Cee es neat carter ee ratings | il weiner aed lm Crtrbes irre A te i i tata Ne tire cane Sah “ty 4 gt eyes Ay aha Oy ree, ” s aoe m Ste AN Fh oo erlemn $4 emiees eve - pi ; 2S PE RD Maton bt isnt “a4 FS eee eee , Wee Oe Doak aan NCAR baceod ets mio umecoateneen E-Store . x ; eaceay he ola ind Dieses esol par: Stee Sy emma : geet POP yt. Remeron PFarms with no debts at the beginning of the year were classified in this group. 534 BuLtetin No, 512 [June, INVESTMENTS AND DEBTS OWNERS AND PART OWNERS TENANTS $24,000 18,000 OPERATORS” 4 TOTAL Sree INVESTMENTS oe DEBTS 12,000 6,000 pee = 0 1-19 2039 40+ 0 19 20-39 40+ DEBT RATIO DEBT RATIO Fig. 2—Total investments and debts of operators having different debt ratios, December 31, 1941. When the farms of no-debt owners were left out of consideration, the total investments of the remaining owners were posi- tively correlated with debt ratio; that is, the more heavily indebted owner- operators had the larger investments. The reverse was true for tenants, the more heavily indebted tenants having the use of less capital. 20 percent and over. These latter groups had the largest short-term debts. Mortgage debts of the most heavily indebted group of owners represented 60 percent of the value of land and improvements. Progress during the period. From Table 8 two significant obser- vations can be made concerning the average assets and liabilities of owners and part owners in each debt-ratio group for the three years. (It should be remembered that the farms were not identical from year to year.) The situation in 1941 is shown in Fig. 3. First, altho all groups increased their assets each year during this period, the increases were largest where the debts were highest. The more heavily indebted owners built up their assets and reduced their debts to a greater extent in each of these three years than did the less heavily indebted owners. The amortization principle, which normally involves payment in proportion to the size of the loan, partly accounts — ee 1945] FINANCIAL Position oF McHenry County FARMERS 535 TABLE 8.—CHANGES IN ASSETS AND LIABILITIES OF OWNERS AND PART OWNERS With DIFFERENT DEBT-TO-PROPERTY Ratios, 1940, 1941, AND 1942 Changes during End of year the year Increase in net worth & gas Debt ; ear r ratio, ncrease Percent of Pe Assets Liabilities inaseets DSTI Ex. in. s increnee farms cent excluding bilities cluding cluding (with ash cash cash cash) No debts OT aaa 12 0 $24 358 = $ 0 $ 447 §$ 0 $ 447 $ 762 ) 1 005 1 660 7.0 PE? a ea 9 0 29 583 0 1 663 0 1 663 4 370 15.2 Debt ratios of 1 to 19 percent (pn) RE gee il 7 $20 251 $ 1 347 $ 360 $ (61>) $ 299 $ 453 2.4 2) SEP eae - Seiad 4 te 5 1 685 926 230 1 156 1 284 6.7 i ee 15 6 23 056 1 317 1 432 1 028 2 460 2 268 11.1 Debt ratios of 20 to 39 percent RON Ee desk 24 30 $24 030 $7 295 $ 602 $ 323 $ 925 $ 880 5.4 COME. Eu. 27 26 25 265 6 502 1 779 554 2 333 2535 14.4 ot See eee 23 25 222 5 871 1 438 1 025 2 463 3 206 17.7 Debt ratios of 40 percent and over ADO Sas oe 12 49 $24 299 $11 800 $ 910 $ 69 $ 979 $1 038 8.6 ROBT iets 19 42 28 381 12 055 2 051 723 2 774 3019 20.2 BGs cig os aCe 12 40 29 096 11 582 1 768 1 226 2 994 4440 27.7 *Less than one-half of 1 percent. >These are increases. for the large payments the most heavily indebted farmers made. But some of these men made payments in addition to those required by the terms of their loans. It is clear that in the owner group debt reduc- tion went hand in hand with increase in assets. Second, the rate of increase in net worth became larger as debt ratios became higher. This was true in each of the three years. Two reasons for this were: (1) the rate earned by the operators of the more heavily indebted farms exceeded the cost of borrowing and thus increased the rate earned on the owner’s net worth; (2) these more heavily indebted farms tended to be larger than the more lightly indebted farms, and in a period of favorable earnings large farms pay better than small farms. In each group of tenants (Table 9) the assets were increased during each of the three years. The group with the lowest debts and the group with no debts did somewhat better, in general, than the two groups with the highest debts, but the situation was not clear-cut in this respect. Thruout the period these men were all accumulating capital, while changes in their debts varied. Debts tended to increase in the low-debt and no-debt groups and to be reduced in the group with 536 BuLietTin No. 512 [June, TABLE 9.—CHANGES IN ASSETS AND LIABILITIES OF TENANTS WITH DIFFERENT DEBT-TO-PROPERTY RATIOS, 1940, 1941, AND 1942 Changes during End of year Increase in net worth Num- Debt the year Year ber ratio, Increase De- Percent of __per- Liabili- inassets crease Ex- In- increase farms cent Assets ‘ties excluding injia “COGN: COMMee. Diag cash: bilities cash) No debts SONG. gs sraiseuie-s 15 0 $7 401 $ 0 $ 916 $ 33 $ 949 $ 774 11.2 LORD dices 19 4 8 544 321 2 182 (3214) 1 861 2 076 28.5 ORR oder aicat 12 Z 9 518 208 1 658 (2088) 1 450 2 618 30.5 Debt ratios of 1 to 19 percent 1940) c cs55 aia 16 9 $7 040) «=$ 613 $ 833 $ (82%) $ 751 $ 694 11.5 DER ic sia wernce 21 : yd 8 065 1 407 1 996 (8688) 1 128 1 402 23.0 1982 iccekis cs 23 11 8 080 890 1 748 (2908) 1 458 2 015 3152 Debt ratios of 20 to 39 percent LJ 1940 3 ccc n0t50- 020 29 $5 922 $1 705 $ 355 $ (54%) $ 301 $ 546 13.4 gL Gear or 22 21 7 584 1 600 946 274 1 220 1 887 34.9 ROE ee 13 17 9 635 1 656 1 092 550 1 642 2 478 34 Debt ratios of 40 percent and over 1980 oes ao ue 42 65 $4 535 $2 946 $1 134 $(5598) $ 575 $ 369 28.3 MOAT sid ccacders 17 $2 5 906 3 053 1 134 (2188) 916 1 343 56.1 1942 eos ie wierd 9 41 6 656 Zoe: 1 668 239 1 907 1 532 51.6 *These are increases. NET WORTH INCREASE HB DOLLARS E]}] PERCENT $3,000 K——. OWNERS _ AND — PART OWNERS TENANTS 2,000 1,000 0 1-19 2039 40+ (0) 1=19: | 20339 40+ DEBT RATIO DEBT RATIO Fig. 3—Change in net worth of operators with change in debt ratio, 1941. As measured in dollars, the increase in the net worth of owners, but not of tenants, became larger as the debt ratio increased. In both groups, however, the percentage increase became larger as the debt ratio increased, indicating that in this period it paid to use borrowed capital. ee a 1945) FINANCIAL PosiTION OF MCHENRY County FARMERS 537 debt ratios of 20 percent to 39 percent. In the high-debt group they tended to increase in the first two years and to decline in 1942. The tenants were, in general, using their credit to build up their assets. The possibilities that existed for farmers with comparatively small capital of their own to build up assets is illustrated by the increase in net worth among the tenants having debt ratios of 40 percent or more. These men increased their net worth, on the average, by amounts ranging from somewhat more than a quarter to somewhat more than a half in each of these three years. As was true with owners, the tenants having the highest debt ratios had the highest percentage increases in net worth; but unlike the owners having high debts, these high-debt tenants were not operating the larger farms. Operators With Businesses of Different Size A good measure of the size of a farm business is the number of productive man work units required in its operation in the course of a year. As would be expected, the size of the business correlated di- rectly with the amount of farm capital invested in each key item— land and improvements, machinery and equipment, dairy cattle, and TABLE 10.—CAaPITAL POSITION OF 67 OWNERS AND PART OWNERS HAVING FARM BUSINESSES OF DIFFERENT SIZE, DECEMBER 31, 1941 Size of farm in productive man work-units*... Under 400 400-549 550-699 700 and over PEMSIHOT OF TOTNIG ie lot lare oe alse s Ube has eens a. 16 16 20 15 Assets Land and improvements.................. $ 9 800 $13 743 $19 277 $20 300 Machinery and equipment................ 1 124 2 074 2 705 2 893 PERM Se iy sate AY Mts AGIM ative ooleTe aici et 130 308 272 369 PIS UG CAUIO se 5ia dale cht os Gre Kiss © steia.s se atele.ais 1 393 2 859 3 209 4 331 PGE IECPRUOC Ek Societe iiss soe ke Sets wiele os 233 411 717 785 MURR ATONE hatin aleic he « 's.0k gissiere es Bet 806 1 589 2 699 3 365 BRMTTADCC TAR: 5c cccrerg We te pte 8s oie id glee reine See 298 239 280 207 PEICACUPVONE BUMMER Ss 6 oie s ove bse 3 984 7 480 9 882 11 949 SPOtRE FATE OODOED ae aiiile to o's SCF cate 'sie due a 13 784 Phileas 29 159 32 249 SRG TISVORGIIOTIED © oc cicie se calse edie se Baers 1 453 . 479 1 378 1 413 SEE PLO il was ea eels ba eae oes $15 237 $21 702 $30 537 $33 662 Liabilities MCSEMEAO TEND CHOTIEG 8a os lp Sioa a wide 6,008 civ de 'o'ee $ 2 238 $ 4 267 $.6 622 $ 8 641 SR ETI RCE alec, cate OF v ile e's 84 0100 4:0 30's 551 687 578 1 566 PRR ENAOTIEDE incense ook ong’ ciena dh o/p 8 Gin's 6 40 erate $ 2 789 $ 4 954 $ 7 200 $10 207 BPGne SELIOS POTOONG. 6 ico o re ois oh vs Wee yets.e 18 23 24 30 Average size of farm Number of man work units................ 310 489 621 830 Number of acres owned.............000005 69.8 107.6 161.6 194.6 Number of acres operated...........-00005 70.6 117.1 178.3 225.2 Number of cows milked..............00005 11.7 18.6 23.4 30.7 “See definition given below *A productive man work unit is that amount of productive farm work (as distinguished from necessary but unproductive work) that can be performed at average intensity and efficiency in a 10-hour day. 538 Butvetin No. 512 [June, feed and grain (Tables 10 and 11). Among the owners, the larger farms had the higher debt ratios, but among the tenants these two factors were not correlated (see also Fig. 4). Per man work unit, the tenants had about $10 invested in farm operating capital; the owners had between $13 and $14. The lower value for tenants reflects the effect of the tenants’ sharing with the land owners the responsibility for providing capital. The owners of the ASSETS AND DEBTS OWNERS AND PART OWNERS TENANTS $30,000 OPERATORS TOTAL — ASSETS ES % DEBT RATIO NET ASSETS 20,000 ASSETS OFFSET} 8Y DEBTS 10,000 UNDER 400 550 700 UNDER 400 550 700 400 549 699 + 400 549 699 + SIZE OF FARM IN PRODUCTIVE MAN WORK UNITS Fig. 4.—Assets, debts, and debt ratios of men operating farms of different size, December 31, 1941. For owners but not for tenants the debt ratio in- creased with size of farm; it averaged slightly over 20 percent. 15 largest farms had $24 invested in land and improvements per man work unit, whereas the owners of the smallest farms had $32 so in- vested. This difference is due partly to the fact that there were more part owners among the owners of the largest farms. Examination of the financial progress of these farmers reveals that 1945) FINANCIAL Position oF MCHENry County FARMERS 539 in both the owner and the tenant groups size of business was positively correlated with the extent of the increases in net worth (Tables 12 TABLE 11.—CAPITAL POSITION OF 79 TENANTS WITH FARM BUSINESSES OF DIFFERENT SIZE, DECEMBER 31, 1941 Size of farm in productive man work units.... Under 400 400-549 550-699 700 and over IRIE MIE EMSTUME ors oo sve la ia we'd 40 bb elevw Gye e'u'e's 13 24 21 21 Assets Land and improvements.................. $ 0 $ 0 $ 0 $ 0 Machinery and equipment................ 703 1 604 1 966 3 105 DURE oR ieee Gs eka sistas Rivleie vee 2 8a’ 189 345 308 369 PUMEMMEOMENE T cet ala icc fsa cis e,e chawiers'< Roe eS a eS 1 192 2 120 2 906 2 966 NUR TEN ts 5055 058 ess ding. vied eles oe oO DOE 329 499 366 365 0 SITS SES oe a a oy 717 1 190 $ FAT. 2 088 BUSI UR, is .5 Gots 09001 ww ierns be fe snote ye. e.e mck 48 141 263 186 POtME Current AssetGA........ weine bes ca eee 3 178 5 899 7 526 9 079 We TS OS 2 44 526 1 550 867 REMIND Ph globe a leccis terse si onece wid wcieaee $3 222 $6 425 $9 076 $9 946 Liabilities RAGACOTIO CODES S.c565.6 os oe ta cletee cd resawins $ 0 $ 209 $ 776 $ 288 PRE ROINISO DIED s Ve 356 wi sp ssvered Lae ee bv ple alee 751 888 1 512 1 550 FRCS MEIER, CS ink ic ts hod cas Seuele ets too 8+ $ 751 $1 097 $2 288 $1 838 PBT OU DOTCOMNE oi. ss iid ceiece ces @ ENS 23 17 25 18 Average size of farm Number of man work units................ 306 487 610 927 Number of acres owned...............20.. 0 0 Number of acres operated................. 90.1 133.2 151.6 218.3 Number of cows milked................055 12.0 19.7 24.8 35.9 *Also the total farm assets since these tenants had no other farm assets. NET WORTH INCREASE MMB DOLLARS E=] PERCENT $4,000 es bet diag Lk gs TENANTS Ped 3,000 Bee rye 2,000 155 1,000 _l 10 : om 400 550 700 ices “400 “350 ‘700 400 549 699 + 400 549 699 + SIZE OF FARM IN PRODUCTIVE MAN WORK UNITS Fig. 5—Amount and percentage of increase in net worth of operators in 1941. The dollar increases were positively correlated with size of farm in each group of operators, tho the increases in the tenant groups were less than in the owner groups. The percentage increases were much greater in the tenant groups than in the owner groups, but in the tenant groups the rate of increase tended to decline with size of farm rather than to in- crease, as in the owner groups. 540 ~ Buiretin No. 512 [June, TABLE 12,—CHANGES IN ASSETS AND LIABILITIES OF OWNERS AND PART OWNERS OPERATING FARM BUSINESSES OF DIFFERENT SIZE, 1940, 1941, AND 1942 Changes during End of year Increase in net worth Num. Debt the year Year se ee Increase De- Ex. In Percent o 5 Liabili- in assets crease ; : increase farms cent Assets ties excluding - in lia- center rected (with cash bilities cash) Less than 400 productive man work units 1940 06% dees 17 20 $16 215 $3 177 $: 314 <§ 24 $ 338 $$ 462 3.6 1981 cies 16 18 15 237 2 789 285 261 546 442 3.6 1942. i.5 ac 11 17 15 329 2 583 607 265 872 868 7a 400 to 549 productive man work units 1940) Aice ci 15 21 $21 397 $4 510 $ 640 $ (988% $ 542 $ 684 4.1 1941 0 c5 20% 16 23 21 702 4 954 5 aoa he 591 2 108 2430 14.9 19482 occa dees 13 17 24 170 4 029 1 585 841 2 426 2 919 15.4 550 to 699 productive man work units 1940 5 cee. 18 24 $28 238 $6 702 $ 618 $ 196 $ 814 $ 769 3.6 gy. Ree eee 20 24 30537 7 200 1-733 362 2 095 2 558 11-5 1942 eyes 20 19 27 678 5 168 1 529 1 092 2621 3 136 14.8 700 productive man work units and over 1940 sein. ce 0r8 9 52 $30 937 $9 912 $ 958 $ 605 $1 563 $1 745 8.6 1949 oceis ines 15 30 33 662 10 207 3 009 580 3 589 4 116 19.0 1942S ocsales 17, 22 32 668 7139 2103. 1 181 3 284 5 681 23.8 ®This is an increase. TABLE 13.—CHANGES IN ASSETS AND LIABILITIES OF TENANTS OPERATING FARM BUSINESSES OF DIFFERENT SIZE, 1940, 1941, AND 1942 Changes during End of year Increase in net worth Num- Debt the year Year ars hose rs Increase De- @ is Percent farms cent Assets relia Beane Pare cluding cluding "ihe cash bilities C8 cash Gash) Less than 400 productive man work units TOAO MC ees tard 10 29 $2 744 $ 786 $ 535 $(3638) $ 172 $ 124 6.6 VOGT cro aitie eitate 13 1383 3.222 751 SPA (2408) 287 869 37.3 1942 esa cieca 7 5 4 491 234 751 204 955 1 080 28.6 400 to 549 productive man work units 1O4Q ne cteece s 17 19 $5 348 $ 991 o. 545) $ (799) $ 466 $570 13.8 a ee aes 24 17 6 425 1 097 1 055 (468) 1 009 1 382 28.6 19425 (ens 20 18 7250 1 321 1 879 (3318) 1 548 1 756 34.1 550 to 699 productive man work units NAO iscsi: cede ie 17 24 $7 564 $1 817 $ 582 $(1419) $ 438 $ 642 11.6 sb lie aiarma ere 21 25 9 076 2 288 2 O11 (5388) 1 473 1 825 30.2 No Se 16 16 9 884 1 584 1.5502 (1878) 1,315 2 STE 31.1 700 productive man work units and over |e Be eariceisinte 19 16 $7 872 $1 244 $1 223 $ (619) $1162 $ 851 14.1 1944S: 2 clans 21 18 9 946 1 838 2 316 (3088) 2 008 2, 3t5 33.4 1082 Scie morercnst pd 10 10 761 £122 1 603 594 2 197 3 075 36.0 ®T:hese are increases. ee eS ee ae ee 1945] FINANCIAL Position OF MCHENRY County FARMERS 541 ' and 13). In the period covered, such correlation was to be expected, for production was profitable and the larger the business the higher was the net income. Among the owners, the percentage increase in net worth also tended to increase with the size of the business, but among the tenants it did not increase so uniformly. Moreover, during this period, with the exception of 1942, the rate of increase tended to rise from year to year. The situation in 1941 is shown in Fig. 5. All groups of owners reduced their debts in all three years except in 1940, when one group increased their debts. This confirms the observation on this point made on page 529. All groups of tenants increased their debts in all three years except in 1942, when two groups reduced their debts. These increases by tenants reflected their efforts to build up working capital. Thru these three years this policy proved to be wise. The question is: Will these men be able to foresee when the trend of income will be reversed and liquidate their indebt- edness before their incomes begin to decline? As a group their debts were not large; in none of the subgroups did the average debt ratio exceed 20 percent of the assets at the end of 1942. Operators With Continuous Records Records were obtained concerning the businesses of 72 operators for 1940, 1941, and 1942. Changes in the financial position of these men are shown in Tables 14 and 15 and in Figs. 6, 7, and 8. There was a moderate increase in the value of machinery and equip- ment, the increases between December 31, 1939, and December 31, 1942, being $391 for the owners, $733 for the part owners, $534 for the cash tenants, and $557 for the livestock-share tenants. The value of this class of property increased each year, even in 1942, when the output of farm machinery was restricted. The most marked increase was in the value of dairy cattle. Between the beginning and the end of the period owners showed an increase of $1,783 in this class of livestock; part owners, $2,113; and cash tenants, $1,708. The increase in the value of other livestock was also marked, particularly on the part-owner and cash-tenant farms. Feed and grain inventories also increased substantially. The increase in the value of the assets on these farms was marked, considering conditions in the period covered. As pointed out before, the debts of owners and part owners were being reduced during this period, while until 1942 those of the tenants were increasing. The aver- age debt ratio of owners declined from 23.1 percent on December 31, 1939, to 14.7 percent on December 31, 1942; the average debt ratio BuLteTiIn No. 512 [June, 542 s'9 OL Le 1'9 6°9 o's Deere eee eee e ee ee eee ee ee ee ees epg g°¢ #87 9°FZ 0'FZ 0°SZ 6°€Z Fete e ene n ete eee ee eeeeneseeseees “1903 JOqer Jo syUOPT g's 6°€Z ZU Z°2Z $'0Z S61 sare ae Ra ete Ae a ‘ore reres ss spaxqtur soo jo JequTN 68T 6LT 69T eet Lel Tet BN cr Sere gee Ee nee ” peyeredo qTe}0}— 0zI 0zI 0zI OFT Ltt rat ies igs rgvatefelcreliciaocely alates y pie ane 4 segs Fisety paumo—saroy 189 629 sre SOS #ES ok Mhials Gite Bates Seta batterands 1 2 feria Spies meas BAL DIELT 8ZIS 8°8E 6° CF 0'St ZO Am £4 t'Sé 0'87z L'67@ Shee S *** *SJUSUIBAOIGUIT pue PUP] 0} S}qop W19}-3u0T 16 £°st i anx4 T'SZ 3°v OL 26 8°83 Ee haat enact a ** 879886 JUSIINI OF S}Qep UlII}-J10YS SF SZ LL 0°6E L'¥I $81 8°1z L'€Z Shao Mah mpicene Vite trreeeeseees-sgaggee 1230} 0} 8349p [BIOL . : qyuosied ‘oer yqoq An KG T6r v9 T9Ot fst oe BLIIOU! 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Heh henai canto: ¢ Fete see eegag (QouRMSU] 6LP Z I8€ 7 sss tT ts T 89 Z 9£0 7Z £09 T SL” feo ee a poke aay a alae! “ccc + ureis pue pra] 178 LLS Ize 167 oeF 906 87Z Sz Prete che : sheet abpinicl 4a wveiatente SeAeRe ers ++ yDo03saaT] JI 979 ¥ v7S € TOL 7@ boa Sr 4 £0 F LEV OLE Z OSZ Z io aa alii A ee ed tere fe ayes Aired 68¢ 6z¢ gse 64 ole 00F 60£ 912 : ; GlisdaeMenste teres ba Net eecae ** SaS1OF] sos 7% £87 Z 670 7 CLLHE 086 T 7s6 I CSL 4 CSS oa Pens oea (ciot m -yuaudmbo pue Arouryoeyy 967 F1¢ 099 SI¢ evry stg Sov ST¢ ZOL 91¢ 68 STS OSL STS LSEASNSa oe i ; Sarai “syuauaAo1dull pue pit ae Il SZ é we Renee stenarens wiauatsiens te eeee s+ gurrey jo aquinN 7V6T T¥6T Orel 6f61 (Ans Tr6l Orel 6f6T SI9UMO Peg SIOUMO ZH6T INV ‘THOT ‘OPOT ‘OL6T ‘TE ATANAIAIG ‘SHANMO LUVG GNV SXANMO ‘IVOILNAG] AO SOILVY ALAAAOUg-OL-LAIG ANV SLAAHS AONVIVG AAILVAVANOD—'F] AAV] FINANCIAL Position oF MCHENRY County FARMERS 543 1945] *SOSPIINUI VIP WSO Ie es 19 $9 8'F g's 6's sCiag ok Piso Pete e eee eee ee eng gr 1°SZ 9°92 0°FZ 0°£Z 0°€Z £22 de S See Maw Seed shoe eee ait 1230}—10qPJ Jo syqUOY €-7Z Lie £0F L'Iz lz $02 oan Be oe Me eerie aicar doe OAS “+++ -payqtur saioo jo raquinN ost z8l z8I SFI EI ET LL aha ated ke atatbaleeeoaiage as MO FF AHS ee [e103 ‘sary 881 Z6L i a Iss 1#S Arch Sk Ab Bea eS Pee Feeeeeeeseseogqtun 30M UeUT aATNpoIg 9ZIS eree eeee seee eeee seee seer eee. seer terseeesssss> -saugUIaAOIdUIT pue PUR] 0} S}qep U119}-Bu07T S‘Et rLI 0'#2 g°€z 9°6 ¥Z1 + oI $21 Binge ays al eats Soret sss+gq9g6@ JUBLIND 0} §3G9P W9}-110YS L'a OLT S'€z Z°§Z 0'OI o'Z1 9°FI lst La cetcety swe e ee teseseseeceeee*gaggse [2403 0} 8IG2P [2I0. queosed ‘oer 3qoq zz 9'# SL $67 $87 #9 ee ledesedats tail wy tle RBS +++ ggeazout Juaodag 9L6 T 979 T $62 ZIS ‘A Te6 T ZLE een ener . ee eee eee ener ee eee * **yseo SUIpNouy 6SF I SIF I SSF $68 T 0S9 I clF bebe tere ee eee e eee e eee eeeeeeeeeee es © sUgBy SUIPNPX YVIOM JOU UI VsvaIOUT Il 101 ST Is ehL e8LT Pek uie anid actasin witows Taw arses ++ -garqTIqely ur aseazs9q, ore 1g Tre 1g Z19¢ 918 1g PZL 1g 16S¢ ee ee eee “ee eee eee soeeseereress + -S9988E Ul BSPIIDU] sosuvy9 $98 Lg SIS 9g L0Z S$ S6S ¥$ TPS OTF StL 8$ 100 Lg OTF OF Testers sapiiqey pue qW0M ION 798 9 for s $86 € L7S € t8P 6 Teo L 186 ¢ gos ¢ eae aY Sie) LS lee SR ALS I « rst euiaty Ghia ane “"* “GWOM JON Z00 If SIT 1¢ 260 1S 890 1¢ LSO I$ 460 1% 0zO 1% zs ¢ pettiness t59 ON ae in seers sess “sorpiqery [2JOL zoo Tt sit t 777 i+ 890 T £78 L06 678 99 ; i eisaakes’ Sts Gt) “Ey yO aes S$}Qep UW19}-jJ1OYS [BIOL 0 $ 0 $ 0 $ 0 g pez ¢ LSU 5S Tot ¢ 96t ¢ eS aay tp ae % stress ss" $3qap UL18}-BUo] [e3OL SOnMIQeYT 798 1g SIs 9g 102 sg Sos ¥¢ 1s OT¢ szL 8¢ 100 Lg Ol OF ttt tte seers ees rees ress se ss gygge@ [230] 8h rat OTT 801 $66 T 82P T L¥Z I soz I Gisip gee Asad] Stel tithaet 26 9 PAS She Tis Ee et PRO LEL OACD OIF L L6E 9 160 L8b ¥ LYS 8 16% L PSL S SOU Si. Pe Nee See mee ae tes eo se ees CONN OS TEL, OIF L L6¢ 9 160 S$ 18h 4 L¥S 8 162 L PSL S DOES os oe eet Se NLT AOR peseTO EID, 6zE 80¢ C12 1Sz 08z ZZ FZ FZ beeen eee e eee e eet eee terse reseeeeteneenegag (QQUBIMSU] Os? T Ltt I 080 T 7883 608 T €hL T ese T €£0Z T eee eee eee eee eee ee eee sreceeccoes* -UTBIs pus podJ 19% 16¢ 1Iz 161 PUL 8cF #0¢ 6SZ bebe eee e eens sees ener eteeeeerseeeees s+ © ¥90989ATT I9TIO L8T Z L¥S T Litt 68 80S ¢ ISL -Z 966 T 008 T wT eieia.ejeionai eiaihraie tie S4Ae shin: S See SS eee 8. te)s eS oe Sree AOE $0F cee 66 OLE Z8Z 08z 00 Z6Z bene e ence nee e eee e eee e eee seen ete e eter eeeeees SOR IOFT S6r Z ele Z S00 Z 8£6 T +F6 T £78 T €zs I OIF T treeesececeeccececeessecesss -quguidimba pue AruTyoVAl 0 $ 0 g rt) ¢ 0 =< 0 ¢ 0 ¢ 0 ¢ 0 g er ters eereeeeceoreceess -SaSTIQAOIGUIT pus PUeT sjyessy ¢1 ‘ €Z sabe cece ee eeeeeeeereeeeeeeeeeeeeeere ss “Surrey Jo J9qUINN 7v6T Tver Ov6T 6£6T 7r6t T¥6T Or6T 6£6T S}ULUd} BIeYS-y0}SOAIT s}ueUd} Ysed ZH6T INV ‘TH6T ‘OF6T ‘6E6T ‘Te AAAWADAG ‘SINVNA], ‘IVOILNAG] AO SOILVY ALUAAOAg-OL-14IQ ANV SLAAHS AONVIVG HAILVaVdNO)—'S]T ATAV LE 544 BuLteTIN No. 512 [June, of part owners declined from 39.6 percent to 24.5 percent. This latter group reduced their short-term debts from an average of $1,640 to an average of $989. The average debt ratio of the cash tenants declined from 13.1 percent to 10.0 percent, a decline reflecting a larger increase in assets than in debts; and the average debt-ratio of the livestock-share tenants declined from 23.2 percent to 12.7 percent. Between the above dates the farms operated by owners increased by an average of 2 acres; those operated by part owners, 20 acres, and by cash tenants, 9 acres; while livestock-share tenants reduced their farms an average of 2 acres. All groups increased the number of cows milked; the greatest change was made by owners, who averaged an increase of 2.7 cows each. The number of months of labor used on these farms changed but little over this three-year period. The increase in value of livestock and of feed and grain in this ASSETS AND DEBTS $30,000 1940-1943 OWNERS PART OWNERS 25,000 20,000 15,000 10,000 5,000 ene 1940 1941 1942 1943 1940 1941 1942 1943 fe) Fig. 6.—Capital and debt positions of owners and part owners on identical farms, 1940-1943. The amounts of capital used by these operators increased, whereas their debts were reduced, particularly in 1943. 1945) FINANCIAL PosiTION oF MCHENry County FARMERS 545 period reflected, in large part, the rise in prices. When individual farm- ers buy and sell livestock frequently, as they do in this area, there is no practical way to inventory it except at current values. Changes in numbers of animal units are of interest, therefore, and are shown in Table 16. On the whole, except on the larger farms in 1942, the number of dairy cattle on these farms tended to increase. Over the three-year period, the owners of the larger farms increased their herds more than the owners of the smaller farms. The reverse was true for the tenants, those on the small farms increasing their herds more than those on the larger farms. No marked increase occurred in the numbers of hogs inventoried. The group of owners having the largest farms and the two groups of tenants on the larger farms had fewer hogs at the end of the period ASSETS AND DEBTS 12,000 saat 1940-1943 ROS Wess 27s Re LIVESTOCK-SHARE __| : TENANTS TENANTS 8,000 6,000 4,000 2000 1940 1941 1942 1943 1940 1941 1942 1943 Fig. 7—Capital and debt positions of tenants on identical farms, 1940-1943. The amounts of capital used by these farmers increased sharply during this period, while debts remained about constant. 546 Butietin No. 512 [June, TABLE 16.—CHANGES IN ANIMAL UNITs ON 72 IDENTICAL FARMS DURING 1940, 1941, AND 1942 Tenure, and size in terms of Number Animal units on hand on December 31 productive man fe) Over-all work units f farms 1939 1940 1941 1942 change Dairy cattle Owners and part owners Lene than 400 or. hares caaiers © cvs lererslo 7 15.9 i 3 16. +1.5 MASAO Oo oar cs ere lard cioseraiare Bi wresere ae 1i 21.8 23.2 24.9 25 +3.6 SS O690 os oe Sealed sist eseigrs die Sate 11 27.4 A eat b 29.5 30.6 +3.2 ZOO ADE OVER tere chances ctu iarti trouve 7 36.8 39.0 41.4 41. +4.2 Tenants Lees:thar' 400 viseo5 Ga cis cicada eects 6 14.5 14.6 16.3 +5.7 BOOS 49 iassraee Gis cearessse cee ctisleaierale fess 7 18.4 21.4 23:9) 24.0 +5.6 SOOO 5 hi 556 a istardie sar etayaud erase: dS caeeis 1S: 26.4 OH feat 29.2 28.6 +2.2 700 and (OVEF o0ifo ss Sees 10 45.8 49.1 49.8 49.8 +4.0 Hogs Owners and part owners Leea'than’ 400 2255.2 alae. cs'k es Se 7 a Fe .38 .20 .16 +.03 BOD SAD Beeiis ora atlaceloieie ohakare Minrere siete 11 . 36 K-56 1.00 By +.37 550-699 8 cess ttaind eisiwveusatetel eeaisiaiee 11 1.26 .95 1.50 1.40 +.14 J00/ ANG OVET 65% 3.05 cide sna oss 7 1.95 155 1:73 1.22 —.73 Tenants Bess'than. 400% 355.002 4.c hae et 6 .05 .54 -92 1.06 +1.01 BOD SAO oo slove aie Ristalenace svahions: natstee 7 ay x BS 220 .40 +.19 SOOO cote ate chris oie 13 1.74 i ler fe S 1.63 1.26 —.48 WOO and OVEE Ss cchietacalk hier wee 10 2512 ais 2.46 1.96 —.16 Poultry Owners and part owners Ress than’ 400) oo occa kia coloctees 7 £25 122 a Wa LS 0 AN0-S49 on ais aisice Rae Heine 11 1 ies 122 1.4 LZ +.1 SOO-G99's enti pene eye ashe ote oe 11 1.4 a2 tbe} 1.6 +.2 100 ANG OVER Se ois Sos.o5 sic sree 7 2 1.4 a ef 1:5 +.3 Tenants Deus than 400-36). shia cee 6 3 12 p 152 —.1 AD hak late ouateieeere oie Se oie 7 1 15 1.6 1.4 = iit 550-000 er ntae a ae ae eee 13 1.0 9 1.0 8 —.2 (OO:andOVED Soho sioale keene 10 1.4 i Ua 1.3 £3 —.1 than at the beginning. There is no evidence to indicate that hogs were increasing at the expense of dairy cattle in this intensive dairy area in this period. The tendency for the operators of the larger farms to curtail the number of hogs at the end of 1942 probably reflected labor shortages. When labor is scarce, farmers concentrate on the things which they consider most important. * Likewise, numbers of poultry were increased but little. The owners in the three groups of larger farms increased their flocks, but all the tenant groups reduced theirs. It may be that with better incomes from milk there was less necessity for these tenants to keep poultry in order to realize a little extra income. Beef cattle and sheep were of negligible importance on these farms. These comparisons indicate that in expanding production in re- sponse to increased demands, farmers in this area put the major em- 1945] FINANCIAL PosiTIoN or MCHENry County FARMERS 547 NET-WORTH INCREASES ON IDENTICAL FARMS Gl DOLLARS E23 PERCENT $4500 % 3,000 40 1,500 20 0 38 Be es oo: oH 1940 1941 1942 1940 1941 1942 1940 1941 1942 1940 1941 1942 OWNERS PART OWNERS CASH TENANTS L:-SHARE TENANTS Fig. 8.—Increases in net worth of all operators on identical farms, 1940- 1942. In 1940 the increases were small, but in 1941 and 1942 they were rather substantial. Altho dollar increases were larger for owners and part owners than for tenants, the percentage increases were larger for the two tenant groups. phasis on their primary product—milk. Labor difficulties will doubtless accentuate this trend for the rest of the war period. CASH INCOME AND EXPENSE PATTERNS In the capital patterns discussed in the foregoing section, increases in assets included whatever increases resulted from the retention of farm-raised property as well as from cash transactions. The following analysis deals with cash income and expense only. Patterns of Owners and Tenants Contrasted The receipts and expense patterns of the various tenure groups are shown in Tables 17 to 19 for three years. Cash receipts include all cash taken in, including that for off-the-farm work and amounts bor- rowed during the year and not repaid. Expenses include expenditures for operating, for new farm capital, for cash living, and for interest payments. The net paid on old debts (those owed at the start of the year) is shown separately in these tables and is further pictured in Fig. 9. Gross borrowings and debt repayments are shown in Fig. 10. 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S ; Se Dispisings TOL T ee Sue Oe OES yodag "yo10q “yo4ag "yo4ag 4940 494ag eUIOIUT YSBO S,10}B10dO 0z 6Z £7 Le 0s oF bebe esse ee eeeeeereeeee es + gunrey Jo 19quInN CH6T Tr6t Or6T 7HOT Trot Or6T $]UeUd} BIeYS-YIO}SAATT * syueus} ysed FINANCIAL Position. oF MCHENRY CouNTy FARMERS ZP6IL INV ‘THOT ‘OF6T ‘SINVNAL 4O SINAWAVdAY LAA] GNV ‘SONIMONNOY ‘SASNAXY ‘AWOONT—'S] FIEV.L *eah dy} JO Suyuupsaq ye Suypuezsyno s}qoaqq ‘@WOOU! WAIJ-YO pue oWIOSUT UTILS SNOIUeTIIOSI[e ie Ist sxe ere 08 stasis os acy Z8Z wae 26% ree 98s “++ yea Jo pua ye predun sBupmorsoq JwerND setts 18% arejeg 26 eats 8ST aires $16 Pe a PEL Peers 6zS EEE aria eis +++ + -gqtaurAedas 8012) See Is ¢ ttt a £9 ¢ Se 60$ ¢ ott" lw go CLL ccc tsetse esses + -ssutwor0q 88015) Pele 8°08 enee Z 2 rae i 9°0¢ eree SOF ree L‘OF “oe sd: 5 an YA ee OS Pea hee a ASD, plo uo pred qusd1ag eree L87 ¢ eree 88 g . of Stl g oeee LYL g owee 609 g I) ZPE g 0 ©: @ Oye @1& OO 66 ose # *qs}qop plo uo pred PN F syuourfedol qop pue s#ulmoll0g seis 806 ay gee Pe 6L Seas 100-4 beiiare 818 Sune -4a4 Total cash expenses......... $4 856 100 $4 457 100 $4 976 100 $6 259 100 Net: cash: inicome ss. 65.6363. 2 707 Sek 904 eae 2 106 ease 3 052 Borrowings and debt repayments Net paid on old debts........ $ 0 ... $1 096 Soe, AOL oes ses SE'GN6 Cash not accounted for..... 2 707 Ace —192 ech 743 Ape 1 446 Percent paid on old debts..... 0 en 46 Ake 19.Si5 Gist 42:5 Gross borrowings............ 0 che OOS Soo (ADT coe 42-2580 Gross repayments............ 0 Sale 1 096 1 432 1 747 Current borrowings unpaid at end: OF Yar se ieee 588 i) 68 338 379 ratios. Net cash incomes and amounts of cash unaccounted for in- creased in all groups from year to year. Among tenants there was no definite tendency for size of cash balance to be correlated with debt ratio, but these balances tended to increase from year to year (Table 23). TABLE 21.—INCOME, EXPENSES, BORROWINGS, AND DEBT REPAYMENTS OF TENANTS WITH DIFFERENT DEBT Ratios, 1942 Debeitatios ae mises onde nies 0 1-19% 20-39% 40% and over Number of fatms 3054.5 824.5.38:5 12 23 13 : 9 Operator’s cash income perct. berct. perct. berct. Crop ealea ire isi accet atch owe $ 185 3.0 $ 242 41S 179 255) See .6 Lavestock sales: tiscecces scat 1873. 1952); 255. 1975 417 20.0 964 19.7 Dairy product sales............ 3 951 64.7 3215: 54.2 4 127 58.4 2506 51.3 Other income va. F ost. ence Ss 593 9.7 484 8.2 707 10.0 389 8.0 Current unpaid borrowings..... 208 3.4 830 14.0 641 9.1 997 20.4 Total cash income........... $6 110 100 $5 926 100 $7 071 100 $4 886 100 Operator’s cash expenses Livestock purchases........... $ 359 1.31 S672 13:9 $ 723: 14.3. ($:°858 72925 Capital purchases. .....5.5..%.. 931 18.8 1103 +2239 723 14.3 425 10.6 Current farm operations. ...... 2586 52.3 2140 44.3 2379 47.2. 4°585 530.4 Interests. 63. accnes ates cee 0 0 30 6 86 £7 146 3.6 Family Hving .0-4:..0% ccteusw 1 066 - 21.6 885 13:3 IT36. 22:5 1 O11 25.4 Total cash expenses......... $4 942 100 $4 829 100 $5 047 100 $4 025 100 Net cash income............ 1 168 ee 1 097 Syn 2 024 ay 861 2 te Borrowings and debt Eepasment Net paid on old debts. $ 0 cos 9! 540 ... $1 188 oat Bk 286 Cash not accounted for..... 1 168 eee 557 a 836 bata —475 Percent paid on old debts..... 0 as 900! 53.9 eee 41.6 Gross borrowings............ $ 208 woe & 944 sais. bo OOS so) “Sh eoee Gross repayments............ 0 pan 654 Eos 1 540 eis 1 573 Current borrowings anata at OT OP WOOT $336 RA VOREIE DE: BHUPS Foi ioc agate koe obs owe 690 1 007 1 364 377 494 1 057 Dairy product sales. .3. 6003. bess 2 167 3 035 3 865 1 738 2 336 2 962 CURE TINE Sc cise Nola sskis cise ase 474 787 653 384 627 539 Current unpaid borrowings......... 320 521 685 338 305 399 Total cash income............... $3 873 $5 508 $6 740 $2 879 $3 818 $5 073 Operator’s cash expenses Livestock purchases............... $ 510 $ 669 §$ 537 $ 280 $ 76 $ 184 aOitnl pUsChasee si Sak ses cece 465 1 004 1.275 440 728 881 Current farm operation............ 2 007 2 187 2 685 1 270 1 435 1 762 PSILOPUMRS Re icle row lin ae 5, alears ee p's 39 51 42 56 39 33 AT AL one A ee 751 869 921 813 920 1 185 Total cash expenses............. $3 772 $4 780 $5 360 $2 859 $3 198 $4 045 Net:cash incomes. g46. cvs 5.005 sie 101 728 1 380 20 620 1 028 Borrowings and debt repayments Net paid on old debts............. $ 142 $ 447 $ 721 $ 184 $ 412 $ Sil Cash not accounted for.......... —41 281 659 —164 208 517 Percent paid on old debts.......... 16.9 43. 65. 17:2 oo. 45. Gross borrowings. ..............++ $ 420 $ 756 $ 704 $ 469 $ 344 $ 537 CETOUE: SOA IOTILG hia os one 9o sla siew.e joys Fe 242 682 740 315 451 649 558 Butvetin No. 512 [June, Expenditures for Various Purposes Total expenditures increased progressively during the three-year period in both the owner and the tenant groups (Tables 28 and 29). The amounts which owners and part owners devoted to payments on the principal of their debts increased more in proportion to total ex- penditures than did the amounts spent for any other single purpose. The expenditures for dairy cattle and for land and improvements became relatively larger, while those for automobiles, machinery and equipment, and other operating expenses became relatively smaller. In 1941, 9.4 percent of the total expenditures of tenant operators went for the purchase of land. In 1942, 6.4 percent was so used. A larger proportion went for the purchase of dairy cattle in 1942 than in either of the other years, while the proportions going for machinery TABLE 28.—EXPENDITURES BY OWNERS AND PART OWNERS FOR VARIOUS Purposes, 1940, 1941, anp 1942 Items 1940 1941 1942 Nemberof farmss.c ..c.cccce sees 59 67 61 Purchases of— perct. berct. perct. Tan = Peas sraiaeraataits bate $ 0 0 $ 0 0 $ 164 2.6 TM PTOVEMENUSS io05 Gaieid cw choi tafe 64 1.6 149 237 250 4.0 Dairy: cattery. shoe's Sineescents 155 3.8 330 6.0 462 7.4 Other livestock 7... cis sess er6 ag 133 3.2 133 2.4 107 iF Machinery and equipment..... 378 9.1 487 8.8 374 6.0 Automoniles 3. sicscice eis ss Pie 215 Se 229 4.2 26 4 OCIS ioc cauaaiieees 299 7.2 361 6.6 479 Tod ROLCUZErSs cvae a tee yarn ts 63 1.5 58 Pt 132 2.1 Other operating expenses......... $1 390 35-6 $1 558 28.3 $1 834 29.5 Interest payments? s 5. Sos ewes 246 6.0 279 Si 225 3.6 Family living. 566 os... c1n8ecaxes 757 18.3 1 040 18.9 1 030 16.6 Paid on debt principal........... 435 10.5 877 15.9 1 144 18.4 Totaliicsc 28355, 325 tances oases $4 135 100.0 $5 501 100.0 $6 227 100.0 TABLE 29.—EXPENDITURES BY TENANTS FOR VARIOUS PURPOSES, 1940, 1941, AND 1942 Items 1940 1941 1942 Number of farms. . ... 55 .55 G02 63 79 57 Purchases of— berct. perct. perct 11 6 LES ee cara aaa feos Mat Seeedin iti Te $ 0 0 $ 454 9.4 $°.352 6.4 Improvements. 3).6.5 5. ee oes 0 0 15 BS 0 0 Dairy cattle Suey Maotalaiarctor eve rerete Biers 269 7.4 344 (be! 549 10.0 Other livestock .\. 2056005 sce 109 3.0 107 S eg 98 1.8 Machinery and equipment..... 421 $ie5 413 8.5 419 7.7 Antomobile: ii. 3 650 dieses oe 109 3.0 220 4.6 103 1.9 re RAE AO eee er 263 72 313 6.5 423 ied Hertilizet 4..42.ccn sce canoe 30 .8 34 yer | 52 1.0 Other operating expenses......... $1 435 39.4 $1 488 30.8 $1 725 31.6 Interest DEY MONS. iss ca deeve a clas 55 1.5 1.2 55 1.0 Mamiily ving 56 oie oslo asso scald eles 707 19.4 868 17.9 1 000 18.3 Paid on debt principal........... 248 6.8 523 10.8 684 12.6 ROGAN a6 6 eicrercal eleicieinie eon eee $3 646 100.0 $4 839 * 100.0 $5 459 100.0 1945] FINANCIAL PosiTIoN oF MCHENRY County FARMERS 559 and equipment and for other operating expenses were considerably lower in 1941 and 1942 than in 1940. The proportion of the total ex- penditures applied to the payment of the principal of debts averaged lowest in 1940 and highest in 1942. POSSIBILITIES OF BUYING FARMS FROM EARNINGS The eventual goal of most farm operators is to own and operate a farm relatively free of debt. The following analysis will show the approximate amounts of earnings available to these farm operators for purchasing land and improvements. In arriving at the earnings available for purchasing farms, all expenses—including interest paid on debts, the actual cash cost of fam- ily living; farm operating costs, and the purchase of items of working capital—were subtracted from the total cash income. The difference was considered to be available to the operator for the purchase of land and improvements. It was assumed that the expenditures for working capital during 1940, 1941, and 1942 were adequate not only to main- tain this capital but to allow for such expansion as would be expected in a progressive business. In the main the increases in the prices of the items included in working capital caused the increased inventory values. Borrowings and repayments of debts were excluded from this calculation. Earnings Available to Owners and Part Owners For farms of different size, the investments of owners and part owners in farm working capital, the increases in their net worth, and the amounts of funds available for purchases of land and improve- ments in 1940, 1941, and 1942 are shown in Table 30. The total investment and the investment in land and improvements varied somewhat in the different years because of variation in the sample of farms studied rather than because of changes in valuations. These differences, however, were not significant. Earnings available to owners and part owners for land purchases increased with the size of the farm. For the three-year period the averages for farms of different size, from small to large, were: $189, $731, $877, and $1,824. At these rates it would take the operators in these different groups roughly 52.7, 19.3, 21.0, and 10.8 years, respec- tively, to accumulate earnings equal to the value of farms of the 560 BULLETIN No. 512 [June, TABLE 30.—Equity oF OWNER AND PART-OWNER OPERATORS IN TOTAL FARM INVESTMENT AND IN LAND AND IMPROVEMENTS, INCREASE IN NET WoRTH, AND CASH AVAILABLE FOR SAVINGS OR EXPANSION, 1940, 1941, AND 1942 . Cash Increase in available for net worth savings or Equity in Equity in Year total land and im- investment provements expansion Less than 400 productive man work units A AQ ee ie earls ars inna sal eedtieieisiotase eo ee ehel a toe sere $16 215 $10 482 $ 462 $ 148 VOR Sear a aes he biare ernie Cle lmlaig ale te sue ale claieetars 19°-237 9 943 442 157 GED a Penis oie iccate ore shore Siniaiehactiajeverest cieeerain siaveseista 15 329 9 470 868 261 A VOTARC 55. Sis ie nie bie Biwi) wee eid sy esetefera ata ote 15 594 9 965 591 189 400 to 549 productive man work units $21 397 $14 812 - $ 684 $ 21 702 13 698 2.333: 816 24 170 13° 848 2 919 1 333 22 423 14 119 1 979 731 550 to 699 productive man work units AO eau taro tke neni ak ctaheke alata oe iat siekate evn oie $28 238 $19 316 $ 769 $452 NAN ee ers wdtale phate cicsnwaieis aH aletas mee aig elerere pielete ee 30 537 19 259 2 558 872 1a iss bialocar cavers iyareie aus 6 alal Ceara egzicbis SIO sens ea 27 678 16 767 3 136 1 607 PVOTAQE cc oret sila tee a ees We ee See Sere 28 818 18 447 2 154 877 -700 productive man work units and over BOGO Seas Aare 5S dcala ala loods TAS siete Sie sieve Shee. 8 see $30 937 $20 638 $1 745 $ 787 se 2 Ptr rors ite a ie ts Areata ay ee erat ae 33 662 20 310 4 116 1 107 hOB D ore eiexafaseSee cei ee ReneS he Pee SiS ouatele he etecake eshons 32 668 18 128 5 681 3 579 WAVOTABE 2555 cis o ciate ores ie Siac hans are 32 422 19 692 3 847 1 824 size they were operating (number of years determined by dividing value of land and improvements by average earnings). Expressed an- other way, the owners and part owners of the largest farms could accumulate in cash the value of the farms they operated in one-fifth the time it would take the owners and part owners of the smallest farms to accumulate the value of their farms. Thus, at least in periods of rising prices, it is much easier for an operator of a large farm to buy a large farm from his farm earnings than it is for the operator of a small farm to buy a small farm from his earnings, and the same can be said for tenants (page 561). The above figures are of course averages—some men would do better, some not do so well. Also it must be remembered that they represent the periods required by men in the capital position of the men studied. The owners and part owners operating the largest farms had equities which averaged approximately $32,000. At 4-percent interest this amount of money would earn $1,280 annually, which is about two-thirds of the average amount of cash available to these operators yearly for savings and expansion. If this money were invested where it would draw interest, the interest earned would help to shorten the eee ee — 1945) FINANCIAL Position oF MCHENRy County FARMERS 561 time required to accumulate enough capital for the purchase of an - equivalent farm; but if the savings had to be used to make down pay- ments and the rest of the purchase money had to be borrowed, the periods would be lengthened because of the necessity of using part of the surplus cash for interest. Usually land is purchased by men who have some initial capital. Earnings Available to Tenants The funds which tenants had available for the purchase of land and improvements (Table 31)—calculated as explained above—in- creased with the size of the farm, averaging during the three-year period $85, $260, $343, and $660 respectively for the four groups. For these tenants to acquire enough capital to buy farms of the same size and with the same land and improvements valuation as those operated by owners and part owners would take 117.2, 54.3, 53.8, and 29.8 years respectively. ; ; Obviously it would be difficult for most of these tenants, after providing for operating and living costs and needed working capital, to save out of earnings such as were realized in this period the neces- TABLE 31.—TENANTS’ EQUITY IN TOTAL FARM INVESTMENT AND IN LAND AND IMPROVEMENTS, INCREASE IN NET WorTH, AND CASH AVAILABLE FOR SAVINGS OR EXPANSION, 1940, 1941, AND 1942 sole Cash wees ai in Increase in available for = investinent net worth savings or expansion Less than 400 productive man work units POND ose ted Vendor a, WISP ROR SEO ae AS Te Gee: Sl car eue sb iand va iatarers Stage rerbie $2 744 $ 124 $—411 2 MRE Od i Liar eae Ae Par Wren ia rey eRe ee Grrl WAPE Aer araray ar irae a oee 869 341 SMe ae ee ce rete, & WAS ser erehE Meret id olatiot oe ia war ao sp elat ace nieneeriey oper ar enaicata tate 4 491 1 080 325 PROLOG cra Tr bocte Sek Pate ie ie ete eA Wie Te Sin WO isco Rus ane Reel a anes 3 486 691 85 400 to 549 productive man work units RSMO oleae Ta eh onder oh ect 6 510 STF se Laie! eral Sears (a dat aham aut lot todo Faces $5 348 $ 570 $. 425 i 8 RAL eh apt Dy Ae Pe cok ar es CAE As SMe Pa ae PEC 6 425 1 382 328 DOME tie crkalet bc Mais a ioe Siale asi G Ra asd gleams ET meee we 7 250 1 756 427 PROTO foe's avers ha aie a teeisinece 6 AV clos Glee NIES 6 GMOLELE bieisia’s nee 6 341 1 236 260 550 to 699 productive man work units NRA CASE 14! ares eae < Wun reR Gioie RCS Se are aye AA erersnsia: dpe eee $7 564 $ 642 $ 60 OM Rate Sie tah area Seth ce sa ate ais SIC Lal avec at eeShe FAG Sra sas Sl eialWcatav eet e\eual digi sidiciaiece 9 076 1 825 —186 pT aCe re eka ie bc te Oe tel MOR CE Nearer AEN ate WER Ta Pea Le 9 884 2 377 £455 CLAM CE Se Nec Nee thre Cee ckolate ews label sin Sia eed Aree elle ae DI 8 841 1 615 343 700 productive man work units and over BTR Gaia cee set euaiess eivre eC ANTS OTE ETC wlAelahe Cieidee ola: Re wie oie awe $7 872 $ 851 $—372 RODE ion y Sunietas oie a hes © ora. Die ane Aida ed leien he. ai diaie iw ies Gialete >. e0) « 9 946 2 375 559 DRE Di Nee Se sick An SB etches oes Veale wi eiRa ewe ke aes Getta ce 10 761 3 075 1 794 GEOR NR Se iain Bis kiare tere oO neh eea Sy On php ie gO MN ora are eal ee are 9 526 2 100 660 562 ‘Butetin No. 512 [June, sary money with which to buy the farms they were operating. The tenants operating the largest farms would apparently have the best chances. They could accumulate in cash the value of the farms they were operating in one-fourth the time it would take the tenants of the smallest farms to accumulate the value of their farms. SOME CHARACTERISTICS OF THESE FARMS AND THEIR OPERATORS Owner and Tenant Farms and Operators As measured by productive man work units, acres, or cows (Table 32), the tenants operated larger farms than the owners and part TABLE 32.—Various ITEMS CONCERNING FARMS, FARM FAMILIES, AND FARM BUSINESSES OF OWNERS, PART OWNERS, AND TENANTS, 1940, 1941, anp 1942 Owners and part owners Tenants 1940 1941 1942 1940 1941 1942 Numberiof fatms\3:462.00.. sc scot oeaaae: 59 67 ‘61 63 79 57 Size of farm business Productive man work units............... 539 562 591 624 607 612 Acrés—owned': 08h esis os ons oes 126 134 128 0 i) 0 TENCE i micecy co Arie ase oie eee 14 14 26 157 154 151 =F OLA Sos Scie A ee ee 140 148 154 157 154 151 Number of dairy cows..2%.5206. 0.5 ice h sce 20.3 21.4 22.2 23.9 24.5 254 Months of: labor—totals.: c.c.c Sons 23.4 2555 24.4 22.6 22.3 233'F me T FOO a fresco, vie cis oh take aaah S27 6.9 5.4 5.9 Set 3.8 Productivity measures Pounds of 3.5-percent milk per cow....... 7 472 7676 7 616 7187 «=-7.. 547 Y bee = 5 2 Bushels:of: corn per acre. 55.5. sz5<0025.- 5 63 52 60 62 Tons of legume hay per acre.............. 220 12.9 YA 1.9 137, 5 Land use A CTES PEE COW: u.5 ds thera ble Coen a 4 48 47 50 46 46 47 WOOL ONF LATIN a <5 p.F ola ee Bs Cale bake cceis se. 7 7 8 6 6 8 Number in family, total................. 4 4 4 5 4 5 Number over 14 years old................ 3 3 3 3 3 3 564 Butietin No. 512 [June, years, the tenants about 8 years. The size of the family in each group averaged four. As measured by all four factors (productive man work units, acres, cows, and months of labor utilized in running the farm), the livestock- share tenants operated larger farms than the cash tenants, altho the difference in months of labor used was small (Table 33). In 1940 the share tenants had lower milk production per cow than the cash tenants; in the other two years this factor did not differ significantly. They had better crop yields, their farms were more heavily stocked and became increasingly more heavily stocked during these years. The cash tenants had a higher percentage of land in corn, silage, and soil-depleting crops and a lower proportion in soil-building crops, hay, and rotated pasture. During the last five years less limestone and phosphate had been applied to their farms. Between these tenant groups there were no significant differences in age of operator, in the number of years he had operated the farm, or in size of family. Farms With Different Debt Ratios The number of cows per farm in the owner groups (Table 34) tended to be higher in proportion to debt ratios in 1940 and 1941 than in 1942. Some of the older men dropped out of the sample, and mean- while some of the farmers of the higher income groups paid off their debts. These changes explain why in 1942 the number of cows on the low-debt farms was larger than in the other years. In the first two years the owners with the higher debt ratios had higher milk produc- tion per cow, but this was not true in the 1942 sample. The owner- operated farms with the higher debt ratios had more acres per cow and more total acres (Table 6, page 532). There were no significant differences in percentage of crop acres in soil-depleting crops. As other studies have shown, this factor is not related to debt, at least under the conditions which have prevailed since 1934. The owners with no debts raised a smaller percentage of their cows. Except in : 1 the no-debt farmers were older men. Among tenants (Table 35), the no-debt farmers milked larger herds and had higher production per cow. Lower production per cow was characteristic of the high-debt tenants. Acres per cow tended to de- crease as debts decreased. Except in 1940, when the percentage of crop acres in soil-depleting crops tended to be positively correlated with debt ratios, this factor did not vary in any systematic fashion with debt. The percentage of dairy cows raised was negatively correlated with debt; that is, high-debt tenants bought more of their cows, indi- 1945] FINANCIAL Position oF McHENry County FARMERS 565 TABLE 34.—SELECTED ITEMS CONCERNING OWNER AND PART-OWNER FARMS CLASSIFIED BY DEBT-TO-PROPERTY RATIOs, 1940, 1941, AND 1942 PEMMRNRRI Et Ls ia Utaiclssla/b-eaueveicia yo nie Sraals © 0 1-19% 20-39% 40% and over payee of dairy cows Baa oie tere! 3 eA Sid beats cielaie'h boars Shela sia she 17.4 0 104 MRIS Stuer y es eta celal are tee ea aela aia oe Se Pee 19.2 21.8 20.9 YK hy 4 UMMA AGHGA hater A Sete like wcreielate be haistaa 6 oei welare yy My J 6 he v7 ppt per cow, pounds of 3.5-percent milk ‘ELE ST pe OL ICTR EI a Pee 6 797 7 147 7 769 7 208 io4t SERS WARM ATES +2405) p oo, ste, cigs tacos fa are 7 048 7 147 7 972 7 844 DRMRMREDE Satbcs re: cP LG. ys lela ees otaiavere Shia weenie mies 7 801 7 418 7 672 7 592 Acres per cow RUB CRG irs FaXG hi fal scenic ors oie he mieieiw a oak fee: 6.3 7.0 7.6 RE RONG tesla g SG 4 ci 8 as Ses w ie cas bee RET ah ie 6.6 La) 6.4 8.4 (UU SSSR ye a a A Ig 6.8 6.3 6.9 Ye! Percent of crop acres in soil-depleting crops PORES Ro 8 sang tosces. WA cld tans once iat 62.8 58.8 9 64.1 LT SL Se 8 ita ert at ae eg ae a 64.8 59.6 67.4 65.1 MOON R OG as 8A. 0d) on rsin oie. 5.6 49356460, scale aid coneer 60.3 61.9 .8 62.8 Percent of dairy herd home raised ee ste ak ESE bis fave ssieT die totale leicse s1ececaie' aie eae 59 60 77 67 PO ate af oW ES alote ates, cis Sbleeiee eineien eee 57 73 68 64 Average age of operators eke ene Onis eee: Civ. waa Soi: sloverere™n ale @ oie tre) anna 62 51 55 49 EMA ea ila, c Rena cane cashew salad he cavers Sate ece oe 61 48 53 53 “i's, CURSE SOR SIE CA Ra tae ors Pa 52 55 54 55 cating a tendency to keep more of their limited capital in milk cows and less in replacement stock. The younger the operators, the higher, on the average, were the debts, as would be expected, for younger men, starting farming, usually must borrow and then gradually retire their indebtedness. TABLE 35.—SELECTED ITEMS CONCERNING TENANT FARMS CLASSIFIED BY DEBT-TO-PROPERTY RATIOS, 1940, 1941, AND 1942 r PODER 5.06 ote ire ow wei ole es ¥ vlioterers ¥ieer 0 1-19% 20-39% 40% and over —— of dairy cows i RA Di ER PR eos tO RS aR ERT 29.1 22d 1 toa OP tie ar eihie seeteadle aie 10d o's ga A Gee erederers oeie%s Pa pees 21.4 y Aly 23.6 Re Sati reyes So Wer ersial bid sche eels, sfaeleou 28.2 22.3 23 ia raul rt cow, pounds of 3.5-percent milk Se e9ss EE ee ee 878 7 254 7 245 6 201 194i Bate Peat Ne lens ave Sroka STs eooTetelne slave's sah fais 7 954 7 996 7 467 7 211 MM se oosoe a deals alot Wh er Fickaiaie,aieiblere.e diel void 'ele.e eve 7 625 7 357 7 602 6 533 Acres per cow a SAS are Maree wea ieee tein bales MOO a ainietere 0 6.4 6.9 7.6 te ES RE teh ree. Cee erie rire heater 5.8 6.7 6.4 6.3 ee ee See iaas Sot a cs ararelGre-¥re Fir as bio reels 5.9 5.9 5.9 6.7 Percent of crop acres in soil-depleting crops PE orn Pa cela tink Stet ods Riba ce eee A 58.3 71.5 67.7 77.3 BOGE oe, Fates oak ees Uipel midline oe Mihi tine Sauk 67.7 71.4 68.2 67.4 Oo. aie a stare are tan ai a aite We teeta Pacer a esate 64.2 68.5 64.3 68.1 ern of dairy herd home raised Do oraiadacse/ sieved ole Rete Tera" Wecate aroha, ol aves, os tayareces Bae 65 58 47 31 194i Be ee ee ee Pe Sete it PLO eC Tae 59 45 49 27 Average age of operators . , 5 ee eee Bs alg Tos Mat hte ered SRG eh 8 350 date 48 49 47 44 ROAR a ra cate ate ohne ile ohaie cia 0. tenth \o.d mate 51 47 46 42 566 Butietin No. 512 [June, Farms of Different Size The owners having the smallest farms, as measured by productive man work units, averaged about 12 cows; those having the largest farms, about 30 cows (Table 36). Except in 1940, production per cow averaged higher on those farms where more cows were milked. Ap- parently the operators of the larger farms found it possible to increase production per cow during these years, particularly in 1941. The opera- tors of the smaller farms tended to stock them more heavily, a fact that suggests that size of farm was a factor that hindered further TABLE 36.—SELECTED ITEMS CONCERNING OWNER AND PART-OWNER FARMS GROUPED BY SIZE OF BusInEss, 1940, 1941, AND 1942 Productive man work units.........0.0ce000% Under 400 400-549 550-699 700 and over Number of dairy cows BOAO eee ceccterate Rio nia Ste BYE Sila See oles see iaTe ES trees 12:2 17. 2 DRE Utes ae es ly AR ee one ape mt Sine Cot OR rh ut 11.7 18.6 23.4 30.7 MND ia iSe 7 nike eres wi elite ay sates a fel bas atte icles 6 os 11.4 17.8 22.9: 1 Production per cow, pounds of 3.5-percent milk 1940 eerste Sic cs aes ste dal rao eel ane Sa arabes 748 7 146 71553 7 421 MOAT Sa tareteeinve waters Ole aie abla e Oe IN eGo ane 7 218 7 590 7 888 7 914 Na 2 icone borciets ete te AIL ee ae ce Dale hone 7 258 7 378 7 597 8 037 Acres per cow ; sre teres ormorare Ora eae aaa tees aes Mota ase Mahan en eUaNTER 7.0 6.4 7.8 6.0 NOAA Seca is sis alates sig hieie aor anh asana Sb cutee a ee 6.0 6.3 7.6 130 NAD id 5 iors orf shined, Ahecar cts ahs G nhs anal onatnce Sak Ue reeks 6.2 655 7.3 TA Percent of crop acres in soil-depleting crops Biaisieiar eee. ai eie oe Mio Bal eial Wiekeverie, Be eG Seas 62.8 59.5 62.3 IA ean sant stolen he nie entree ee ee eae 60.0 69.8 64.7 66.9 OAD, citaterskl cle ie a Oa Goce htc as Mic an ee 5 58.0 63.5 Percent of dairy herd home raised Risutdiciia ops enstarOneseianene Sisters Gai ataseaNerare CaaS 60 66 15 80 hit IBS petty eres rey are ar rey ae ge eR 49 63 71 73 Average age of operators Byes det snisican a ieceges eeturas Pale (97 oka is dottnetors et one Bape Oraralale 58 S52 50 48 LOST Ferenc ee ee hla Re 59 49 54 52 LOAD riersicnsrsta lie aiastiat master sete hake See At oe 59 52 53 55 increases in these herds. The owners of the larger farms tended to put more of their cropland in soil-depleting crops. They also raised more of their cows, a fact that indicates that they were not so limited in the use of their land. Among the operators of the smaller farms were more older men. The tenants having the smallest farms averaged 12 to 13 cows, compared with 35 to 40 cows for those having the largest farms (Table 37). Production per cow was positively correlated with size of farm, the correlation in this case being high. In 1941 and 1942 the tenants on the larger farms tended to stock them more heavily than the tenants on the smaller farms. The tenants on the smaller farms had a higher percentage of land in soil-depleting crops, the percentage 1945) FINANCIAL PosiTIoON OF MCHENry County. FARMERS 567 TABLE 37.—SELECTED ITEMS CONCERNING TENANT FARMS GROUPED BY S1zE oF Business, 1940, 1941, anp 1942 Productive man work units.................- Under 400 400-549 550-699 700 and over Number of dairy cows MM cle Cah 0S 4 uk yaks rg WP eabvere ere alec wiale bla cae 12.4 18. 2 34.7 PN er S- 'y cass yenstwrata isi Wisi kla elegant Wiervln es 12.0 19.7 24.8 35.9 RMR Te A ait! oon. Sa 4k bisa bce risa oe eae aes 12.6 19.0 25.0 40.2 Production per cow, pounds of 3.5-percent milk ae sree tates ele Sale waite Oale aka arnlelarerPre o4 7 026 7 265 7 489 6 927 MRR Gey oles a Ng cid a Sidley dda aterdia 4 aang are Ae ai 7 038 7 550 7 367 7 988 BCS ee go Nice avels, seRaieare.e aleiaerlee etiam sea 7 049 7 118 7 348 7 790 Acres per cow MRAM Gs 15-5 ein 955 bk oon pH Rio re BO eee ale wed Ate ee ane 3.8 7.7 6.8 6.6 MRE ec Prats gos Shar oleae aire sil ea es 7.5 6.8 6.1 6.1 BN SOG Tre lang cece 's, sie Si Wma ered aslo eR ee ee riety | 6.6 5.9 5.4 Percent of crop acres in soil-depleting crops oy Stee eee oa) ae ets 0 eine Ree wi erecse ewe ord Ne 68.2 as 69.6 69.7 OPE nated Gao Gaskin 8p OS 8 ate 8 eMerw ed ai Oe 77.6 67.9 68.1 64.9 EDD Shs She talk atesre are love Hi -Slaf elie atate Srke ese 78.9 70.5 67 60.3 Percent of dairy herd home raised BUTE die Seder tam deal aarae aT cin elo See ayerehS! ohasaue 36 62 45 53 PERCE Nah ciate cian bie Siklue & a lsiso@ ais oo SarTorte ness 42 48 43 56 Average age of operators Mace RO he sides Whe sented Osa cies mck 48 47 46 48 RON cctv one sisi cie ola ghace id wld ou el oie al oi gig im es8i ote tee ates 49 46 47 46 Bers Cia arvineie cele Resin ioe ice ta ones cows 54 44 53 48 becoming even higher during the period; whereas the tenants on the larger farms wére reducing their acreage in soil-depleting crops. Ten- ants on the larger farms raised a larger percentage of their cows than those on the smaller farms. There was no significant difference in age among these men. CHANGES IN MILK PRODUCTION On the 72 farms for which continuous records from 1940 thru 1942 were available, the average milk production per farm increased 17,560 pounds or 10.7 percent in 1941 over 1940 (Table 38), and 3,537 pounds or 1.9 percent in 1942 over 1941. On a percentage basis the part owners made the largest increases in 1941, the cash tenants the smallest. In 1942 the production of the part owners fell below that of the previous year, while the production of the full owners showed the largest increase. When the farms are grouped by size, the 1941 increases in milk production on owner farms are found to have been directly correlated with size of farm, but in 1942 no correlation was indicated. Among tenants there was no clear relationship between size of business and increases in milk production either in 1941 or 1942. Among owners the more heavily indebted groups made the largest increases in 1941, but not in 1942. Among tenants, debt ratios were not significantly related 568 Buttetin No. 512 [June, TABLE 38.—PouNDS OF 3.5-PERCENT MILK PRODUCED PER FARM ON 72 MCHENRY County Farms IN 1940, 1941, AND 1942 Number Increase Incr ‘ ncrease Grouping Piha ee 1941 1942 1941 over 1940 1941 over 1942 Tenure of operators 1b. 1b. 1b. 1b. perct. 1b. perct. OCWOTE 65 5c cro es nse aisteaireie 25 150 072 165 294 176 668 15 222 10.1 11374 6.9 Part OWENS oso sis ei niete ace ste 11 160 031 188 112 182 130 28 O81 17.5 —5 982 —3.2 All Ownere.. 6onGisncs et 36 153 394 172 396 178 443 19 002 12.4 6 047 35 Caabstenantes:. foc. nea 4} 151 569 162 415 164 023 10 846 7.2 1 608 1.0 Livestock-share tenants..... 43° 246,150" 243.086." 243-241) “26: 936-1235 155 i All tenants: .......0..0s%0> 36 175 602 191 628 192 707 16026 9.1 1 079 .6 Alb farmgs ik: < Sticiesoeis sien 72 164 714 182 274 185 811 17 560 10.7 me Ws 1.9 Size of farm (p.m.w.u.) Owners and part owners Wnder400 752.27 cs seoce fi) 97 381 94279 98 951 —3 102 -—3.2 4676 5.0 400 10: S49. sie slew ly. 6 11 137 374 156 175 158 443 18 801 13.7 2 268 5 OS All under 55057-5.4-70.0% 18 -121 737 131 188 134 676 -9 451 7.8. 3) 488 2% SOO 't0; 69900 Brads eens 11 166 631 193 545 202 320 26 914 16.2 8 775 4.5 700 and) Over? oc. S503. 1452 7 212 862 251 446 259 022 38 584 18.1 7576 3.0 All 550 and over....... 18 185 563 216 776 224 950 31 213 16.8 8174 3.8 Tenants Wnder'400 2.023. fees oe. 6 87 375 94892 95 472 7517 ° 8.6 580 6 400: to $49 )2. oo oe aea 7 138 869 148 221 148 629 9 352 G..7 408 3 All under 550.. ew, 13° © 113,952" 123003" 123°605:- 39-051 "729 602 5 S50'toO992-:.< sis: ~. 43 +164 812° 176 711. 180 579: 11 899: '-7.2..- 3) B68 2273 JOO ABUSOVET!: > cicocaletrs xs. 10 264 579 303 137 303 820 38 558 14.6 683 2 All 550 and over....... 23: 209-204 (230.225: 2327086; -21).021, 10°0 861 8 Debt ratio Owners and part owners Opes ss cegrenic setts teiesteseeree 6 152 258 155 639 154 330 3 381 2:2 —1 300) =.8 1 to) 19) percent x. F saci os S- 123 757: 137 680 162 652 13.923 11:3: 24:972--43c1 All under 20 percent.... 11 139 018 147 673 158 430 ,8 655 6.2 10757 7.3 20 to 39 percent......... 17 155 808 179 282 185 823!'23 474 15.1 6541 3.6 40 percent and over...... 8 167 788 192 715 190 583 24 927 14.9 —2 132 —1.1 All 20 percent andover.. 25 159 907 183 794 187 612 23 887 15.0 3 818 2.1 Tenants ere a ry eR INET His St ATES 9 240 037 264 528 270 277 24491 10.2. 5 749 2.2 1 to-19 ‘percent; «40.26... 11 142 672 154 825 156 239 12153 8.5 1 414 9 All under 20 percent.... 20 184 847 202 477 205 998 17 630 9.5 3521 1.7 20 to 39"percent:2.. . 3... 11 168 835 182 860 182 693 14025 8.3 —167 —-.1 40 percent and over...... 5 152 445 166 998 163 045 14 553 9.5 —3 953 —2.4 All 20 percent andover.. 16 164 342 178 297 176 708 13955 8.5 —1 589 —.9 to changes in milk production, but the operators of the more heavily indebted farms did produce less milk in 1942 than in 1941. If the two years are taken together, the operators of the larger farms and the more heavily indebted farms are found to have in- creased their milk production more than the other operators. Since the samples are small, the above results cannot be taken as indicating definitely what large groups of similar farmers actually did during these years. It would appear, however, that farmers reacted differently to pressure to increase their milk production in this period. TOTAL FARM BUSINESS In studies of farm financing both the operator and the business are of interest. The analysis up to this point has, however, dealt only with 1945) FINANCIAL Position oF MCHENry County FARMERS 569 the operator’s capital and income. In the case of tenant-operated farms no figures have been included to show the extent of the capital fur- nished by the landlord or his share of the income. In order, therefore, to give a more complete picture of the farms in these studies and furnish a basis for comparing them with those included in other farm- income studies, capital and income data for the entire farm business in 1942 were obtained for 118 farms. Averages for these farms, grouped by tenure of operators, are shown in Table 39. The farms with the smallest total capital investments were operated by owners and cash tenants; those with the largest were operated by part owners and livestock-share tenants. The rates earned on total investment varied but little among the different tenure groups, aver- aging 13.6 percent for the combined owner and part-owner ‘group and 13.8 for the tenant group. Likewise, for the farm as a whole there was little variation in the calculated labor and management wage, which averaged $3,015 for the farms of the owners and part owners and $3,045 for the farms operated by tenants. However, the groups made up of livestock-share tenants who owned less than 50 percent of the cows showed the highest rate earned on total investment, 19.1 percent, and the highest labor and management wage (farm), $5,473. On this group of farms the landlords took a direct interest in the business. This group also had the highest average production of milk per cow and the highest yield of corn per acre. The figures showing the operator’s share in the business of these farms give a different picture. The rate earned on his share of the capital was much higher than the rate earned on the total farm business, averaging 33.4 percent for all tenants. The operator’s labor and man- agement wage was lowest for the livestock-share tenants owning 50 percent of the cows, $1,832, and highest for the part owners, $3,296. For owners and part owners together it averaged $3,058; for all tenants, $2,602. The landlord’s rate of return on his investment. averaged 3.5 per- cent on the farms rented for cash; 4 percent on the part-owner farms; and 11.4 percent on the livestock-share farms. These differences reflect the tendency of the earnings of landlords who rent for cash to lag behind in periods of rising incomes, while earnings of those who rent for shares tend to follow changes in income. None of the measures of earnings varied with debt ratios in any uniform fashion (Table 40). Among the owners the rates earned on total farm capital, and particularly the labor and management wage, increased with the size BuLietin No. 512 [June, 570 MEL yh ae 8 %6 Tt %s'or VS"! %0'v %0'v Sreeess s**QuUsUrSaAUT §,p1O[puL] UO patie 97ey SZuTUIva S,pIO[pue’T 709 Z ¥ ece 7 ¥ - bez eg wes I g 8hL 7S geo € 967 £ $ 186 7 $ '°"** tt aBVM JUSMIEZeUeUT pue IOqe’T VP ee Hee Mees %9 1 Vv ve %9'F1 %Es'st %e ot ** JUaUTSAAUT 8,10}e19d0 UO pauIea a}ey SZulUIeS §,10}e19d0 0°€Z Z'°9E ¥'0F gee 0°91 * erez see 161 Piitrressssssss ©" "=" pyos ssoy jo sa9quinN 79 el LL TL LS +9 LS 69 spat i oe *“speysnq ‘spfaté w10d LEe L LOE -L 98E 8 088 9 LS€ L 919 L 66F 1 699 ee -“spunod ‘moo Jed uorjonpoid ATW T'Sz ste o'ee L°0€ LAS CSE 6°27 6°17 Tr eeeseees cess sss ssmoo Alrep jo JoquinN L°SZ x4 T'S 0° FZ ¥ EZ ma Z4 LSE, 6° €Z a IE se C*T Lut 0°71 Sit Tur ea eI 9O'IT "11 * '8,40ye1ad0— 9°8 v8 e°¢ an § L°8 SL LED vil ws * Ayyurej— Sc £'? 8°6 £31 oe v's L'9 6'F sores s ss “party —uney UO 1oqe] Jo syyUOW 901 sZt ra 971 96 901 Let 76 Rete aba ye ears a eee TST TLT 6LT LOT OFT ST Z1Z 621 PER Se Deen eS *[2}0j—sa1y sto € ¥ +20 + $ elLbs¢ etz7 € $ 61s Z ¥ slo € 617 € ¥ LE a meek (W11ej) BBVA JUSUIDSeULUT pue 10qeT %8 et %O0°st %1'6t %9T %6 71 %9'et %L zt Hest SE *JU9UTISAAUT [2}0} UO pouva a}ey T8s sz 981 zeg P78 Teg 18 Teg 720 77$ 6£9 S7g evs Teg O8T £7 “°° * AVA Jo Zuyuuysoq ‘JUsUI}saAuT [vO] 1s 0z Ll EI te 19 SI pa Piette eee eeeeeeeeee es sgunzey Jo saqumyy sjueue} SMO) Jo SMOD SI9UMO S12UMO oreys jrey uey} jo yey s}uBUd} qaed pue qe SIIUMO sues} S-L IV S89] SUIUMO SUIUMO yseo Aq SIIUMO d wa} Iv peyeredo I §}UPU9} oreYs SUlIe yy -y903saAT] Aq pozersdo surrey —Aq poyeiado suey SUOLVUAIQ AO AXONAL Ad GAdNOU SWAV] ALNNOD AYNAHIW SI] AO SSANISNG ZF6T IVLO], ONINAAONOD SWAL] GALOATAS—'6¢ ATAV] FINANCIAL PosiTIoN oF MCHENRY County FARMERS 571 1945] %'6 He'L I'S Vr MS %0'°9 | Aan a aaa reid ahd ****JUSUIISOAUT S,PIO[PUL] UO Pouivs 93eyY ‘ SSUTUIvS S,pIO[pueT 679 € $ 008 7 ¢ est 7 ¢ 667 1 ¢ 7149 0S £06 Z ¢ 966 7 $ CS OS Res char asvM JUIMIEZeULUT pUe 10qe’T MS" Le Meee Vv cE %6' Lt %V'St Meet Mv st %0°S "+ *JUeUIYSeAUT §,10}e19d0 UO petlivs 9ey SSuUIUIvS §,10}e10dO O06L L sre L SIT 2 670 L eos L L6S L Ble L SSC 4h a ee spunod ‘moo sod uoronpoid ATW z'OF 0°Sz 0'6T 9°7I 162 67 8°LT PEs OP Sic ae tet SMOO Aiyep jo JequInN 068 + ¢ 807 € $ 19% Z $ i Aad 05 LS tg 7£6 7 F £66 7 $ wig § * ** * (urrey) oFeM JUOMIOZeUeUT pu IOqeT %s'st Het %L‘zt %S'L %0'9t Vs Ae St ph ae nd a ae EO SA JUSUTISOAUT [2}0} UO pollivs o3eY Tze 6€$ SLL St 6£h 61¢ Sst ST¢ gcse beg FI8 Leg PLS 17$ LEO? ENG et a ee rte Poe QUSUIYSOAUT [CIOL ¥I 91 0z L LY 0z €1 1 suey Jo oquNN J9AO0 pur OOL 669-0SS 6PS-00F OOF J9puy) TAO pue OOL 669-0S¢ 6S-00F 00F JOpuy) BOIPUT S}JUN xIOM ueUT aArjonpoid Zurumber ‘syueus} Aq poyersdo suey peyeoIpul sziuN ueu sAT}ONpoid ZulmMb -d1 ‘s1auMO Jed pue sisUMO Aq pazeredo suey wij] SSANISNG AO AZIS GNV SYOLVAAdO dO AMNNAT AM GAdNOAD SWAVY SII AO SSANISNG ZH6] IVLO], ONINUAONOD SWAL] AALIATAS—‘|P ATAV]L Hy HSL MSL %L°9 %9'€ YL’ Ee VV°L Het ****7USUIJSOAUT S,PIO[PUL] UO PsuIes 33ey ssulUIvS S,pPIO[pue’T 060 z ¢$ 6LL 7 SLb ZF sto £ ¢ wos ¢ ¢ orl Eg £s0 7 ¥ FOL CG nes ee a3eM JUSMIESeULUT pUe 10qLT] Hy’ cwE %O' ve MS ee YL‘ Oe %0'St %iV°st My it %L°9t * * *QUSTIISIAUT §,10}e19d0 UO pourea 9}eyY k ssuluiee s 10ye10dQ ees 9 Z09 L LSe L $z9 L 76S L ZL9 L Sir L TOBE) IFRS spunod ‘Moo sed uorjonpoid ATW €°€Z $°8Z £°7 Z°87Z 9°77 0'1Z oo at CSOT ey a aE reer es sMoo Aryep jo 1aquinN £95 7 ¢ gze ¢ ¥ 468 7 ¥ 66¢ € ¢ OLb € ¢ FIT € ¥ 180 Z $ GROPE. Sx 2s (uizej) dBeM JUSMIAaZeUeUT pUe I0qGeT Mee %dI et VX A a Mr’ Vn eA Moet MV it UGCIGTS Rae ere a JUSUIISIAUT [2}0} UO PauIve 93ey ES HUF LLY 6% v89 77 =, Ss ETB LZ 67S 67$ Sth Sz HPI 17g STS CORE Sates a Gee ee JUSUT}SIAUT [EIOL 6 eT ez Zt ZI $z St 6 RTE et eee e etree ee eees suze} jo soqunyy Joao puw%Op %6E-0Z %6I-1 0 IaA0 puwe%Op BOEle-0Z %6I-1 0 szuvueay Aq poyeiedo poyeoIpul soljzer 3qQap YUIA SMELT S19UMO jred pue siouUMO Aq pezesedo payeoIpul sores Wqep YIM suey wie} OILVY Lad Ad AGNV SAXOLVAAIO JO FUNNAL AM GAdNOU SWAVY YI] AO SSANISNG ZPH6] IVLO], ONINAAONOD SWAL] GALOATAS—"Op ATAV]L 572 Butietin No. 512 [June, of the farm business (Table 41). On the tenant farms the tendency of rates earned to increase with size of business was even more marked than on the owner farms. Since production was profitable in 1942, the farms producing the most would earn the highest rates. In the owner group the smallest farms, measured by size of business, pro- vided an average labor and management wage (farm) of $812, whereas the largest farms yielded $4,557. Similar figures for the smallest and largest tenant farms were $1,223 and $4,890 respectively. On the tenant farms both the tenant’s labor and management wage and the rate earned on the landlord’s investment increased with size of farm. More of the smaller than of the larger tenant farms were rented for cash, and so not all the landlords of the smaller farms shared in the increased income. KINDS OF CREDIT AND HOW USED Debts of All Farmers At the end of 1942 the farmers included in this study owed, on the average, one-third as many short-term: as long-term debts (Table 42). The long-term debts of owners and part owners were secured chiefly by first mortgages, only 15.6 percent of the long-term debts of owners and 24.6 percent of those of part owners being second mortgages or other kinds of debts. Short-term debts of owners and of tenants consisted largely of personal notes or chattel mortgages, altho among tenants chattel mortgages were more important than among owners. In 1942 these two forms of debt represented 86 percent of all short-term debts. Conditional sales contracts and personal debts were of minor importance. Sources of Credit Owners. At the beginning of the period (December, 1940) the Federal Land Bank, individuals, insurance companies, and the Land Bank Commissioner were the principal holders of the long-term debts of owners (Table 43). During the period the importance of the Federal Land Bank and the Land Bank Commissioner as holders of long-term debts increased in this sample, that of insurance companies increased slightly, while individuals became less important. Commercial banks were not important in this field. The three principal holders of short- term debts of owners and part owners at the beginning of this period were commercial banks, individuals, and the Production Credit Associ- 573 1945] FryanciaL Position oF McHenry County FARMERS L°9 L 2 s°6 v" Se. ve 0 0 0 Lt ZT $}Q9p U119}-7.10Ys 18YIO 9° 8 TZ 0 5 0 0 vt v es LZ v6 “+ "srea1ze ut [edu Sr eS o'r i vt S"E 0 cy 0 a4 9° 9° “**"Sreaire Ul jSa10}UT (ars (an Lt sit 6°¢ oy £-€ O'F 0 a4 8° Ba 4 “** 5" s}qep pemnsesu/) z'Te L°0€ 9°67 T'1z s'st L°0@ Lets Ly T'LY COLE: T°8s LOU | ONE Oe Soj0U [eUOSsI9g ev 4! v9 vv s‘tt Sv Les TOT z'6 0'9 1st Th Need ere sores [BUOT}IpPUuoy) s°vs an $5 9°LS T'¢9 c' v9 7°69 T° 6Z £' iy £°€v 9°8P 0°12 £°9e “***sases jour [eyey [#10 Jo JuVdI0g ZHI 76 $ BSZ OSIS HST TZIF 87Z 6S$ LOE S6$ 760 HLF OOF OIF 6SS OZ $ TOL OZ PTS OTS) SLOSIVE +E 1OP OCG es Saco ecg, *Te0.L S}Qep WI9}-}I04S Se 9°83 Bit oot oot oot 0 0 0 0 97% 0 S}qep W1e}-3Uo 19430 6°LT o'st A! 0 0 ie 9°F7 O'1z 15a £4 9°ST a! 0'Ot ases}IOW! PUL] PUOIIS 9°8L v'OL T'¥8 0 0 0 0'SL 0°6L 6°SL tts b€8 0°06 * aBes}OUl Pury ISIN [e103 jo JusII8g 78h 78ZF OOF CHEF 6b 687F $88 6 $ 8ee L7Y OST SF OLI L8$ ZET OTTS O9S 68F TZP SOTS = 9667SS2E.- SRL FOI are * "TROL S}qop UII9}-300T 7r6T Tr6T Orel 7H6T Tr6t Oret 7HOT Tr6T Orel 7r6r Tr6t Overt SULIe} [TV syueuay s19uMO Weg SIDUMO ° ZH6T INV ‘TH6T ‘OFOT ‘Te AAAWAAG ‘SYAWUAVY ONILVAAAOOD TIY. 40d VIVG ‘SLAIQ IWLO] AO SVM LHAQ AO SSVID HOVYA AOVINAIAG— ZF ATAVL [June, ive) beth onl be) + Com “wy onan Looe) Anan MHOAIN aN ” mo TRON EMAMNOWS macaooqucaens WDOAANMOAHSOOOCS Cnmmannooes tOANOSMAHMAGCOH an N a ~” N -_ So be) ButietTin No. 512 LOS 7L7$ 871 99g SPE P87F OLT L8$ ZET OTS 09S 68¢ ONT N MAN mA eeIN DHNAGSOCHDAGCCH 12h S8Tg _ 97g 966 SS7g S8L FOlg “**sreaqre ul [edpung “+ ***S7eaqre UT ysas0}UT *****s9xe] Juonbuljeq se +** "99708 19430 tee ee er eees ssauBUDIaAT ***satuedurod soueUuly ‘++ *gr9reap Juowedury ane ey Gro nee sia[eap 933eD (Re fe gt et ot Ce “s[enprAIpuy ‘woKePOssy }PeD woHonporg ‘uOHeAISIUIMPY AjANIIG WAP ** *syueq yelorurM0d [#307 Jo JuVdI0g tint e erent eee term T $}Q@p U119}-3104 tosses ssaq mos 13990 "+ “syueq yelorsuru0d “sotueduroo soueinsuy Se ee ***s[enprlArIpuy "1 ** *AQUOISSTUIMIOD JULY puey “yueg puey [esepa.y [2103 jo JUadI0g S$}Qop UI119}-2u0T Cr6r Tr6T Orel CV6T TP6r Oret 7rOr TP6r OF6t SIIUMO JIed pUe SIZUMGO SI9UMO Weg SIJUMO THOT INV ‘TH6T ‘OF6T ‘TE AAANAOAG ‘SHIONADY ONIGNA'T SNOIAVA OL GAMO SYANMOCO LUV AGNV SYANMO HOIHM, SLAAC WAAL-LYOHS GNV WAA]L-ONOT JO ADVINAIUAG—'¢hf ATAV LE 574 575 0 I 0 0 z 0 0 0 Ou asses graze ut pediouug I’ tI ST 0 9°Z #2 I" 8° Go ttt teeeseees SIeaxIe Ul 3Sa19}U] I ‘' 0 0 0 0 z: Zz: Ott tttttsereses axe} UNDUE ‘< S° tI 0 0 0 - 3° €°Z orgie WAS tae te ie ie sie s901N0s 1310 oe o'r I'l Le 8°Z 91 12 Le Go ttt tt esteseceeees squeyoryy ea (Ae 4 LS st 9'°¢ 6° Vis St rT hy sina Sd? NS Sal sotuedurod aoueuly v3 £°9 ZL o'r 6°7I L Lt + Ol oe Ci FA DIS oo ee ae siafeep Jusute[dury L'a 0°ZI SIT 6'8Z LIZ ¢'1z zs UL OS itt tttsssseeeetes spro[puey TLT 8°7I zt 0 L't 3 0'Sz st Ce A SE REED Se ieee. gag i tte RP hay siefeep 2138) £°9t o'et 9°6 L'3 9'TT 9°FI L°61 9°eT Gobel teen gra oye sTenprArpuy Ee 6°01 Es Litt 6°01 +01 0 8°01 0'9 * uOHeDOssy WpeD wuoronpog $st Lt ae x4 L°97 8°6T ¢°st 8°FT 0'°9T 6°97 *uoreIstulUIpy AWINdeg WIE 6°81 s°st 9°FZ S’tt ana ' Ss’? O'12 9°12 OU S e cee ee syueq [elorourUr0) [}0} Jo JuadI0g 877 6S$ LOE S6¥ 760 bLS 8S9 BIg ZOL 7es O8S 67% OLS OFF S6z £9$ CES) BUS) ee nk Daa Rena Te3OL S}Qep Ul19}-}104$ $° SP 0°99 9°FT 0 oO oot S'St 0°99 One eet S90INOS IIYIO 0 L°st ¥'S8 0 0 0 0 L°st ODF) 2 et Pere squeq [eo1eurUl0) 0 £°st 0 0 0 0 0 £°st Onin aa es soyueduroo souvinsuy 0 0 v1) 8) 0 0 0 0 0 ee sTenptAIpuy svt 0 0 0 0 0 S°tT 0 rt, win ass IOUOIssSTUIMIOD YuUe_ pur] 0'0F 0 0 0 0 0 0°0F 0 Oho) oat tee “cc * "queg pueyT [erepey [2307 jo qUaoIeg $086 ¢ > SFe-2t$. --ost SGT eae LES. $” oct. -¥ ete 6 eee eed. on 8S See eee **TeIOL S1qep WII9}-3u0T cr6t Tr6T OF6T 7r6r TP6T Orel COT Tr6t OF6t sjueue} [IV S}ULUD} DILYS-490}SOAVT sjueus} ysea FINANCIAL PosiITION oF MCHENryY County FARMERS 1945] ZP61 INV ‘TH6T ‘OP6T ‘TE AAANAOAC ‘SAIONADY ONIGNA’] SNOLEVA OL GAMO SINVNAL HOIHA\ SIAAQ WAAL -LYOHS GNV WAAL-ONOT AO AOVINADAG—Pp ATAVL 576 BuLttetin No. 512 [June, ation. At the end of the period, the importance of individuals as sources of credit had increased, that of commercial banks had declined, and that of the Production Credit Association had increased moderately. Also, the importance of the Farm Security Administration and of cattle dealers had increased, altho both were of minor importance to owners. Tenants. Among tenants the sources of credit were more varied (Table 44). Cash tenants used somewhat different sources of credit from share tenants. At the end of 1940 one-fourth of the short-term credit used by tenants came from commercial banks and about the same proportion came from the Farm Security Administration. Indi- viduals, cattle dealers, and landlords, all held about 10 percent each, and implement dealers and the Production Credit Association each held about 7 percent of the total. At the end of 1942 the importance of in- dividuals and cattle dealers had increased, the importance of landlords and implement dealers had not changed much, while, in the sample of tenant farms studied, the importance of the banks, the Farm Security Administration, and the Production Credit Association had declined. This situation suggests a trend toward financing by agencies which have some interest other than the extension of credit. { ‘ Purpose of Borrowings The owners’ long-term borrowings were principally for refinancing, altho they borrowed a little for improvements (Table 45). The tenants’ long-term borrowings were to buy farms or other property. Two tenants purchased farms in 1941, and one in 1942. In 1940 and 1941 the short-term borrowings of owners were for four principal purposes: operating expenses, and the purchase of farm equipment, dairy cattle, automobiles and trucks; in 1942 they borrowed for only two of these purposes: operating expenses and purchase of dairy cattle. The short-term borrowings of tenants were for the same purposes except that they did not include the purchase of trucks and automobiles, a fact that indicates the tendency of tenants to borrow only for purposes quite directly connected with farm production. In 1942 tenants continued to borrow to buy farm equipment and to refinance. All these purposes are legitimate uses of credit. Changes in Total Debts In each year the owner and tenant debts secured by each class of long-term mortgages declined (Tables 46 and 47). The greatest de- clines were in loans held by commercial banks and individuals, the 1945] FINANCIAL Position OF MCHENry County FARMERS 577 TABLE 45.—PURPOSES FOR WHICH EACH YEAR’S BORROWINGS WERE USED Owners and part owners Tenants Purpose of borrowing 1940 1941 1942 1940 1941 1942 Long-term borrowing EME Sore ean vote sed wad $5 773 $9535 $4 400 $3 000 $25 700 $12 635 Percent of total Marchese Of land sec. leven oe oe 0 0 0 0 100 80.2 RIENCE oi 5a. arin oid awn 8 Hee 17.6 26.6 4.5 0 0 0 Refinancing. ........ Mare anigeete beg 82.4 73.4 95.5 100 0 0 NOnfSTM Property... <6. cece ees 0 0 0 0 0 19.8 Short-term borrowing PRMIMMMRE at Soe Sarge alo Siive-re'al’s Sue We w.8) erg seve $15 167 $29 950 $18 928 $28 086 $53 076 $36 338 Percent of total Purchase of — BRC RARUE c.. e sg Fasc e ie ale¥ es 13.8 24.0 47.2 25.1 36.3 36.8 Other livestock. < ogc. dens sas 0 0 0 | mY 1.2 MMII CS ara a a's dei n Brase ate is if 0 0 3-3 ok 0 Farm equipment.............. 13.9 S5o1 4.8 30.2 21:7 oh Ee § Automobile and truck. ........ 29.0 16.4 1.6 4.7 10.1 4.4 Current operating expenses....... 30.5 20.3 34.4 28.3 15.8 14.4 POM UNE MODUS E Oy. vce aca se so Fe 2.0 35 4.5 3.0 6.2 3.6 PICONET fo oof ae inefevereeidicra Wee 3.2 0 0 2.0 0 0 Interest in arrears...... Bcnene gtAv lane 379 E. | 0 1.4 is oe PCMHCIPO! Wi ALTOATS 655.60. dks ss 2.3 4 0 is] 0 0 BACAR ON F htia,s oivieten ty coe tacks sae 4 0 0 1 0 Loan reamortization............. 0 1.8 2.8 0 0 0 MRPGTOE OMNI £5 sted 5 sue ow ivory oh 0 0 4.7 0 8.1 17.7 least in loans held by insurance companies. The Federal Land Bank and the Land Bank Commissioner occupied an intermediate position in this respect. The changes in the short-term debts of owners were more varied. Loans by commercial banks to owners declined, particularly in 1942. Loans by the FSA declined in 1940 and 1941, but increased again in 1942. Loans by the PCA increased in 1940 and 1941, but declined in 1942. Loans by individuals were reduced in 1941, but increased in 1940 and 1942, The owners reduced the net amount of their debts each year— 2.3 percent in 1940, 6.8 percent in 1941, and 15.4 percent in 1942. Among tenants, debts increased 12.1 percent in 1940; this rise repre- sents an increase in loans from each source except from finance com- panies and merchants. In 1941 the loans’from commercial banks, from the FSA, and from individuals were reduced. In 1942, while the ten- ants were substantially reducing their short-term debts they were at the same time increasing their long-term debts by practically the same amounts. During this year they reduced all their short-term debts except those to cattle and implement dealers. It is probable that for the rest of the war period the new credits in this area will be used increasingly for purchases of land by tenants who have accumulated enough cash to make a down payment and for purchases of new equipment when it again becomes available. es -. C ? SY = = = “yeah JO ZuluUlsaq 7k sse[d dy} UT }qQep ONes $'SI- OLL SS Sete g'9— eIs OF cee ¢'7—- 816 L Srthce motets ++ sree ss egaqap [fe ‘aBueyo IN 9°LZ—- 9S ZI Aa tatels ¢'6— ZI9 ¢ an OSIt SLE Og CTT suo] W1I9}-11048 [210 , L'$t— coz ets easter $'9— 106 ¥7¢ etter 3'F— 662 FIG bese eeeeeeeseeees+gupor u14aq-BUO] [210 T Areuruing $'9S— $F Br tox $‘¢— Ish I Ras 86st Netsieies lizt° teeee sees esses egrpaare ur pedpung Lis= ZOE ecoee 0°9Sz7+ eran eas HE (s) o ese ee OST . $0.8 e\e/g 41d) dpenele Bes “srea1Ie Ul 4Sd10}U] 0'00I— 68¢ Ryseeee 1 6Z— OI Adee 199+ Siaevesse 801 bette seen eee eeeeeeseeegayey quanburpeqd 3°09T+ eine es 00s 1 00I— 681 Z ‘ FIzI+ trees 092 3 nea Sieaae Recaltais +++ *gagunos 13130 S'us+ Peirees 390 Le €Z Sevitre L'se+ Bier shesSte Z0Z beet eee tree eee eee eee eee gaUBH OTA a $°9L— 6LE 1 vate Z— 19 ret e'7— Ip Sees sree eeeeeeeeeeeees e+ sgonmeduroa aoueUly oa £°6L— 601 Z pearenate pest Sai eherelg 19z I 9°979F+ PERNA gse tT tes eeeeeceee + ‘grarpap quowa;duy i 6°9L1+ wee . A & A («) . . oa S39 see eee are of eee . of =o Siemee shake e's) tueh’:ies*)? STO Vap ial tee.) S Set artetecs oss a SOL Z ew Lort asters An +++ *-grenprarpuy Z L°6z— 140 Z lee: eee eae : ros ¢ o'1S+ eas 8h8 T “ott t woRNepossy yWparD uoronporg x, 9°SI+ tants Or7 ¢ C:St= LLG eee tate c.s= 901) Ca ee “**uoreIysturMpy AyNdeg Wey Zz l'is— wos oo $9— 999 I ever 6I- ze g Sparen site lebeiceg: daut siete elena sy orashe(e syueq Terorourur0’) Pe 9°L7Z— Sos Z1¢ eeee £'6— Z19 S g ween 9°ST+ eee eee SLE og . SINTON TS OF ‘suvo] UII9}-}104S 3 8'F7— z56 9 ere 9'5— 00S ee 64- ees bones tenes eeeeeeeeeeeeeeeseessgagmog 3230 a) 3°t¢— 008 ¥ eee ¢°s— O08 sae 6° 6— 096 eee Ole ie a ie tea > syueq [eoseurut0sd —Q 3: 1t— 80S 8 oes Cc $90 Z ie €I- 008 Wis eae treseeeees s+ -gatuedulos souevimnsuy C1Z— 000 TT aigiers 9°8— $58 9 ects 9'I- Zep I Nae ga NO ue iar crt he ake +“ S[enprAIpuy ae A So 906 $ es oe HTL 7 aan Subl— SLE FY asi ies: (pus mises: sisi seitievi*)* * FOUOBBIUIULOL) AUS d: PAST $S— 6£0 9 Shecsiend g°8— 876 II arise OL— 810 9 Png Con tearote sradeisroteies see yueg puey ferepag L°st— SOZ erg eid ease r'9—- 106 ahs digger eae 83°F £6Z $I aaieee a ere venncd.s) eteeurn © e s:t1c'ere se on ‘suvo] U119}-3U0T asueyo aeeeI09, asueyo asueyo dG = asearouy aseoivaq «=—s« aswaOUT asvoineq = esva10UT quaciag qwusd19g qusI9g qqep jo pury cv6t TP6T Orel AHL LV GALUYOdAY SV SUANMO LUV UNV SYANMO AO SLIAAC IWLOL NI SHONVHD) YOVINAONAd 578 ZP6T INV ‘THOT ‘OP6T AO ONINNIDAG GNV IVALOY— OF ATAVL 579 *reah JO BUIUUIZeq 3e SSP[D 94} Ul qQep ONes FINANCIAL PosiITION OF MCHENRyY County FARMERS Z- PET **eee 3° z+ oe eee 186 1Z T ‘TIt eee 78S g ore ee eee eee ee *s}qop 1e ‘asueyo PN L- 610 S¢ elute Z— 10z ¢ visio sgt+ hey gos sg ccc sue] W118}-320Y8 [210 L ‘16+ we eee Ssg +g g ‘ocr+ ee eee SBT 77F Z ‘p— 97z$ ore ee seers eerereeesee sueo] UW119}-3Uu0] [eqOL Areuruing eee eee ee eee ee eee or enee (e) os eee eee eeee ee ree # eel eiaiels siete. wis ers 36 OBST UP TOGO ey 9°06— wee loot Ott FS 6'es+ ate BLE tenet tere sesees greanie Ul 3SaI9}U] HOP oa. te eles 5 RAPE le Mey ao) | Ne | ere. 6% («) OIl ee eee eeee seeee # by See ens ein’ 9 8 Bas 888 SCO TOON DAOC weet or z'39—- 170 I inst SOS L'zs+ Beate Ty "+2008 JBIIO L'§1— ez oc Vato 996 I Zs¢— gsr ried oe squeYydIa 0 99— ZSZ T . ¢ ttz7+ oe eee 6TL Z g'se-— Sszg o.6.0:¢ 6's $C C8 oo e668 0 Se 4 ® 6.078°4 sorueduroS soueUuly €'g+ wes ate ese gost oct 6z¥ I 6° tF+ OA oe sug[eap Juoua[dut] L'Lg— ese zoet Ot #59 Z 3°67-+ Pach TO6 Erte esse sss se spio[pue’y seezt oUt L6¥ LS Zt Ot Lee I ¢OI+ see + a eR a sraqeap aed oI- Shite easy ZTI—- ST oct e+ Ae GE tte ee seeeeeeeees +s -srenpralpuy yy s9o— ofl v Eta SOEC ne ye cies 6b7 7 £"se-+ Ori BOP Sgr ace uol}ePossy Ppely uoNonporg i= SOC isin Ors, ae Oy gee OLE EE yp ee €°8+- Ns aie i es BRR stout Bs al uoneiysIulMIpy AjLINIeg WIeYy ¢'FI- LS I . 3 Fe— 6196. Oe 6+ nines ZOOL octet syueq TerrourUIO>) g L- 610 S$ . Z poe 107 $ ore eee ¢‘¢et+ » «e6 808 8g ee ed eeee * [8303 suBoy W119}-}104S 0 oI- oos g . I soe 7+ or eee 88Z Lt Ft tI— 9ZI oenee ee so0.mnos 2410 Sere g tee De ik. Sate ans ere €°Z— oor ¢ Kein Z‘Z— OOT Nesta beeen eee ee eeeesee es sgyureq peroraurUI0s CRC A. ees me 2 f Xe 9 ays (e) oe eee 000 ¢ > wis h.008 ange rh> , = coe Car «1 -b062 600.6. ¢ 0.6 8.0) $06an soruedurod aoueinsuy Pr a Laer one n et ahedra ae A wheter range shan cate seals shoves vette eee eee e eee eee tees es sgrenpraIpuy ree ee oeeee Lev T KHEeCosn -'s. se eiéwe ore eee eee eee CO we,’ — 2% oes eee pe 810-8 oN OS gre" e wie © JOUOISSTUIMIOT) yueg puey Wee ashe APS 8t6 £ i dah oe $iice ae Siamese AF wee ty ematealg Se SSE CCR Ae AK Se Lard re eat ae yueg pur] [erepay L "L6+ eeeee S88 $y 8'O¢e+ eeeee S8T 77F ré ‘E— 977g oocs 1 ode ae ow ee 0-bp-6.4,6 ds 18303 ‘siqop W19}-3U0T ssuey aseai00q aseoIouy esueyo 98eb9199 hele od fal aseoroUuy aseais9q] «ss os BaIOUT quso19g qusoIed quadieg qqap jo pury Trt Tv6l Orel 1945] ZP6I INV ‘TH6T ‘OF6T FO ONINNIDAG AHL LY GaALYOdaAY SV SINVNA] JO SIMA IVLOL NI SHONVHD AOVINAIMAG GNV IWALIY— LP ATAVL 580 Buttetin No, 512 [June, The ending of the war will have two effects: first, young men will come from the army and industry and take over the operation of many of the farms now operated by older men; second, farm equipment will again become freely available. The result will be an increase in short- term debts created to finance working capital. At the same time, and until a serious break in prices occurs, purchases of land will continue. It is likely that the present owners will continue to liquidate their debts. This will be a period when beginning farmers should be cautious about their borrowings. It will probably pay to wait until price read- justments reduce the costs of starting to farm. FACTORS INFLUENCING FARM EARNINGS Records obtained from 113 dairy farms in 1942 were analyzed by using rate earned on investment and labor and management wage as measures of profit and relating them to: 1. Size of farm as measured by productive man work units, 590 being used as the dividing line between large and small farms. 2. Milk production per cow in terms of 3.5-percent milk, 7,500 pounds a year being used as the line between high and low production. 3. Degree of specialization as measured by percentage of gross re- ceipts derived from the sale of dairy products, 65 percent being used as the line between the more specialized and the less specialized farms. When Earnings Are Measured by Rate Earned Influence of size of farm. The following averages were calcu- lated showing rate earned on invested capital by various groups of 1 farms: Number of — Rate earned Low production per cow, more specialized farms perct. Marge farms ys ccs seers wont See ee AN gs Ace ae eee 6 8.4 + 2.12 SMALE FAVES chew Reyes tse a, eae we) de es A een 16 9. 2 Se Daerenee oc. sss es cure sai cot nia see ee a ee (—).8 + 2.63 High production per cow, more specialized Sree Faring 362 ook 25 ee ee 17 1552: bvSe SMTA EARSB foc os errs esa one hake d oO eae 15 13.3 + 2.04 A PTPORENEG 62.55) 205 ec atta Bese Sa ae a RS Eo 2.2 + 2.44 _ Low production per cow, less specialized Raree faring x5 005 cc ce Sok eee a oes es ee ae tas 9 1322/2 38 DIAM Tate eo erie vg Pais wg ares ieee ae ee 15 11.3 + 2.04 DillerenGe oss 2) i cee er davies ideas Guan AOE Re Le 1.9+ 2.46 High production per cow, less specialized 5 Large faring os cn cec¢ fee oh eed eee el oe ee ee 15 16.52: 91 SMA Tara: <2 i573 cece eo eRe ee Deck cee 10 20.1 + 2.94 Datkerenee 8.554 sg 2 One as Me Oe (—)3.8 + 3.22 *These and the following comparisons were arrived at by cross tabulation. 1945] FINANCIAL Position oF MCHENry County FARMERS 581 Number af _—— Rate earned All farms farms perct. Mn hs OS eho a Fk is clude SR Siok Gece tet ee 57 14.19+ .78 SEER ea eed OS EY oe Ie EAR Sa ae ea a RI SN 56 12.79 + 1:13 PLESGLORCE Mirren aa Soi) tak Wak OE NTES,. cee ee, Ce 1.40 + 1.37 Altho the earnings of large farms were, on the average, $1.40 higher per hundred dollars of invested capital than those of the small farms, this difference was not significant. Likewise when the large and small farms are subdivided into various groups on the basis of produc- tion and specialization there is seen to have been no significant differ- ences between them in the rate earned. (Whether the differences between the averages are significant or not depends on whether the standard error of the difference between the two averages—the plus- or-minus (+) figure after each average difference—is more than half the actual difference between the averages. ) Influence of milk production per cow. The rates earned on in- vested capital by farms with high production per cow were found to exceed the rates earned by farms with low production per cow by the following differences (the actual values for any group are shown in the preceding tabular statement) : Difference in Difference in More specialized farms rate earned Less specialized farms rate earned EE See ey On 4.1%+2.6% SoA gS So scien aeerele sf 8.8% + 3.6% DRY aod ee VAG 7222 5% Barge sod wae es 3.1% + 1.9% PAL TONG) 35, ocho oasis, « 4.9% +1.3% Production per cow was thus a significant factor in influencing the rate earned on invested capital. In each of the four subgroups the differences were relatively significant, but they were especially sig- nificant for the small, less specialized farms and the large, highly specialized farms, Influence of degree of specialization. The earnings of farms less specialized in dairying (farms on which less than 65 percent of the total receipts came from the sale of dairy products) exceeded those highly specialized in dairying by the following amounts: Difference in Difference in Low production per cow rate earned High production per cow rate earned Small farms........ 2.1% + 2.6% Smiallsfaring: 3 cgi 6.8% + 3.6% Large farms........ 4.8%+2.5% Large farms........ .8%+1.9% All faring ic. vars lon fone 2.4% + 1.38% The two groups where this factor appeared to be more significant were the large farms with low production and the small farms with 582 Butretin No. 512 [June, high production. The reason this would be true for the first group is fairly obvious. A large farm having low-producing cows needs diver- sity to build up income. But why the income of small farms with high- producing cows would be more influenced by diversity than small farms with low-producing cows is not so clear. Did these farms carry their efforts to get high milk production beyond the point of increasing unit costs? The three following factors appeared to add the amounts indicated to the sums earned per one hundred dollars of invested capital: above average production per cow, $4.90; less specialization in milk produc- tion, $2.40; above average size, $1.40. Size, however, did not appear to be associated in any significant way with income in any of the sub- groups. When Earnings Are Measured by Labor and Management Wage Influence of size of farm. Size of farm had more effect on the labor and management wage derived from the farm as a whole than on rate earned on investment. In periods of good earnings this is usu- ally true. This measure of income averaged $1,436 higher on the farms that were above average in size than on those below average; it aver- aged $1,365 higher on farms with above-average milk production per cow, and it averaged $532 higher on farms that were less specialized in dairying than on those that were more specialized. The differences in labor and management wage (farm basis) for large over small farms were as follows: Difference in labor Number of — and management Low production per cow, more specialized farms bit MAP Oe LAlON oy ee oe ce, eet ed a ae ees 6 $1 782 + 724 SIA SALI grid ccs meee i OE Aa CR a ita 16 1 687 + 326 BU CTO COs 95, tation 4 stent siecle oo ek oa rote ea $ 95 + 794 High production per cow, more specialized ES Ee Parte oe Gs tr oot ees st sae Eee 17 $4.519 + 570 > ea AL FARTS 50450) s6s one Sena me Late ie te en os 15 2 477 + 403 Ditlerence sto c eras case a he Cade oe eee eres OR $2 042 + 698 Low production per cow, less specialized Large (args ce 80k 2 oe ek ee ea ee 19 $3 512 + 468 DIMA Tarme oe eae tonics ca ke saciaha eee 15 1 992 + 314 DM CCRDOE Si Sethe Rog oa eae OE aac oa Me een $1 520 + 564 High production per cow, less specialized Pearge fais ye So dare ere eo roots Bes 15 $4 151 + 414 SULT LSE Eg 57° Pe aR OR rts RO See TREE ee 10 3 827 + 664 ID CRERCE i855 iso va de eh a ak ooo Ae $ 324 + 783 All farms Tee sis ave hep seg oe earn nee 57 $3 798 + 281 DMUBNN SS Fain Pacers Sor oR Moca ek su aehavitsaeeis Ghee 56 2 362 + 222 Pikeence hs nck ate lnae e e $1 436 + 358 1945) FINANCIAL Position oF MCHENry County FARMERS 583 Size was apparently a significant factor in increasing labor in- come only on the less specialized farms with low production per cow and on the highly specialized farms with high production per cow. On the highly specialized farms with low production per cow, size made no significant difference in labor earnings; nor did it make any dif- ference on the less specialized farms with high production per cow. Influence of milk production per cow. The differences in the operator’s labor and management wage on farms with high production per cow over those with low production were as follows: Difference in Difference in labor labor and management and management More specialized farms ‘send Less specialized farms wee. BR ote ceux: psig aoa $ 790 + $519 °C BaP ea $1 835 + $735 WR eye ai ie howe ee O21 ROUGE. iS iiedsrnagss 639 + 624 Allsfarmes. on cence oe: $1 365 + $360 High production per cow resulted in larger increases in labor earn- ings on the large, highly specialized dairy farms than on the small, highly specialized farms, and on the small, less specialized farms than on the large, less specialized farms. Influence of degree of specialization. The operator’s labor and management wage on farms having a low degree of specialization ex- ceeded that on farms with a high degree of specialization by the fol- lowing amounts: | Difference in Difference in labor labor and management and management Low production per cow ted High production per cow gis Small farms........ $ 305 + $453 Small farms......... $1 350 + $777 Large farms........ 1730+ 862 Large farms........ — 368 + 704 WAN tare ns oh eS eas $552 + $382 The large farms with low production per cow and the small farms with high production per cow showed the greatest increases as a result of low specialization. Small farms with low production per cow and high specialization had the lowest labor earnings. Large farms with high production per cow and with high specialization in milk sales had the highest labor earnings. Earnings of groups between these extremes were intermediate. It will be noted that a difference of one favorable factor did not cause a significant difference in labor income. Likewise, when two factors were favorable, the addition of the third factor did not cause a significant change in earnings. 584 ; Butietin No. 512 [June, TABLE 48.—COMPARATIVE SOURCES OF INCOME ON 54 HIGHLY SPECIALIZED Darry FARMS AND 59 LEss SPECIALIZED DAIRY FARMS, 1942 : Highly specialized Less specialized Source of income dairy farms (54) dairy farms (59) Cash receipts from sales perct. berct Dairy nroductss,<.c. -vcens sad eee sranectarcve $4 753 74.7 $3 763 51.5 Wait y Cattle ey cis wets el aha Seals hat eros 681 10.7 990 13.6 Beek SAL OS 5 icc.a) cia wiaid o oy siel gist wise Sac we’s ois 0 0 14 2 TA ORG os os ccste Nao is see ie ARUN ORE DNs ales Me prs wis 251 3.9 1 037 14.2 See soe occa Siac ekce Clas. as woes suse te 5) (#) 29 4 POUMNEY hoes. icone sh Ones whee te oeN 45 wt 82 133 OG ses rice e Oe Deals a eS ooges 133 2.1 268 cow | Meed and graith nso: ive wyereleiz.s valsig ste acg eins 169 Zat 485 6.6 PAA OCH DEB Sis ws S cic te ele cals os ciate e sini ota niles 200 Sut 254 3:5 Pabor Off farm sce 63 ioc cod homed esis walsi eae at 35 $5 CONOE oo eh oes sg ive stave alain ies ele hia cceeags toys 125 2.0 347 4.7 TOtal se os sices os FeT ese cob See sau eee sae $6 365 100 $7 304 100 sLess than .05 percent. The less specialized dairy farms showed considerably lower re- ceipts from the sale of dairy products and considerably higher receipts from the sale of hogs, feed and grain, dairy cattle, and miscellaneous sources of income than did the more specialized dairy farms (Table 48). The less specialized farms had $939 larger total receipts—$990 less from the sale of dairy products but $1,929 more from other sources. METHODS OF SELECTING SAMPLE AND COLLECTING DATA The farms and operators included in this study were selected in as unbiased and representative manner as was felt to be practical. Every tenth name was selected from the listing sheets of the farms in the county prepared by the Agricultural Adjustment Agency. The town- ships were selected in alphabetical order. In the first township the names of the operators opposite all numbers ending in one (1, 11, 21, etc.) were taken; in the second township, all names of operators oppo- site numbers ending in two (2, 12, 22, etc.) were taken, and so on. In 1940 owing to bad weather and lack of time, records in four townships in the western part of the county were incomplete, no records in one township, and records in only parts of the others being obtained. In 1941, however, it was possible to cover the entire county and to get in touch with all the farmers who had cooperated in 1940. The 1941 survey, therefore, provided the most complete coverage of the county. In 1942 each cooperator of the previous year was contacted. Changes in locations of operators and refusal of some cooperators, particularly 1945] FINANCIAL Position oF MCHENryY County FARMERS 585 those who had small debts, to again cooperate reduced the number in- cluded in the study and made the data somewhat less representative than those for the previous year. The enumerator filled out a survey form with information which the farmer supplied on the basis of estimates or of records. When an operator’s record concerning receipts from the sale of milk was incomplete, the enumerator obtained information from the dealer who bought the milk. When an operator’s record of his debts was incom- plete, some information was obtained from the lenders. Four circumstances connected with the selection of farms may have affected the representativeness of this study: (1) Very small farms located close to the several cities and villages in the county were omitted because the operators of these farms were reluctant to cooperate. (2) All farms on the selected list which were operated by hired man- agers and absentee owners were omitted. (3) Because of inclement weather in 1940-41, the west half of Chenung, Dunham, and Marengo townships, as well as all of Riley township (these four constituting the western tier of townships in the county), was not surveyed. (4) The fact that some cooperators moved during the period covered and some refused to give information for the second or third year may have detracted from the representative character of the sample. Nevertheless it is believed that the data presented here represent a typical group of farms and farmers. Comparisons with U. S. Census data. In order to ascertain how representative the sample was of all farms in McHenry county, some of the data collected in this study were compared with 1940 US. Census data (Table 49). Except for the part-owner group, the percent of farms in each tenure group did not vary greatly in the sample from that shown by the Census. TABLE 49.—COMPARISON OF ITEMS AS REPORTED IN 1940 U. S. CENSUS OF AGRICULTURE* AND IN THIs Stupy: McHenry County, ILLtiNors, 1940 Owners Part owners Tenants All farms Item This This This This Census study Census. study Census study Census. study Percent of operators in tenure class........... 40.7 KY i | 6.3 12.0 49.3 50.8 Verve wari Acres: pet fart. <0 < ph eg ene Ne haw eT 560 Ge SRNR SOM RONTME SG. 20 oS oad glere CRG s 6 aan FEDS 8 4A SAO EO OT Weg LEANER 561 32 Characteristics of owner-operated farms and their operators, 1940, PRR 5 LOA. Sones Gatch te tick acca he MAAS TSO RCSN SET eR ams RENN ee 562 BS GME FOr TENG OP ELUNE. FORE SE ssiscc Soy 0a5 oi ev es We gan vcisielé Hams ein’ 563 592 Buiter No. 512 LIST OF TABLES (concluded) TABLE PAGE 34 Selected items concerning owner farms classified by debt ratios, 1940; 1941, 1942. over cae ccuecicsew sep y ces oles ta ud sad slh an ep o— ne 35. Same for tenant farms. 0. o.oo cl dan cele dds g 04800004 4) pes Peete ae 36 Selected items concerning owner farms grouped by's size of business, 1940, 1941, 1942. 0.5 cc vicecces cevce ss 0b 0 divin ntsc eueae Pons yoy Saeed ern 37. Same. for tenant fOrm68... 5 60s ce Sic ec vias yin o's Vow veb'de wadee tes eee 38 Milk produced per farm on 72 farms, 1940, 1941, 1942...............008- 39 Selected items concerning total 1942 business of 118 farms grouped by tentire Of operators. 0... iscisc si cae dis oss edt cece cle gid cate ditty es aeeer a nne— 40 Same for same farms grouped by tenure and debt ratio................ 41 Same for same farms grouped by tenure and size of business........... 42 Percentage each class of debt was of total debts, all cooperating farmers, December 31, 1940; 1941, 1942 sic. 500. eS oes get daca eee 43 Percentage of long-term and short-term debts owed by owners to various lending agencies, December 31, 1940, 1941, 194823035 ae ce 44 Same for tenants... ...6cc. caw cacacnd 6 b.8aa/erne oah ope hen erent ae 45 Purposes for which each year’s borrowings were used..............0005 46 Actual and percentage changes in bigs debts of owners at beginning GF 1940, 1941, 1942. 00. ee cicndeccsde Pavia ves 0b. 6h nu sees Beet Re cneeena 47. Same for tenants 506 osi0< ness hg a tls ah yeedeas gels steele 48 Comparative sources of income on 54 highly specialized dairy farms and 59 less specialized dairy farms, 1942.. setae eeeceesencece seis Meme 49 Comparison of items reported in 1940 U. S. Census of Agriculture and iM GHIS Study ac Se hap ooh oa Be te coe eben LEY ee + aes 3050—6-45—29676 mi 7 ¥ =>. se . ey 7)