right may not be a strictly
legal claim, it is universally admitted in Lincoln-
shire, the landlord paying it when a farm falls
into his own hands, and refusing to accept a ten-
ant who declines to comply with the custom. It
varies, however, considerably in the different parts
of the county, and appears to have enlarged in
its obligations with the greater development of
agricultural improvements. In North Lincoln-
shire, the usual allowances claimed by the outgo-
ing from the incoming tenant, include draining,
marling, chalking, claying, lime, bone, guano,
rape dust and oil-cake. The following is the scale
on which these allowances are usually made :
When the landlord has found tiles, and the tenant has
done the labor, if done within twelve months before the end
of the tenancy and no crop has been taken from land after
the draining thereof is completed the whole cost is allowed.
If one crop has been taken from such land, three-fourths
of the cost are allowed, and so on, diminishing the allowance
by one- fourth for each crop taken ; but this allowance is
made only when the work is well and properly done by the
tenant, to the satisfaction of the landlord or his agent, ex-
pressed in writing. For marling or chalking, if done with-
in twelve months before tfoe end of the tenancy, the whole
310
LANDLORDS AND TENANTS
cost is allowed ; for that done in the previous year, seven-
eighths of the cost are allowed ; and so on, diminishing the
allowance by one-eighth for each year that shall have
elapsed since the marling or chalking. — For lime used
within twelve months before the end of the tenancy, if no
crop has been taken from the land limed in that year, the
whole cost, including labor, is allowed ; if one crop has been
taken from such land, four-fifths of the cost are allowed ;
and so on, diminishing the allowance by one-fifth for each
crop taken from such land. — For claying on light land, a
similar allowance to that for lime. — For bones used within
twelve months before the end of the tenancy two-thirds of
the cost are allowed, and for those used in the previous
year one-third of the cost. — For guano and rape dust used
within twelve months before the end of the tenancy for
turnips or other green crop, two-thirds of the cost are al-
lowed.— For oil-cake given to cattle and sheep one-third of
the cost price of that so used within twelve months before
the end of the tenancy, and one-sixth of the cost price of
that so used in the previous year is allowed.
"The amount of these allowances is settled by
arbitration. . . . On the whole, .... the system
is believed to have worked well."1
The custom of tenant-right was fully recog-
nized in the counties of Sussex, Surrey, and Lin-
coln, in the Weald of Kent, in the northern part
of Nottinghamshire, and in the West Riding of
Yorkshire. In some of these regions the system
was not giving very good results. In Surrey, the
custom of tenant-right was said to be "promoting
an extensive system of fraud and falsehood
among the farmers."1 The custom seems to have
been quite loosely formulated in that county, and
1Caird's English Agriculture in 1850 and 1851, pp. 194-5.
AGRICULTURAL ECONOMICS
it was possible for the farmers to "work up a
quitting," as it was called,1 and thus defraud the
landlord or the succeeding tenant. Not being
properly regulated the "compensation" often em-
braced "large payments for imaginary improve-
ments and alleged operations, which, even if they
had ever been performed would be more injurious
than beneficial."2
But while the custom of tenant-right was very
imperfect in its operations in some parts of Eng-
land, the principle on which it was based was
sound, and in time it was to be embodied in the
laws of the land. The custom of tenant-right
struck at the very heart of the tenant problem.
It guaranteed to the tenant just returns for his
investments, without involving the many disad-
vantages of the long-period lease. The experi-
ence of the landlords and tenants of Lincoln-
shire had already proved that where the system
was properly regulated the custom of tenant-right
was satisfactory in practise as well as sound in
principle.
In 1850, a bill was introduced into Parliament
which aimed at the embodiment of this custom
of tenant-right into a law. It \vas entitled "A
Bill for the Improvement of the Relation between
Landlord and Tenant in England and Wales."
Its purpose, as stated in the preamble, was to
English Agriculture in 1850 and 1851, p. 119.
2 Ibid., p. 119.
312
LANDLORDS AND TENANTS
insure to farmers, compensation for properly con-
structed, permanent improvements. The idea of
enacting a law of this kind was not new in 1850.
Two hundred years before, Walter Blith advised
that a law be enacted "whereby every landlord
should be obliged .... to give him [the tenant]
reasonable allowance for his clear improve-
ments."1 The bill of 1850 did not pass, but
neither did it die. Again and again similar bills
were brought before Parliament, and in 1875 an
act was passed, which laid down the conditions
for compensating the outgoing tenant, but unfor-
tunately no provision was then made to keep the
landlords from requiring the tenants to contract
themselves out of the right to claim compensation
under the law, and while the law was beneficial in
that it systematized and brought greater uni-
formity into the practise of granting compensa-
tion where tenant-right was recognized, it was not
generally adopted. The author of the bill, even,
asked his tenants to contract themselves out of the
benefits of the law which he himself had framed.
In 1883, a new bill, the Agricultural Holdings
Act, was passed. This Act contained a clause
making it illegal for a landlord to contract him-
self out of the conditions of the law. The law of
1883 with the slight modifications of the Amend-
ing Act of 1900, is still in force, and it will be
worth while to examine it with considerable care.
1Thorald Rogers, Work and Wages, p. 459.
313
AGRICULTURAL ECONOMICS
The law enables the tenant farmers to obtain from
the landlords as compensation for improvements
at the termination of their tenancies, "such sum
as fairly represents the value of the improve-
ment to an incoming tenant."
The improvements for which compensation
could be claimed under this law were divided into
three classes. The first class includes all those
improvements to which the consent of the land-
lord is required if the payment of compensation is
to be enforced by law. This class includes the
following list of improvements :
(1) Erection or enlargement of buildings.
(2) Formation of silos.
(3) Laying down of permanent pasture.
(4) Making and planting of osier beds.
(5) Making of water meadows or works of irrigation.
(6) Making of gardens.
(7) Making or improving of roads or bridges.
(8) Making or improving of water courses, ponds, wells
or reservoirs, or of works for the application of water
power or for supply of water for agricultural or domestic
purposes.
(9) Making or removal of permanent fences.
(10) Planting of hops.
(n) Planting of orchards, or fruit bushes.
(12) Protecting young fruit trees.
(13) Reclaiming of waste land.
(14) Warping or weiring of land.
(15) Embankments and sluices against floods.
(16) The erection of wirework in hop gardens.
[N. B. — The above are subject to the provisions given
under the third class of improvements with respect to mar-
ket gardens.]
314
LANDLORDS AND TENANTS
The drainage of land is put into a class by itself.
It is required that the tenant shall give notice to
the landlord of his intention to construct a drain-
age system if he is to expect compensation under
the law for his improvement. This notice must
be given not more than three months nor less than
two months before the beginning of the execution
of the work, and during this time the landlord
may, if the tenant has not in the meantime with-
drawn the notice, "undertake to execute the im-
provement himself, and may execute the same in
any reasonable and proper manner which he
thinks fit, and charge the tenant with a sum not
exceeding five pounds per centum per annum on
the outlay incurred in executing the improvement,
or not exceeding such annual sum payable for
a period of twenty-five years as will repay such
outlay in the said period, with interest at the rate
of three per centum per annum, such annual sum
to be recoverable as rent. In default of any such
.... undertaking, and also in the event of the
landlord failing to comply with his undertaking
within a reasonable time, the tenant may execute
the improvement himself, and shall in respect
thereof be entitled to compensation" under the
Agricultural Holdings Act.
The third class includes a large number of
improvements for which compensation can be
claimed under the law, without having gained the
consent of the landlord or having given notice to
315
AGRICULTURAL ECONOMICS
him previous to the execution of such improve-
ments. The list of improvements put into this
class is as follows :
(18) Chalking land.
(19) Clay burning.
(20) Claying of land, or spreading blaes upon land.
(21) Liming of land.
(22) Marling of land.
(23) Application to land of purchased artificial or other
purchased manure.
(24) Consumption on the holding by cattle, sheep, or
pigs, or by horses other than those regularly employed on
the holding of corn, cake, or other feeding-stuffs not pro-
duced upon the holding.
(25) Consumption on the holding by cattle, sheep, or
pigs, or by horses other than those regularly employed on
the holding, of corn proved by satisfactory evidence to have
been produced and consumed on the holding.
(26) Laying down temporary pasture with clover, grass,
lucerne, sainfoin, or other seeds sown more than two years
prior to the determination of the tenancy.
(27) In the case of market gardens —
(i) Planting of standard or other fruit trees
permanently set out;
(ii) Planting of fruit bushes permanently set
out;
(iii) Planting of strawberry plants ;
(iv) Planting of asparagus, rhubarb, and other
vegetable crops which continue productive for two
or more years ;
(v) Erection or enlargement of buildings for
the purpose of the trade or business of a market
gardener.
In ascertaining the amount of compensation
payable to a tenant, account is taken of any bene-
fit which the landlord has given or allowed to the
316
LANDLORDS AND TENANTS
tenant for making the improvement. Also in
case the tenant is under contract to return a cer-
tain amount of manure to the soil each year, and
in case such amount shall not exceed the amount
that is produced from the feeds which are pro-
duced upon the holding, this amount is excluded
from the amount for which compensation can be
claimed.
In case the landlord and the tenant fail to agree
as to the amount of compensation which the ten-
ant should have for the various improvements
which have been named above, the difference is
settled by means of arbitration.
In case of any breach of contract on the part of
either landlord or tenant, damages may be claimed
by the party injured. Also in case the tenant
causes or allows any waste, injures the soil, or
destroys the improvements, the landlord can make
a claim for payment for such injuries. These
claims are arbitrated the same as those for im-
provements.
In case of permanent improvements such as are
not mentioned in either of the above classes, the
tenant may remove the improvement unless the
landlord may choose to buy the same, with the
proviso that he repair any damages which may
have been incurred by the removal of the build-
ing, that is he must leave the premises in as good
condition as if the improvement had not been
made.
317
AGRICULTURAL ECONOMICS
It is the usual thing for the incoming tenant
to pay the sum which is due the outgoing tenant
as remuneration for improvements; and in case
the new tenant remains but a short time on the
farm, so that at the expiration of his tenancy he
has not had time to realize in full upon such invest-
ments, he receives remuneration for such im-
provements just the same as if he had executed
them himself.
These are the essential points of the Agricul-
tural Holdings Act of 1883 as modified by the
amending Act of 1900. The changes made by
the amending Act were matters of detail meant to
meet certain objections to the practical workings
of the original Act. This law, as it now stands,
seems to supply the regulations necessary to an
amicable adjustment of the relations between
landlord and tenant in England.
Tenancy from year to year is the rule iri Eng-
land to-day, and no question is raised as to the
security of the landlord or of the tenant. Either
party may bring the tenancy to a close at the
expiration of any year, by giving proper notice.
Under the act, twelve months' notice is required,
but by special agreement between landlord and
tenant the time may be changed to six months.1
Written contracts are generally used, but the
1The Agricultural Holdings Act as now in force may be
found in convenient form in the Journal of the Royal Agricul-
tural Society of England, third series, Vol. XI, Part III, 1900.
318
LANDLORDS AND TENANTS
leading agriculturists of the country agree that
such contracts should contain few restrictions
upon the methods of farming, except that the
farm shall be operated in accordance with the
rules of good husbandry. Many of the written
agreements now in use would, if strictly enforced,
bind the tenants hand and foot ; but as a matter of
fact many of these covenants are recognized to
be obsolete and others are "winked at" by the
landlords. A study of the written agreements
nominally in force at the present time would, in
themselves, give a very erroneous idea of the
actual relations between landlords and tenants.
The farmers and the landlords of England have
quite generally come to recognize that liberty and
honesty are essential to success in agriculture.
The writer gradually gained the impression by
coming in personal contact with farmers and land-
lords, or more often the agents of the latter, that
accompanying the gradual perfecting of the Ag-
ricultural Holdings Act, there has been the
growth of a sense of justice in the minds of both
the landlords and the tenants. This sense of jus-
tice is all the more effective because it is accom-
panied by the belief that in farm management,
whatever is beneficial to the farmer is likewise
advantageous to the landlord.
The English method of regulating the relations
between landlord and tenant is successful through-
out Great Britain. The history of land tenure in
319
AGRICULTURAL ECONOMICS
Scotland would prove very interesting and help-
ful. Leases of long duration, most commonly
for nineteen or for twenty-one years, have been in
general use in Scotland for more than a century.
The system of "corn rents," already referred to,
proved an effective means of adjusting rents to
prices at the time when this problem was prov-
ing disastrous to the long term lease in England.
At the present time the Agricultural Holdings
Act of Scotland is practically the same as that in
force in England. While it continues to be the
custom among Scottish landlords and tenants to
have long term leases drawn, it has become the
common thing to include a clause which makes
it possible for either the landlord or the tenant to
bring the tenancy to a close at certain periods, as
for example, at the end of the fifth, tenth or fif-
teenth year, or at the end of the second, fourth,
sixth, etc., year, by giving proper notice to the
other party. In effect, therefore, the long term
lease is passing away, for the same object is now
attained through the Agricultural Holdings Act.
In another connection the writer had occasion
to publish the statement that, "the relation be-
tween landlord and tenant is very satisfactorily
arranged, the farmers are, as a rule, contented
with the present system, and the fields of England
prove that landownership on the part of farmers
is not essential to good agriculture." This state-
ment has occasioned surprise on the part of some
320
LANDLORDS AND TENANTS
American readers, but an eminent agriculturist
of Great Britain, Mr. John Speir, says this state-
ment "expresses briefly and concisely the position
here." The writer had no thought of minimiz-
ing the importance of landownership on the part
of farmers, but rather to emphasize that in spite
of the fact that tenancy is the rule in that country,
the agriculture of England is, in many ways,
worthy of our emulation, and that this advanced
position of English agriculture is due, in a great
measure, to an excellent system of adjusting the
relations between landlord and tenant.
That Americans may profit by the experience
of their British cousins, should be evident from
the foregoing pages. That they will be willing to
draw upon the experience of the English, will
scarcely be questioned. The Americans have be-
come independent in thought and action, and have
become leaders in nearly every line to which they
have turned their attention, yet they have always
been willing to accept all that is of value in the
achievements of other countries, and we believe
that as America has profited by the experience of
the English in the development of factory legisla-
tion, so will she profit by a study of the English
agrarian legislation.
31
AGRICULTURAL ECONOMICS
APPENDIX TO CHAPTER XIII
COVENANTS FOUND IN NORFOLK FARM LEASES, BY W.
MARSHALL
[The following description of the Norfolk leases is taken
from the second edition of William Marshall's Rural
Economy of Norfolk (1795), PP- 70 to 80.]
The following heads of a lease will place the general
management of a Norfolk estate in a clear and comprehen-
sive point of view. They are not, either in form or sub-
stance, copied, precisely, from the lease in use upon any
particular estate; but exhibit, I believe, a pretty faithful
outline of the modern Norfolk lease.
Landlord agrees, i. To let certain specified premises,
for a term and at a rent, previously agreed upon.
2. Also to put the buildings, gates, and fences in tenant-
able repair.
3. Also to furnish rough materials, and pay half the
workmen's wages in keeping them in repair, during the
term of the demise ; willful or negligent damage excepted.
4. Also to furnish the premises with such ladders as
may be wanted in doing repairs, or in preserving the build-
ings, in case of high winds, fire in chimneys, etc. (an excel-
lent clause).
5. Also to furnish rough materials for keeping the gates,
gate-posts, styles, etc., etc., in repair; or to furnish the ma-
terials ready cut out ; tenant paying the usual price of labor
for cutting out.
6. Also to pay half the expense of such shores and
ditches as he, or his agent, shall direct to be made or re-
newed.
Landlord reserves, I. All minerals, fossils, marls, clays;
with liberty to work mines, quarries and pits, and to burn
lime and bricks upon the premises ; likewise to carry away
such minerals, etc., etc.; excepting such marl, or clay, as
may be wanted for the improvement of the farm.
2. Also, all timber trees, and other trees and woods,
underwood and hedgewood; with liberty to fell, convert,
322
LANDLORDS AND TENANTS
char, and carry off such timber or other woods; excepting
such thorns and bushes as shall be set out by landlord, for
making and repairing fences; provided the thorns, etc., so
set out be cut in the winter months; excepting, however,
out of this proviso, such few as may be wanted in the course
of the summer months, for stopping accidental gaps.
3. Also, full liberty of planting timber trees in hedges, or
on hedgebanks; with a power to take to himself, after
twelve months' notice given, some certain number of acres
of land for the purpose of raising timber trees, other trees,
or underwood; allowing the tenant such yearly rent, etc.,
for the land so taken, as two arbitrators shall fix.
4. Also, a power of altering roads, and of inclosing com-
mons, or waste lands, without the control of the tenant; to
which intent, all common-right is usually reserved, in
form, though seldom in effect, to the landlord.
5. Also, the customary liberty to view the buildings, do
repairs, and, consequently, to bring and lay materials.
6. Lastly, the right of sporting and destroying vermin.
Tenant agrees, I. To pay the stipulated rent half-yearly ;
and within thirty days after it be due ; under forfeiture of
the lease; and further, to pay the last half-year's rent two
months, or a longer time, before the expiration of the term.
2. Also, to do all carriage for repairs (within a specified
distance) ; and to find all iron-work and nails ; and to fur-
nish wheat-straw for thatching; and to pay half the work-
men's wages, and find them with small beer.
3. Also, to do all ditching, etc., set out by landlord (pro-
vided the quantity set out do not exceed one-tenth of the
whole) ; and to pay half the workmen's wages, and find them
in small beer ; and to defend with hurdles, or otherwise, all
such young hedges as shall be exposed, in spring and sum-
mer, to the browsings of pasturing stock.
4. Also, to make, or pay for making, such gates, etc., as
shall be wanted upon the farm during the term of the de-
mise ; and to hew, or to pay for hewing, all necessary gate-
posts ; and to put down and hang, in a workman-like man-
ner, such gates and gateposts at his own sole expense; as
323
AGRICULTURAL ECONOMICS
well as keep all the old gates on the premises in tenantable
repair.
5. Also, not to assign over, nor in any other way, part
with possession of his farm; but to make it his constant
residence during the term of the lease. Nor to take any
other farm; nor to purchase any lands adjoining, or inter-
mixed with it ; without the license and consent of landlord ;
under forfeiture of the lease.
6. Also, not to break up any meadow, pasture, or furze
ground, under the penalty of ten pounds an acre a year.
Nor to cut "flags," that is, turves, under fifty shillings a
hundred.
7. Also, not to lop or top any timber tree, under the
penalty of twenty pounds ; nor other tree, under ten pounds ;
nor cut underwood or hedgewood (except as before ex-
cepted) under ten pounds a load. But, on the contrary, to
preserve them from damage as much as may be; and. if
damaged by others, to give every information in his power
under the penalty of twenty pounds.
8. Also, not to take more than two crops of corn with-
out a whole year's fallow, — a crop of turnips twice hoed, —
or a two years' lay, — intervening, under the penalty of
9. Also, to consume on the premises all hay, straw, and
other stover; and not to carry off, or suffer to be carried
off, any part, under pretense of being tithe compounded for,
or under any other pretense whatever, under the penalty of
ten pounds, for every load carried off
10. Nor to carry off, nor to suffer to be carried off, any
dung, muck, etc., under five pounds a load.
11. Nor to impair the foundations of the buildings
round the dungyard, by scooping out the bottom of the
yard too near the buildings; but to keep up a pathway
three feet wide between the dungpit and the foundations
(an excellent clause).
12. Also, not to stock any part of the premises with rab-
bits ; but to endeavor, as much as may be to destroy them.
13. Also, during the last two years of the lease, not to
take in any agistment stock.
324
LANDLORDS AND TENANTS
14. Also, in the last year, not to suffer swine to go loose
without being yoked and rung.
15. Also, in the last year, to permit landlord, or incom-
ing tenant to sow grass seeds over the summer corn ; and
to harrow them in, gratis; and not to feed off the young
grasses after harvest.
16. Also, in the last year, not to sow less than
acres of fallow, of, at least, three plowings and suitable har-
rowings, with two pints an acre of good, marketable, white-
loaf turnip seed; and, in due time, to give the plants two
hoeings (or, if the crop miss, to give the fallow two extra
plowings} in a husbandlike manner; and, at the expira-
tion of the term, to leave such turnips growing on the prem-
ises; free from wilful or neglectful injury; under the
penalty of pounds an acre.
17. Also, to permit the landlord or incoming tenant to
begin, on or after the first day of July, in the last year, to
break up the two years' lay (hereafter agreed to be left)
for wheat fallow, or any other purpose ; and to harrow,
stir, and work the said fallows; and to carry and spread
dung or other manure thereon, without molestation.
18. Also, in the last year, to permit landlord, or incom-
ing tenant, to lay up hay, or other fodder, on the premises,
and to protect it thereon.
19. Also, to lay up and leave upon the premises, at
the expiration of the lease, all the hay of the last year (or
of any preceding year, if unconsumed at the expiration of
the term) except loads, which tenant is allowed to
carry off.
20. Also, to lay up, in the usual barns and rickyards, the
last year's crops of corn; together with the tithe, if com-
pounded for ; and to thresh them out in proper season ; and
in such manner that the straw, chaff, and colder shall be
injured as little as may be.
21. Also, at the expiration of the term, to leave no less
than acres of olland [meadow-land, literally old-
land], of two years laying (including that which may have
been broken up by landlord or incoming tenant) and which
shall have been laid down in a husbandlike manner, after
325
AGRICULTURAL ECONOMICS
turnips or a summer fallow, with not less than twelve
pounds of clover, and half a peck of ray grass, seeds an
acre under the penalty of pound an acre.
Also not less than acres of olland, of one year s lay-
ing, to be laid down as above specified, under the penalty
of pound an acre.
22. Also, at the expiration of the term, to leave all the
yard manure, produced in the last year of the lease, piled
up in a husbandlike manner, on the premises; excepting
such part of it as may have been used for the turnip crop ;
and excepting such other part as may have been used by
landlord, or incoming tenant, for wheat.
23. Also, at the expiration of the term, to leave the
buildings, ladders, gates, fences, water-courses, etc., etc.,
in good and tenantable repair; landlord in this, as in every
other case, performing his part as above agreed to. Also,
upon such parts of an estate as lie near the residence of the
owner, it is customary for the tenant to agree to furnish an-
nually, a certain number of loads of straw, according to the
size of his farm ; also to do the carriage of a certain num-
ber of loads of coal; also to keep dogs, warn off sports-
men, and suffer them to be prosecuted in his name : rem-
nants, these, of the ancient base tenures of soccage and
villanage.
Tenant to be alloived, i. The full value of all the hay
left upon the premises, of the last year's growth, or of the
growth of any preceding year ; provided the quantity of old
hay do not exceed loads.
2. Also, the full value of the turnips left on the prem-
ises ; or the accustomed price for the plowings, harrowings,
and manuring; at his own option.
3. Also, the feedage of the lays broken up, by the land-
lord, or the incoming tenant, from the time of their being
broken up until the expiration of the term the ensuing
Michaelmas; also, for all damage arising in carrying on
manure or otherwise.
4. Also, the feedage of the young clovers, from harvest
to Michaelmas.
326
LANDLORDS AND TENANTS
5. Also, the use of the barns and rickyards for summer
corn until Mayday; and for winter corn until the first of
July next ensuing.
6. Also, (by way of a consideration for the stover) the
customary price for threshing and dressing the corn; the
landlord, or incoming tenant, also carrying the same to
market, gratis : provided the distance required to be carried
does not exceed miles, and the quantity required to
be carried, at one journey, be not less than coombs.
[A coomb is equivalent to four bushels.]
All the above allowances to be referred to two arbitra-
tors ; one to be chosen by each party, in Michaelmas week ;
and the amount awarded to be immediately paid down by
the landlord, or the incoming tenant
'TPHE following pages contain ad-
vertisements of a few of the
Macmillan books on kindred subjects
The Most Recent Additions to the CITIZEN'S LIBRARY
Great Cities in America
By DELOS F. WILCOX, Author of "The American City"
Dr. Wilcox's forthcoming book differs from most works on this
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Cloth, leather back, izmo, $f.2j net
Wage-Earning Women
By ANNIE MARION MACLEAN
Professor of Sociology in Adelphi College
Quite recently the National Board of Young Women's Chris-
tian Associations of the United States conducted an investigation
throughout the entire country of the status of women in the most
important industries. Its results are incorporated in this book.
"This book needed to be written. Society has to be reminded
that the prime function of women must ever be the perpetuation of
the race. It can be so reminded only by a startling presentation of
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the paper, cotton, and woolen mills of New England, the department
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silk mills and potteries of New Jersey, the fruit farms of California,
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The author calls for legislation regardless of constitutional quibble,
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Cloth, leather back, izmo, $J.2J net
THE CITIZEN'S LIBRARY OF ECONOMICS, POLITICS, AND SOCIOLOGY
is edited by Richard T. Ely, Professor of Political Economy at
the University of Wisconsin. For a complete list of the volumes
included in the series, address
THE MACMILLAN COMPANY
64-66 Fifth Avenue, New York
AMERICAN SOCIAL PROGRESS SERIES
Edited by SAMUEL McCuNE LINDSAY, PH.D.
A series of handbooks for the student and general reader, giving the
results of the newer social thought and of recent scientific investigations
of the facts of American social life and institutions. Each volume about
200 pages.
1. The New Basis of Civilization. By Professor S. N. PATTEN,
Ph.D., LL.D., University of Pennsylvania. $1.00 net
The new American Social Progress Series, which The Macmillan
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known writer on economics has characterized it as "the book
we have been waiting for to put social work on the basis of a
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2. Standards of Public Morality. By ARTHUR TWINING HADLEY,
PH.D., LL.D., President of Yale University. $1.00 net
This is a subject on which President Hadley has already spoken
with conspicuous wisdom, and no man in America is better fitted
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years have made this topic one of general interest, and Presi-
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and stimulating thought.
3. Governmental Action for Social Welfare. By Professor JERE-
MIAH W. JENKS, PH.D., LL.D., Cornell University. $f.oo net
The book presents a great deal of information and comment
which the average citizen should possess, and is written in Pro-
fessor Jenks's shrewd, practical, and readable style.
4. Misery and Its Causes. By EDWARD T. DEVINE, PH.D., LL.D.,
Columbia University. $/.^5" net
Poverty and Maladjustment. Out of Work. Out of Health.
Out of Friends. The Justice and Prosperity of the Future.
PUBLISHED BY
THE MACMILLAN COMPANY
64-66 Fifth Avenue, New York
Some Ethical Gains through Legislation
By FLORENCE KELLEY
Secretary of the National Consumers' League
This interesting volume is by one who knows and sympathizes with
the abject poverty to be found in certain sections of the country.
It has grown out of the author's experience in philanthropic work
in Chicago and New York, and her service for the State of Illinois
and for the Federal Government in investigating the circumstances
of the poorer classes, and conditions in various trades.
The value of the work lies in information gathered at close range
/n a long association with, and effort to improve the condition of,
the very poor.
Cloth Leather back i2mo $1.25 net
Studies in the Evolution of Industrial Society
By RICHARD T. ELY, Ph.D., LL.D.
University of Wisconsin
Professor Ely discusses in a straightforward way the progress of
the working classes, the changes in their condition, their tendencies
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on society generally. The benefit of competition and the improve-
ment of the race, municipal ownership and concentration of wealth,
are treated in a sane, helpful, and interesting manner.
Cloth Leather back $1.25 net
Education and Industrial Evolution
By FRANK T. CARLTON, Ph.D.
Professor of Economics and History in Albion College
The importance of general educational advance to industrial
progress and the necessity for manual training as a means of de-
velopment among the working classes, are subjects of the greatest
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and dwells especially on the importance of a broader industrial
education.
Cloth Leather back $1.25 net
PUBLISHED BY
THE MACMILLAN COMPANY
64-66 Fifth Avenue, New York
By JANE ADDAMS
The Newer Ideals of Peace
Miss Addams points out that in the growth of the moral sense of
the nations the goal of universal peace will be reached through the
cooperation of the very elements now regarded as disturbers — the
immigrant population in the large cities. She discusses the Labor
Movement ; the Protection of Women and Children ; " Women in
City Government," etc.
The editor of Collier's writes : " To us it seems the most compre-
hensive talk yet given about how to help humanity in America
to-day."
"A clean and consistent setting forth of the utility of labor as
against the waste of war, and an exposition of the alteration of
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are relegated to their right places in the minds of men. . . . Back
of it lies illimitable sympathy, immeasurable pity, a spirit as free as
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Democracy and Social Ethics
" Its pages are remarkably — we were about to say refreshingly —
free from the customary academic limitations . . .; in fact, are the
result of actual experience in hand-to-hand contact with social
problems. . . . No more truthful description, for example, of the
'boss' as he thrives to-day in our great cities has ever been written
than is contained in Miss Addams's chapter on ' Political Reform.'
. . . The same thing may be said of the book in regard to the
presentation of social and economic facts." — Review of Reviews.
"Too much emphasis cannot be laid upon the efficiency and in-
spiration afforded by these essays. . . . The book is startling,
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Cloth i2mo Leather back $1.25 net
Twenty Years at Hull House
Ready in October, 1910
PUBLISHED BY
THE MACMILLAN COMPANY
64-66 Fifth Avenue, New York
UNIVERSITY OF CALIFORNIA LIBRA
This book is DUE on the last date stamped be
OCT 14 1941
MAY II IS
REC'D LD
JUNb 1959
LD 21-100m-12,'46(A2012sl6)4120
YD
UNIVERSITY OF CALIFORNIA LIBRARY
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