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AGRICULTURAL ECONOMICS

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MATERIALS FOR THE STUDY
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OUTLINES OF AGRICULTURAL.
ECONOMICS

THE UNIVERSITY OF CHICAGO PRESS
CHICAGO, ILLINOIS

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OUTLINES OF
AGRICULTURAL ECONOMICS

A CLASS-BOOK OF QUESTIONS
AND PROBLEMS

By

EDWIN G. NOURSE

tural Economic*.
Ames. Ioiva

If

Professor of Agricultural Economics, Ioiva State College

THE UNIVERSITY OF CHICAGO PRESS
CHICAGO, ILLINOIS

Copyright 191 7 By
The University of Chicago

All Rights Reserved

Published September 191 7
Second Impression January 1922

Composed and Printed By

The University of Chicago Press

Chicago, Illinois, U.S.A.

PREFACE

This little book appears in fulfilment of the promise made a year
ago that there would be a class-book to accompany Agricultural
Economics. In fact, these questions and exercises should be regarded
as an integral part of the earlier volume for all purposes of teaching
and study. They should be bound together except for the undue
size which would result and the possibility that some instructors
might desire to use this class-book in connection with other materials.
For this latter reason the writer has aimed to make the questions
sufficiently general in character to be of value to classes using other
textbooks than his own and especially to instructors or classes in
marketing, rural credits, and similar special topics. While the ques-
tions bear in the main upon the particular matter presented in the
companion volume, specific references have been avoided in nearly
all cases.

The writer disclaims any pretense of offering a bibliography of
agricultural economics. The lists of "additional references" appended
to the various chapters are merely what their name implies — references
added to those already suggested in the footnotes of the various
selections. Some of these represent valuable material which has
appeared since the publication of the earlier volume; others are works
which for one reason or another were not used in the compilation of
the source book, but which seem to the writer to be of value for further
reading on special topics or in the preparation of term papers.

Likewise, the lists of special topics do not aim at completeness,
but are intended, by a few concrete suggestions, to stimulate the
student to discover suitable subjects of his own.

Besides the use which the writer has already made of this material,
a part of the questions have been used at the University of Illinois by
Dr. Charles L. Stewart, from whom numerous helpful suggestions have
been received. Criticisms and suggestions from all who may use the
book are cordially invited, in order that the book may be revised, at
no distant date, in the light of a broader classroom experience.

E. G. N.

Fayetteville, Arkansas
July 2, 1917

504 i as

CONTENTS

PAGE

Introduction i

I. The Emergence of the Problem of Agricultural Eco- ^

nomics 3

II. Consumption 7

III. Land and Other Natural Agents of Agricultural

Production . 10

IV. Human Effort as a Factor in Agricultural Production. 16

V. Capital- Goods as a Factor in Agricultural Production. 20

VI. Organization and Management of the Agricultural

Enterprise . 24

VII. Records and Accounts as Measures of Efficient Manage-
ment 29

VIII. Principles of Value and Price as Related to Farm

Products 32

IX. Market Methods and Problems 42

X. Transportation and Storage Facilities as Factors in the

Marketing of Farm Products 51

XL The Rent and Value of Farm Land ....... 58

XII. Land Tenure and Land Policy ........ 64

XIII. Interest on Farm Loans 70

XIV. Rural Credits 75

XV. Agricultural Wages 82

XVI. Some Problems of Agricultural Labor 87

XVII. Profits in Agriculture 91

Syllabus 94

INTRODUCTION

Note. — Unless the individual instructor suggests a different line
of procedure, the student should pursue a systematic plan of study-
like the following: First, read the introduction of the chapter to be
studied. Many points in the discussion will probably not be clear
in this preliminary reading, but the student will get a certain per-
spective for the whole chapter, which it is desirable to have before
undertaking the study of separate selections. In some cases it will
doubtless be helpful to interrupt the reading of the chapter introduc-
tion long enough to turn over into the body of the chapter and read
some selection or portion of a selection to which specific reference is
being made. v

The second step should consist in reading the chapter section by
section, studying each in the light of the questions presented in the
corresponding section of this question-book and of the suggestions
contained in the chapter introduction.

Finally, these separate lines of thought should be drawn together
into a somewhat integrated discussion of the whole situation or prob-
lem of which they are the component parts. For this purpose there
is appended to each chapter in the class-book a section labeled
" Problems." Many of these consist of quoted opinions which are
submitted for the student's criticism. They are intended to show the
practical guise in which he will later meet the problems of agricultural
economics and to test his understanding of the principles which
should aid him in solving them. At this stage of his study a re-reading
of the chapter introduction is advised.

QUESTIONS

i. Look up several definitions of economics as contained in stand-
ard college texts in general economics. Can you, by the change of
a few words, make one of them over into a satisfactory definition of
agricultural economics ?

2. Would it be sufficient to say that agricultural economics is a
study of the price relationships of the farmer ? What would be the
object of such a study of price relationships ?

3. Does the study of agricultural chemistry, physics, or biology
give the scientifically trained farmer power to control natural forces
and direct them to his own advantage ?

4. Does the commercial experience of the last few decades seem
to indicate that it is possible to identify and understand economic

2 OUTLINES OF AGRICULTURAL ECONOMICS

forces so that we can rationally work with them and turn them to our
personal or social gain ?

5. A prominent banker has said that we are a nation of economic
illiterates and that no other form of illiteracy is so dangerous in a
republic. Can you show the truth of this statement as applied to a
lack of economic intelligence among farmers ?

6. Does economic well-being have any bearing upon political,
social, and moral conditions in a community or nation ?

I. THE EMERGENCE OF THE PROBLEM OF AGRICUL-
TURAL ECONOMICS

QUESTIONS

i. Was the purpose of primitive man in domesticating plants or
animals the securing of an economic gain ?

2. Did he make his choice of species or individuals in accordance
with considerations of maximum return from the minimum outlay?
Was the savage greatly concerned about saving time ? Why ? Ma-
terials ? Why ?

3. Does it appear that in his choices the primitive man made
serious blunders ? Are we still undertaking the domestication of wild
plants and animals ? Why ?

4. Were there economic reasons for the appearance of pastoral
peoples? Did the pursuit of stock-raising necessitate that the per-
sons so engaged be nomads ?

5. Did pastoral life permit a raising of the standard of living above
that of hunting peoples? Did it lead men naturally into a more
advanced type of economic effort ? Explain.

6. Did commerce grow up among pastoral peoples? If so, was
it concerned with trade in agricultural or non-agricultural products ?

7. Did the growth of commerce tend to change the character or
direction of agricultural efforts ?

8. Can you assign any reason why the patriarchal system should
be found in conjunction with pastoral farming ?

9. Did the pastoral farmer get a cash return from his industry ?
In what form did his return come ?

10. Did he have " expenses of production " in the modern sense?
What determined his acreage, labor force, and amount of accumulated
property ?

11. Did the classic nations conduct agriculture alone or as one of
a group of related industries ? What others had they developed ?

12. Did the Roman farmer grasp the economic facts of his busi-
ness? Illustrate, pointing out both where he did and where he
did not.

13. Was the organization of agriculture in feudal times more or
less along business lines than was that of Rome ? than that of early
pastoral peoples? What do you mean by the expression "organized
along business lines" ?

14. Who owned the land which was used for agricultural purposes
under the feudal regime ? Was control of land based upon absolute
private ownership ?

4 OUTLINES OF AGRICULTURAL ECONOMICS

15. What is meant by the " engrossing' ' of land? by ''primogeni-
ture"?

16. Did the conditions of feudal tenure lead to a management of
the soil which served the best interests of agriculture ?

17. Was economic betterment the principal concern of the feudal
lord ? Was any surplus which might be produced above the imme-
diate needs of himself and his dependents saved and devoted to
improving the productive equipment of the estate ?

18. Was labor employed effectively under the manorial system?

19. Contrast the personal rights of the feudal slave, the villein,
and the metayer; their property rights.

20. Was any inducement to agricultural improvement offered to
the rank and file of agricultural workers?. any inducements to the
accumulation of capital ?

21. Was manorial economy concerned with market prices and
cash transactions? Upon what did their prosperity or unprosperity
depend ?

22. What is meant by the "self-sufficiency " of the manor ? Was
it a self-contained e/ficiency ?

23. What is meant by the "commutation of labor dues for
money" ? Did it play any part in the improvement of agricultural
conditions toward the close of the mediaeval period ?

24. Can you show any connection between "enclosure" and the
improvement of English agriculture ? Are enclosures still taking place
in England ?

25. Mention a few of the technical improvements which charac-
terized the Agrarian Revolution.

26. What bearing did the growth of commerce during the six-
teenth, seventeenth, and eighteenth centuries have upon changes
which took place in agriculture ?

27. In America did the colonists inaugurate a new type of farm-
ing, adopt or adapt that of the natives, or transplant European
farming to this country ?

28. What circumstances forced some modification of old prac-
tices ? Have such conditions affected American agriculture since the
colonial period ? Do they still operate ?

29. In reviving primitive methods were the pioneers economically
justified ? Can you suggest any primitive practice which is still per-
sisted in though no longer justifiable upon economic grounds ?

30. Were the reasons which caused American pioneer farms to be
self-sufficient the same as those which brought about that condition
upon the English manor? Show both likenesses and differences.

31. Trace several steps in the break-up of that self-sufficiency.

32. What is meant by "commercialized farming"?

PROBLEM OF AGRICULTURAL ECONOMICS 5

33. Show how commercial agriculture leads to better utilization
of natural resources. May it lead to poorer utilization? Did you
ever see a cotton farm without a vegetable garden or a wheat farm
without any fruit trees ?

34. Show the difference between individual self-sufficiency and
national self-sufficiency in agriculture. Is the latter desirable?
Why?

35. Does commercial farming lead to one-crop agriculture?
Inevitably ?

36. Does the specialty farmer secure greater efficiency from labor ?
from equipment ? Sometimes or always ?

37. What is meant by "the business of farming'' ? What special
knowledge or training does it call for ?

PROBLEMS

1. "With the development of chemistry, bacteriology, and other
physical and biological sciences, the economic aspects of the produc-
tion side of agriculture were left to the farmer unaided. This resulted
in a one-sided development of our agricultural education, which
accounts for the fact that the wise farmer mistrusts many of the
statements handed him by the colleges and experiment stations."
Take several figures of loss due to insect pests or the escape of elements
of plant food, such as are given out by entomologists and chemists,
and illustrate the foregoing quotation. Show the relation of the
economic to the technical problem in agriculture.

2. "The modern farmer, besides being something of a scientist,
must be a good general, a more than good financier, a good executive,
a man of courage and vision." Show how these qualities are related
to, or grow out of, the economic problem of agriculture.

3. "The farmer used to be the most independent man on earth,
and therefore the happiest. But now he is falling a prey to the rail-
road and the capitalist, and the trader and the labor organizer. His
days of peace and prosperity are over." Is it true that the farmer
must contend with these and other outside forces today ? Is it true
that they have wrecked his peace and prosperity ? May he be bene-
fited by them if he has the knowledge of how to work with them?
Explain.

ADDITIONAL REFERENCES

Thomas, A Source Book of Social Origins.
Forrest, The Development of Western Civilization.

Bogart and Thompson, Readings in the Economic History of the United
States.

6 OUTLINES OF AGRICULTURAL ECONOMICS

Robinson, An Economic History of Agriculture in Minnesota.

Bidwell, Rural New England at the Beginning of the Nineteenth Century.

Cyclopedia of American Agriculture, Vol. IV.

TOPICS FOR SPECIAL PAPERS

The Survival of Status in Rural Relations.
The Commercializing of American Agriculture.
Agricultural Economist v. Agricultural Scientist.
The Place of Economics in Agricultural Education.

II. CONSUMPTION

QUESTIONS

i. Is there any logical reason for placing the discussion of con-
sumption first in our study of the divisions of economics? What
relation does it bear to the subject of production ?

2. Some writers have put this division last. What reasons could
be advanced for doing so ?

3. Does the character of our consumption rest upon physiological,
psychological, or social considerations ? Are these mutually exclusive ?

4. Is the aim of our consumption to secure maximum enjoyment,
personal well-being, or social welfare ?

5. To what may we look for guidance in these endeavors? Is
the problem purely one of economics ?

6. What is the law of diminishing utility? What qualifications
must be emphasized in stating it ? Does its general principle seem
valid in your own case ?

7. Show how the law of variety operates in your personal satis-
faction of desires. Could you formulate a rule to cover the method
by which one could secure the maximum return from each dollar
spent for consumption goods ?

8. Could such a rule be called rational consumption or an "eco-
nomic order of consumption"? Do some persons govern their con-
sumption after such a plan ? Do many ? Why ?

9. Might such a plan be carried out by each individual without
producing the most advantageous results for society as a whole?
How?

10. Explain the "law of least social cost." Is it particularly sig-
nificant in connection with agriculture ? Why ?

. n. Does the fact that human wants expand beyond existing
means of satisfying them have favorable consequences? Does it
lead to progress ? How ? Necessarily ?

12. What is meant by the "dynamics of wealth"? Can you
show its relation to the standard of living ?

13. Have Americans prided themselves upon having a high stand-
ard of living? In what sense has it been "high"? What results
have followed?

14. Does the character of agriculture reflect the character of
public consumption?

15. Does such response to consumers' demands sometimes bring
unfortunate consequences? Do these ills fall upon the agricultural
industry or upon society as a whole ?

8 OUTLINES OF AGRICULTURAL ECONOMICS

1 6. Are such results checked automatically ? How ? Promptly ?
Before harm is done ?

17. Is the relation of the farmer to all this entirely passive or can
he shape the conditions to his liking ? Explain.

18. Does advertising alter the amount of food or other farm
products consumed? Does it shift the consumption from certain
articles to certain others ?

19. Point out the danger of overestimating the possibility of per-
suading the public to consume according to the farmer's needs of a
market.

20. What appears to be the farmer's positon with reference to
his own consumption standards? How have they come to be as
they are ? Are they changing ? For better or worse ?

21. Can you point out defects in rural standards of consumption
which appear to be due to lack of proper understanding of the prob-
lem, e.g., lack of knowledge of sanitary or dietary requirements?
other causes ?

22. How can each of them be remedied?

23. Point out some important merits of rural standards of con-
sumption.

24. What is the meaning of an efficient standard of living ?

25. Is the average American farmer's standard low? Inefficient?

26. Does immigration tend to modify rural standards of con-
sumption ? How ?

27. Is a rise in the price of farm products reflected in the farmer's
standard of living ? How ?

PROBLEMS

1. Look up Engel's Law (in Ely's Outline of Economics or else-
where). Do you believe that the proportions which Engel found
between the various classes of expenditures would hold for American
rural families? How and why are they modified? Is this change
for better or for worse ? (See also selection 28 in this connection.)

2. "It's not much use to grow better corn and live stock and get
more money if we can't use that money to make better homes. And
how are we going to have better homes if we don't train the girls for
it?" Is this the central need in rural consumption today? Are
there other ways of bringing about desirable consumption standards ?
What is being done along any of these lines ?

3. "A few make so much money that they can slight the art of
spending without suffering discomfort, but the vast majority would
gain as much from wiser spending as from increased earnings. Com-
mon sense forbids us to waste dollars earned by irksome effort, and
yet we have developed less skill in the art of spending than of making
money. Ignorance of qualities, uncertainty of taste, lack of account-

CONSUMPTION 9

ing, carelessness about prices— faults which would ruin a mer-
chant— prevail in our housekeeping." Can you explain why it is
that such a condition has come about ? Does the rural situation in
this regard show peculiarities of its own ? How can the situation be
remedied ?

4. "Formerly the family was the unit in large measure for pur-
poses, both of producing and consuming goods. Production has been
organized on the basis of a new unit — the business enterprise — and the
new unit proved vastly more efficient than the old. But as a unit
for consuming goods, for spending money, the family has remained
substantially where it was in colonial days. We have not developed
a large, more efficient unit for spending money." Is the rural family
even more closely attached to the family system than the town
family? How might efficiency in buying be brought to the rural
family ? Does domestic-science training operate in this direction ?
Does co-operative organization ?

5. "The trouble with the farmers of this country is that they
haven't got hold of the tremendous power of advertising. They com-
plain of the railroads and the middleman, but what they need to do
to move their product out at good prices is to get hold of the con-
sumer through clever advertising. You can sell anything if you adver-
tise it properly." Does such a statement apply without limitation?
Was the writer probably thinking of wheat and cotton ? Of what
classes of goods? Point out the precise results which advertising
does bring about.

ADDITIONAL REFERENCES

Mitchell, "The Backward Art of Spending Money," American Economic
Review, II, 269.

Cherington, "The Ability of the Consumer to Defend Himself," in
Materials for the Study of Elementary Economics, p. 374.

Langworthy, " Eggs and Their Value as Food," Bulletin 471, U.S. Department
of Agriculture.

, "Potatoes, Sweet Potatoes, and Other Starchy Roots as Food,"

Bulletin 468, U.S. Department of Agriculture.

Holmes and Lang, "Fats and Their Economical Use in the Home," Bulletin
46 q, U.S. Department of Agriculture.

Atwater, "Food Values and Uses of Poultry," Bulletin 467, U.S. Depart-
ment of Agriculture.

TOPICS FOR SPECIAL PAPERS

Independent Standards of Consumption for the Rural Community.
Learning How to Spend Wisely.
Educating the Consumer of Farm Products.

A Criticism of Domestic Expenditures in .

An Efficient Standard of Living for the Farmer.

III. LAND AND OTHER NATURAL AGENTS OF AGRI-
CULTURAL PRODUCTION

QUESTIONS

i. Might we state the process of agricultural production in the
form of an equation, as follows:

L+W+C=P,

in which L stands for land and other agents of nature, W for work or
labor, C for the capital-goods employed, and P for the product
secured ?

2. To give such an equation any degree of mathematical accuracy,
each term should have an exponent, should it not, in order to show
how much of each factor is taken, as 6 units of work equipped with
3 units of capital goods and employed with io units of land produce
15 units of product?

ioL+6W+3C=i5P.

3. But, if the exponent gives expression to the quantitative value
of the given factor, do we not still require a coefficient to give expres-
sion to its qualitative value? Is the factor L " raised to a higher
power" by certain favoring conditions of climate, fertility, and
topography which should be expressed as coefficients of the factor
when we are making up our equation of production ? (For a fourth
factor of production, see chapter vi.) •

4. Show how extreme heat and extreme cold place limitations
upon the productive power of land and how men have so adapted
their agricultural operations to these conditions as to push their
economic efforts up as close as possible to the line of absolute physical
unproductiveness.

5. Is a region which is too cold or too hot for raising a particular
product yet capable of yielding a product of some other kind ? Is
this substitute product likely to have as great economic value as those
of less extreme climates ? greater value ? Illustrate.

6. May a region which does not yield certain products with
conventional methods of growing be made productive by a modifica-
tion of that method? Illustrate.

7. Can man alter the climate of a region to permit the growing
of a crop not naturally suited to the temperature conditions ? Are
all the lands now producing citrus fruits, peaches, and other delicate
products naturally safe for such vegetation ?

LAND AND OTHER NATURAL AGENTS n

8. What is meant by a " marginal" climate ? What factors enter
into the establishment of the margin of cultivation ? Is its location
to be regarded as permanent ? Why ?

9. Does rainfall impose a more or a less rigid limitation than does
temperature upon the productivity of land ? Explain.

10. Show how moisture is a limiting factor even in so-called
humid regions. Is there also a surplus of moisture in the same
regions ? At the same time ?

n. Give a brief discussion of the methods of dry farming. Are
similar methods applicable during droughts in sections ordinarily
sufficiently watered ? Which would bring the larger returns, taking
more dry land into cultivation or handling the old lands better during
dry periods ? Which is more difficult to achieve ?

12. Show the nature of the economic problem resulting from the
presence of irrigable lands, sub-humid lands, lands subject to drought,
lands occasionally overflowed or waterlogged, small and scattered bits
of swamp, and large tracts permanently too wet for cultivation.
Where can we best push out the margin of production ?

13. Explain how judicious and scientific selection and breeding
of plants may enable us to use more lands in their natural state. Is
this cheaper than trying to change the character of the land ? How
about the value of the product ?

14. What proportion of the area of the United States is now cul-
tivated ? Is any part of our area unavailable because of temperature
conditions ? How much may be added by reclamation of lands too
wet or too dry at the present time ? Why have we not already done
this ? When shall we do it ?'

15. What are the chemical elements which are the limiting factors
in most agricultural soils ? Is it economically practicable to main-
tain this source of productivity through an indefinite period of agri-
cultural use of land ? Explain.

16. Which physical factors in productivity are inherent in a soil
and which are the result of tillage methods? Show the economic
aspect of these facts. May intelligent farming secure a virtual
increase in our land resources at no expense ?

17. Does the present trend of our biological studies seem to hold
out a hope that in the future we may maintain the productivity of our
lands more completely and more economically than in the past ? How ?

18. Is agricultural productivity an " original and indestructible
power of the soil"? In your answer relate the physical law 01 the
conservation of matter, the question of biological condition and the
needs of plants, and the economic issue involved.

19. Point out both the technical and the economic sense in which
rough topography constitutes a brake upon the productivity of land.

12 OUTLINES OF AGRICULTURAL ECONOMICS

20. How may we get the maximum performance from hilly lands ?
Do the same general methods apply here as in previous sections, viz.,
choosing a suitable crop, adapting our agricultural methods to the
character of the land, and actually remaking the land? What is
likely to be the economic order of their application ? Illustrate by
the experience of America, Italy, and China.

21. Why did population spread westward, as soon as means of
transportation were made available, instead of using the eastern sea-
board more fully? Why not raise all the perishable products for
New York City in the adjoining counties? Why have American
farmers gone to Western Canada ?

22. State the law of diminishing returns from land. Is it a part
of the working knowledge of the successful farmer? How does he
phrase it? Do some farmers ignore the principle? Entirely? In
part?

23. Under what circumstances will later applications of labor and
capital to land yield a larger return than those which have gone before ?

24. Does this fact constitute a denial of the principle of diminish-
ing returns ? State the law in such a form as to cover such cases fully.

25. What is intensive cultivation? the intensive margin of culti-
vation ? Give local illustrations.

26. What is extensive cultivation ? the extensive margin of culti-
vation ? Illustrate.

27. Are these relative or absolute terms? When is cultivation
absolutely extensive?

28. Must all agriculture be somewhat extensive ? somewhat inten-
sive ? Is the really significant question whether a particular outlay
be made intensively or extensively ?

29. Popular writers and speakers are constantly referring to
diminishing returns in agriculture as though it were the same thing
as the decline in the fertility of land. Show carefully that this is not
the case. Again state the law so as to exclude the possibility of such
a blunder in interpreting it.

30. Now show the effect which declining fertility will have upon
the operation of the law of diminishing returns from land.

31. Is scientific agriculture a means of getting a reprieve from the
effects of the law of diminishing returns from land ? Explain just
what is the relationship of the two. Show that your answer to this
question is consistent with that of the previous case.

32. Does conservation mean saving from use? What does it
mean ?

33. Outline a policy of conservation of farming land which is
economically sound today. Does it take account of the principle of
diminishing returns from land farmed intensively ?

LAND AND OTHER NATURAL AGENTS 13

34. Whose interests should be kept in mind in making a conser-
vation program, those of present consumers of agricultural products
or those of the future ? Present or future producers ? Can we recon-
cile the interests of all these classes ?

35. Were the pioneers who homes teaded the Mississippi Valley
conservationists ? Were they enemies of the people ? Was their
profit others' loss ? Whose ? Have they any defense ?

36. Can you point out some sort of exploitative agriculture which
is economically justifiable ? some which is not ?

37. Is the careful farming of rocky hillsides (even conceivably
increasing their fertility) true conservation ? What would be ?
Extend this to apply to all the varieties of land in the United States.

38. Is there reason to suppose that, having taken the cheap road
to agricultural production in the past, we shall find new sources of
cheap fertility in the future ? Explain several prospects.

39. Does it seem likely that numerous changes in the arts will
in the future tend to enlarge the agricultural powers of land ? Men-
tion several.

PROBLEMS

1. A lecturer said: "Few people realize that Australia contains
an area larger than the United States. If you do not find suitable
opportunities here, come out to Australia. " Even granting the
accuracy of his figures, is physical area of the two countries a fair
basis of comparison of their agricultural resources in land ? Are the
United States and Canada comparable in this way? Why? The
United States and Mexico ? Europe ?

2. "A fact which distinguishes agriculture from all other industries
is its dependence upon land. A manufacturing or mercantile estab-
lishment can economize land surface by building up into the air; a
mine needs land surface only as a means of getting access to the
mineral deposit beneath. But, no matter how deep the soil or how
rich the deposit of plant food in a given area may be, there is a limit
to the number of plants that can grow on that area, and therefore
the product of that area does not depend exclusively upon the depth
and richness of the deposit; it depends quite as much upon the size
of the area." Is this a peculiarity of land as a factor in agricultural
production ? Does the thinness of a soil layer sometimes become a
limiting factor ? Did you ever hear of " two-story farming" ? How
deep does a deep-tillage machine make the soil available ? May we
go deeper in the future? Only very little manufacturing and mer-
cantile business runs more than ten stories high. Is it likely that
deep tillage, artificial fertilization, and the like will give us ten-story
agriculture ? How high will cities be then ?

14 OUTLINES OF AGRICULTURAL ECONOMICS

3. "The experience of Holland in draining Haarlem Lake may-
serve as an example. This was a body of water covering 42,000
acres at an average depth of over 13 feet. Such an undertaking was
relatively greater in 1848 than it would be now and was all the more
difficult because the bottom of the lake was below sea-level, and all
the water had to be lifted out of it." Just before the outbreak of the
European war Holland was planning an enormous undertaking of this
sort. Does this point to large possibilities at the mouth of the
Mississippi? elsewhere? Is it conceivable that much of the water
which now comes down our rivers might be impounded at flood time
and pumped back over the land during periods of scant rainfall?
How would the coming of cheaper mechanical power affect this ?

4. "It is well known that pioneer homesteads were generally
located by springs ; that in the course of a decade or two many of the
springs failed, and shallow wells were dug for domestic supply; and
that these wells in turn frequently failed and were either deepened
or replaced by drilled wells. A careful investigation of conditions for
about twenty years back shows a very general lowering of the water
table throughout the older settled portions of the Mississippi Valley —
3.87 feet in Wisconsin, 3.45 in Minnesota, 1.94 in Tennessee, and
so on. For eight states this seems to indicate an average lowering
equivalent to 10. 5 feet in the eighty years since permanent settlement
and cultivation began. The water supply of a country is its agricul-
tural capital, and these figures make clear the fact that the reserve
agricultural capital of the country is shrinking. " Is this the real
limiting factor in our agriculture? If so, what are we going to do
about it?

5. "There are in this country a number of important sources of
potash salts, and, owing to the conditions brought on by the European
war, they are in a way to be developed on a scale which offers hope
that the American farmer may have a home supply of potash in the not
distant future." Explain. Should we include deposits of phosphate,
potash, and other mineral fertilizers as a part of the natural resources
of agriculture? Would the discovery of a potash bed enlarge our
land resources as truly as the discovery of an unknown island ?

6. "The farmer wants extent of land and he wants his land to be
fertile, but what is sometimes even more significant than these quali-
ties is the location of the farm which he is to cultivate." Aside from
its relation to climate, is location a factor in the productivity of land ?
value productivity or technical productivity ? May these economic
qualities of land which are due to location be changed with the passage
of time ? Illustrate.

7. "The profitable limit to intensive cultivation is reached at the
point where the return to the last unit of labor and the last unit of

LAND AND OTHER NATURAL AGENTS 15

capital corresponds to the return to labor and capital on land at the
extensive margin of cultivation.' ' Is this true? Work out your
proof illustrating with a chart.

ADDITIONAL REFERENCES

King, Farmers of Forty Centuries.

Carver, Principles of Rural Economics, chap. iii.

Shaler, Man and the Earth.

Kropotkin, Fields, Factories, and Workshops.

Teele, Irrigation in the United States.

Crookes, The Wheat Problem.

Hopkins, Soil Fertility and Permanent Agriculture.

Hill, Highways of Progress.

McGee, "Subsoil Water of Central United States," Yearbook U.S. Depart-
ment of A griculture, 1 9 1 1 .

Brown, " Importance of Developing Our Natural Resources of Potash,"
Yearbook of the U.S. Department of Agriculture, 1916.

Woods, "The Present Status of the Nitrogen Problem," Yearbook of the
U.S. Department of Agriculture, 1906.

Hirshberg, "Making Foods of Chemicals," World's Work, XXVI, 115.
(See also Scientific American Supplement, LXXIII, 310.)

Woodward, "Land Drainage by Means of Pumps," Bulletin 304, U.S.
Department of Agriculture.

TOPICS FOR SPECIAL PAPERS

How Science Discovers New Agricultural Resources.

Fitting the Character of Our Production to the Nature of Our Resources.

The Possibilities of Irrigation (or drainage) in the United States (or some

particular state or section).
Getting the Full Value of Our Rainfall.
How Fertility Is Wasted.
The Danger of Declining Fertility.

Why We Need Not Fear Future Barrenness of Our Fields.
A Rational Conservation Program for Agricultural Lands.

IV. HUMAN EFFORT AS A FACTOR IN AGRICULTURAL

PRODUCTION

QUESTIONS

i. In our equation of agricultural production, shall our labor
factor carry an exponent to indicate numbers of workers and a co-
efficient to indicate their quality ?

2. What percentage of our people make up the agricultural group ?
What has been the trend of this proportion since 1820? Make a
chart to show this.

3. Why has the rural birth-rate fallen off? Does this constitute
a national danger ? Why ?

4. What is the nature and meaning of the "rural exodus"? Is
it greater or less today than one year ago ? Why ? Five years ago ?
Why ? Twenty-five years ago ?

5. In the so-called rural exodus do certain classes leave the farm ?
Which classes ? What is the ultimate effect upon the labor force ?

6. Has the back-to-the-land agitation actually reversed the tide ?
Why ? Did it introduce any new element into our agricultural labor
group ? Explain. Is this important ?

7. How large a factor is immigration in the determination of our
farm labor supply? Was it larger or smaller in the past? Why?
Was it different in character ?

8. Were South Europeans agriculturists in their own countries
before coming here? Do they prove good workers when they get
into our farming communities ?

9. What are the principal difficulties in the way of recruiting our
farm workers extensively from this source ?

10. What part has the Asiatic played in the development of
American agriculture ?

n. What is the present status of the question of Asiatic labor on
American farms ? How has it come to this pass ?

12. How large a place does the negro fill in the ranks of farm labor ?
Does he seem to hold his own in his original field ? Does he show any
tendency to invade other areas? to be displaced by other workers
when brought into direct competition ? Why ?

13. Is women's part in agricultural labor increasing or diminish-
ing ? Do you see any possibility of a change with the general move-
ment of women into industry ? As farm managers ? in what types of
farming ? As employees ? (See problem 4.)

14. What sort of a labor demand is made by agriculture? Is
there a demand for specialized ability and training ?

16

HUMAN EFFORT A FACTOR IN PRODUCTION 17

15. How long does it take to make a master-farmer? Explain
the process fully. Is it a trade, a profession, or a job ?

16. How should this labor group be taught or trained in order
to get the most adequate labor supply at the minimum cost ?

17. What is the relation of versatility of the laborer (i.e., famili-
arity with many kinds of farming) to progress in farming methods ?
Is this an argument against specialized agriculture ?

18. Explain the co-operative demonstration work as a method of
securing a high quality of farm effort.

19. Is the negro a labor element which is readily assimilated into
new methods of farming? Is he what might be called a " natural"
farmer ? What does that mean ? Does he use machinery effectively ?
get the scientific point of view ? work hard ? steadily ?

20. Show how health conditions affect the quality of the rural
laborers ? How does the negro stand in this regard ? Are conditions
of rural health improving ? How ?

21. Does the farm worker's state of mind have anything to do
with his efficiency? Would a feeling of security be a help? self-
respect? knowledge that increased efficiency would bring increased
pay ? Point out some others.

22. Would five members of a given family running their farm
enterprise constitute a more or less efficient labor group than five
unrelated persons of equal strength and ability? Why?

23. Can gangs of laborers be employed effectively in agriculture ?
Why ? More effectively in some types of agriculture than in others ?
Why ? Can gang work be made the basis of permanent labor organi-
zation in agriculture or used only for seasonal work? Explain the
economic importance of this factor.

24. Does tenancy produce inefficient labor? How? Might it
be that the man was a tenant because he was inefficient instead of the
other order of cause and effect ?

25. Are all farm owners efficient ? Are they likely to be stimulated
by the responsibilities of ownership ? May the tenant be responsible
for a larger business than the owner ?

26. Would it be possible to introduce forms of labor association
which would bring about more effective labor conditions? Can
agricultural interests follow the pattern set by other industries ?

27. During the war some European countries have provided that
farm labor must be pooled during harvest time, so that as soon as a
farmer has his own crop harvested he may be assigned to help others
whose work has not yet been finished. In America some so-called
civil-military plans of mobilizing high-school boys and city men to
work on farms during their respective rush seasons have been advo-
cated. Which of these plans appears to you to be the more feasible ?

1 8 OUTLINES OF AGRICULTURAL ECONOMICS

Does the type of farming affect the availability of either of these
methods of organizing labor ? Do they offer valuable suggestions for
peace times?

28. Does hired labor or "unpaid labor" (i.e., members of the
farmer's family) make up the larger part of the labor force which the
average American farmer employs ? Does this vary in different sec-
tions and with different types of farming? What effect does this
have on the quantity and quality of the labor which the farmer uses
in various operations ?

PROBLEMS

1. "In the period following the war progress in agriculture and
appliances was at a standstill owing to the capacity of the labor. The
watchword was 'cut down, wear out, and move on to more productive
fields/ only to keep in perpetual motion the same destructive theory."
Is it true that the capacity of the laborer acts as a limiting factor and
determines the type of agriculture which may be followed? Give
some illustrations from the present, if possible from your own com-
munity.

2. "The labor thus employed [share system of the South] only
works about seven months in the year. The rest of the time is
devoted to loafing, fishing, hunting, and having a general good time.
A school term of five months is provided and paid for by the State.
This covers all the time that can be taken from the farms during each
year." Do you see any cause-and-result connection here? Is such
a labor situation hopeless? Where should you begin if trying to
effect an improvement ? What would be the condition of agriculture
as long as this condition continued ?

3. " The Hollanders along the western shore of Lake Michigan take
possession of the low lands that others do not regard as valuable and
are making the best kind of farms." Has immigration brought us
types of labor ability which we should not have had otherwise ?

4. "In the' more intelligent scheme of the new country life, the
economic position of woman is likely to be one of high importance.
In the development of higher (more intensive) farming she is better
fitted than the more muscular but less patient animal, man, to carry
on with care that work of milk records, egg records, etc., which under-
lies the selection on scientific lines of the more productive strains of
cattle and poultry." Does this seem to indicate a new but important
possibility ? Is it analogous to the field which women have come to
occupy in industrial life ? Is there any reason why the two cases are
not parallel ?

5. "A large supply of very cheap labor is sometimes a means of
getting a large product per acre, and this is just what certain mis-

HUMAN EFFORT A FACTOR IN PRODUCTION 19

guided persons, ignorant of the first principles of economics, are con-
stantly clamoring for. But a large supply of cheap labor means a
large number of families supported on very low wages; and that
means in turn widespread poverty, which is precisely what the study
of political economy aims to prevent." Show what this means in the
present stage of agricultural development in the United States, and
point out what kind of labor policy is necessary to insure a large
product per man.

6. "The one way to solve the labor problem is to organize the
farm business so well that the labor used on the farm is unusually
effective. In other words, to so manage the farm work that a given
amount of labor accomplishes more than on the average farm." Do
you agree? How is this process to be carried' into effect? Can we
draw any lessons from the management of labor in industry ? What
differences are there in the two situations ?

7. "One of the greatest sources of low productivity from farm
labor is to be found in the amount of time lost through unfavorable
weather conditions. Until this leak is stopped our farms remain
in a low state of efficiency as compared with other industries." Is
this true according to your observation ? Do you know of any farm
proprietor who has solved the problem ? What suggestions can you
make?

8. "The whole scheme of labor efficiency in industry is based on
division of labor. But no such division is possible in agriculture."
What are the gains from division of labor ? Is it entirely absent in
farming? Do certain new types of farming take greater advantage
of this principle than the old ?

ADDITIONAL REFERENCES

Warren, Farm Management, chaps, i and xi.

Taussig, Principles of Economics, chaps, ii and iii.

Emerson, Twelve Principles of Efficiency.

Labor, "Factory Management Series/' A. W. Shaw Company.

Hourwich, Immigration and Labor, Part II, chap. v.

Hasbach, A History of the English Agricultural Labourer.

Industrial Commission (1900), Report, Vol. X.

TOPICS FOR SPECIAL PAPERS

Why the Proportion of Farm Workers Is Decreasing.

What the Immigrant Has Contributed to American Agriculture.

The Meaning of Efficient Farm Labor and the Means of Securing It.

Machinery as a Substitute for Farm Labor.

The Negro an Indispensable Factor in American Agriculture.

The Possibilities of Specialized Labor in Agriculture.

The New Labor Demands of American Farming.

V. CAPITAL-GOODS AS A FACTOR IN AGRICULTURAL

PRODUCTION

QUESTIONS

i. How productive would a farmer be today if he attempted agri-
culture empty-handed, without equipment ?

2. How effective was the labor of the primitive man as compared
with the modern farmer? Did he have any forms of capital-goods
to aid him ? How did he get them ? Why ?

3. Give a definition of capital and show why we use both the
expressions capital and capital-goods.

4. What do the Commissioner of Labor figures indicate as to the
increase of technical productivity which has resulted from the use of
farm machinery ? Do you think this is likely to increase in the future
as rapidly as in the past ?

5. What other forms of capital-goods besides the ordinary farm
implements are being added to our farming equipment today ? Are
irrigation works capital-goods ?

6. Is it possible that as the rate of progress in one direction tends
to slow down we may find a more rapid addition to our productive
equipment in some other direction? In what fields of capital de-
velopment other than farm machinery are we making rapid advance
today ?

7. Show the relation which the amount of farm capital bears to
the farmer's return from labor. What relation does the capacity of
the farmer bear to this problem ?

8. Does the increase in the capital factor demand a proportionate
increase in the capacity and training of the farmer ? mechanical train-
ing ? what other kinds ?

9. Is it in this connection particularly that economic training is
significant ? Explain.

10. If one needs to be a good mechanic in order to get the best
performance from a tractor and to prevent undue deterioration of the
machine, does one need to be a good economist in order that capital
may be employed most effectively and that capital value may not be
dissipated even while physical property remains intact ? Explain.

n. How much capital does the average American farmer under-
take to employ today ? In what forms is it ? What seems to be the
outlook for the future ? t

12. Does the economic efficiency of a piece of farm equipment
depend only on its technical performance or does it depend also on
how it is fitted into the farm enterprise ? Explain and illustrate.

CAPITAL-GOODS A FACTOR IN PRODUCTION 21

13. Must the size of the man, the size of the machine, and the
size of the farm be adjusted to each other? What difficulties does
this present ? How can they be met ?

14. Should the different forms of capital-goods be adjusted with
reference to each other ? What is the result if they are not ?

15. What factor is often neglected in this apportionment of the
farm capital ? Why is this so ? What results follow ?

16. Does the productivity of the various capital-goods vary
exactly in accordance with their market price? Are these dis-
crepancies sometimes large? Illustrate. Does this cause a par-
ticular importance to attach to the selection of the particular article
to be purchased ?

17. Are farmers as a rule shrewd buyers ? stingy buyers ? lavish
buyers? gullible buyers? intelligent buyers? Try to assign the
reasons in each answer that you give.

18. Is the buying function of the farmer becoming constantly
more important ? Why ? More difficult ? Why ?

19. How can the farmer protect himself or be protected in this
regard? See what activities your state undertakes along this line.

20. What is meant by depreciation ? Can this be reduced in the
case of most American farms ? How ?

21. Can depreciation be entirely eliminated ? Should the farmer
take account of the actual rate of depreciation of capital-goods in
figuring his profits and planning his future enterprises ? Show why.

22. Do we expect capital in the long run to maintain itself?
How ? To increase in amount ? How ?

23. Is the process of replacement or further accumulation an
automatic one ? What part must the farmer take ?

24. In general, do we expect farmers to supply the capital for the
agricultural industry or do we expect them to use others' capital?
What is necessary if they are to secure a supply of capital from out-
side sources ? Must the one who supplies such capital know that his
money is safely employed ? that it is profitably employed ? What
does this require of the farmer ?

25. Explain the relation of insurance to the question of capital
conservation. Is insurance or prevention better ? Does the system
of insurance tend actually to reduce the amount of losses ? How ?

PROBLEMS

1. "There is an important difference between land and capital-
goods in that when more capital-goods are wanted it is usually the
more productive forms which are made, while an increase in the
amount of land under cultivation usually requires that less productive

22 OUTLINES OF AGRICULTURAL ECONOMICS

land be resorted to." Can you illustrate this proposition from actual
experience ? If it is true, would it seem to show that the condition
of the farmer and indeed of the whole human family may be made
economically better as time goes on? What one condition would
have to be observed if we are to benefit from the increasing efficiency
of capital-goods ?

2. "The trouble with most farmers is that they have bought their
equipment in response to the solicitation of some fellow who had a
machine he wanted to sell, instead of buying only those things for which
they knew there was a real need, in fact the most important need for
their particular farm operations. Many a farmer finds himself
limited because he can't make a certain expenditure for a breeding
animal, some fertilizer, or a piece of machinery and has only himself
to thank for it, because he spent his money for some fool thing that
he didn't need and that won't work anyhow." Is such a condition
more true in some sections than in others? of some classes than of
others ? How can the farmer's capital be conserved and more profit-
ably directed ?

3. "The use of the tractor is not wholly a question of cheaper or
more convenient operation, but also of having enough power to do
certain farm tasks. Only with a tractor can plows and discs be put

down to proper depth for summer and fall plowing It requires

a better workman to keep a tractor running efficiently than it does
to operate a team." Pick out several other cases which illustrate the
fact that the character of capital-goods determines the possibilities of
farm operation and the nature of the labor demand. Can you cite
any product we could not raise at all if it were not for mechanical
aids to production ?

4. "Agriculture can be conducted with much or little capital as
conditions dictate. While a man with little capital will always work
at a disadvantage, it is possible for him to begin with greater chances
of success than in many other lines of effort." Is this true? Ex-
plain and criticize.

ADDITIONAL REFERENCES

Taussig, Principles of Economics, chap. v.

Quaintance, The Influence of Farm Machinery on Production and Labor ,
"Publications of the American Economic Association, " 3d Series,
Vol. V.

McDowell, "Influence of Age on the Value of Dairy Cows and Farm Work
Horses," Bulletin 413, U.S. Department of Agriculture.

Valgren, "Farmers' Mutual Fire Insurance," Yearbook of the U.S. Depart-
ment of A griculture, 1 9 1 6 .

Cyclopedia of American Agriculture, Vol. I, chaps, v and vi.

CAPITAL-GOODS A FACTOR IN PRODUCTION 23

TOPICS FOR SPECIAL PAPERS

The Advent of Capitalism in Agriculture.
Agricultural Capital as the Basis of Social Progress.
The Delicate Task of Conserving Farm Capital.
Pirates Who Prey on the Farmers' Capital Fund.
Economic Bases for Comparing Horses and Tractors.

VI. ORGANIZATION AND MANAGEMENT OF THE AGRI-
CULTURAL ENTERPRISE

QUESTIONS

i. Is there a function of organization or business enterprise which
constitutes a fourth factor of production similar to land, labor, and
capital ?

2. What are the attributes by which we may distinguish it? Is
it separate from labor ?

3. The other factors are quantitative, are they not? also qualita-
tive ? Is organization or entrepreneurship qualitative ? quantitative ?
Explain.

4. May we now put in a fourth factor in our equation of produc-
tion— E ? Shall we give it an exponent ? a coefficient ?

5. Does it perhaps indicate rather the power to which the three
quantitative factors are raised? How would this be:

(ioZ/'+6^+3C0e= 15P?

This indicates roughly that the coefficients of land are fertility and
location; of labor, the efficiency of the worker; and of capital, the
technical quality of the capital-good. Modifying the whole equation
is the efficiency of the organization in which they are joined, expressed
here by the coefficient e outside the trinomial.

6. Show that the law of diminishing returns applies equally to
each of the factors of production. Does the expression "law of com-
bining proportions'' seem to you to express this idea more clearly
than the older expression "diminishing returns" ?

7. Does this same question of most profitable proportion come up
in connection with the relationship of various farm enterprises one to
another? For instance, how many chickens will give the greatest
profit on a farm which has a certain acreage in grain, a certain num-
ber of livestock, and a certain number of women and children in the
family ?

8. Show that this is the real problem of one-crop v. diversified
agriculture.

9. Show that the same issue is involved in the most profitable
adjustment of agriculture to our industrial development, commercial
facilities, and the whole complex of economic activities.

10. Show that a wise choice of enterprises is the beginning of wis-
dom for the farmer.

24

ORGANIZATION OF AGRICULTURAL ENTERPRISE 25

11. Does the choice of location come next in importance? Are
these two questions separate or more or less bound up together?
Explain and illustrate.

12. Will the amount and kind of land that the farm manager
chooses be determined solely by the kind of farming he likes best?
Does society have any way of telling him what it most needs him to
do ? How ? Does he always heed ? Can you trace any sequence of
results if he does or does not follow this line ?

13. Are both the individual and society constrained to fit their
preferences to the sort of natural resources available ? Illustrate.

14. Is the course of business enterprise also deflected by the num-
ber and character of laborers available? How does such a process
work itself out?

15. Is the organization of the agricultural industry also modified
by such limiting factors as the scarcity of the capital fund or the
efficiency of capital-goods ?

16. Show that this whole process is to be explained in terms of the
mutual adjustment and readjustment of the prices of products and
of the component cost-goods which enter into their production.

17. Let us then go back to the fundamental proposition of chap-
ter i, viz., that the modern business farmer must take his place in a
commercial system organized upon a basis of price. In making his
decisions as organizer and manager as to what to produce and what
to use in producing it, is it his task to bring about wholesome relation-
ships among these various price-goods ?

18. Is his own personal profit involved? How? Is the welfare
of others ? Explain.

19. Can you illustrate these general propositions with reference
to the redirection of farm enterprise in the United States in connection
with the European war ?

20. We are now in a position to view the problem of the proper
degree of intensity of cultivation more adequately. Is extensive agri-
culture characteristic of periods of cheap land? Why? Does the
speculative fever often lead men under such circumstances to buy
more land than they can work to the greatest advantage ? Why can
they not work it to advantage ?

21. Under such circumstances what policy should be followed in
order to secure the greatest profit? Note here that there may
be two quite distinct questions involved, one as to the maximum
physical product and the other the price received from a crop of
given size.

22. Show clearly the difference between the size of farm and the
size of farm business. Is the size of farms in the United States increas-
ing or decreasing ? Why ? What of the future ?

26 OUTLINES OF AGRICULTURAL ECONOMICS

23. Is the size of the farm business increasing or decreasing?
Why? What circumstances enable a farmer to conduct a bigger
business on a given acreage? Does a bigger business mean a more
profitable business ?

24. What acreage appears to be most profitable at the present time?
What is the limiting factor ? Is this limit likely to be pushed outward ?

25. The scientific- management movement in industry today lays
much stress upon plant design and shop management. Do these
questions have equal importance to the farm manager ?

26. What are the principal considerations to be taken into account
in the lay-out of the farm ? Give reasons.

27. Point out the importance and possibilities of a working plan
for man labor; for horse labor. Can efficiency be carried as far in
this direction by the farmer as by the manufacturer? Why? Be
very careful in answering this question. Don't imagine that all fac-
tories are 100 per cent efficient, nor be modest about the possibilities
of really scientific farming.

28. Show the importance of the problem of how to buy raw mate-
rial, e.g., feedstuffs or fertilizer. If we say that a dairyman is buying
the wrong feed in spite of the fact that his cattle are thriving, what do
we mean ? Has he harmed anyone by so doing ? Is this a concrete case
under the general issue discussed in questions 16-18, above ? Explain.

29. What are the advantages of the family system as a form of
farm organization ? Has it also some weaknesses and defects ? What
are they ?

30. What changes have come about in the organization of other
industries which have already passed out of the family system?
Have these marked gains in economic efficiency ? Have social prob-
lems been created thereby ? Do they appear to be in process of being
solved or to be growing worse ?

31. Would it be possible to carry these industrial types of organi-
zation over into agriculture ? Why should we desire to do so ? Why
hesitate ?

32. Point out the principal advantages of having a larger unit of
operation in agriculture. Might this end be secured by other means
than the resort to industrial forms of organization ? Explain.

^. Even if we have operating units of the most efficient size, may
it be desirable to have a larger unit of commercial organization or
financial control? Is this the situation in the great industrial cor-
porations? Are there any attendant disadvantages or dangers?
May they be eliminated ?

34. May these advantages be secured by farmers through co-
operative organization? Does such organization avoid the dangers
of large-scale corporations ?

ORGANIZATION OF AGRICULTURAL ENTERPRISE 27

35. Analyze the theory of co-operative organization carefully, in
such a way as to show specifically how it is capable of securing more
efficient use of (a) natural resources, (b) labor powers, (c) capital.
How about skill of business enterprise under co-operation ? How is
control exercised ? Is it sufficiently centralized ?

PROBLEMS

1. "On the average American farm there are areas of waste land.
Some of these can never be profitably reclaimed, but others found on
about all farms may be termed wasted areas. They are so misused
that they produce nothing." Does such a situation present a problem
to the farm organizer, e.g., to find an enterprise suited to those
neglected and perhaps ill-favored areas, to marshal the labor and
capital necessary to reclaim them, etc. ? Explain fully in terms of the
business organizer's function. Might the same general proposition be
applied to wasted labor and wasted capital-goods ?

2. "It was found that specialized farms, those of tobacco, stock,
or dairy type moderately diversified, are the most efficient in this
region and that the general mixed farms, more highly diversified, are
the least efficient." Does such a situation seem to you peculiar to
the region referred to (the bluegrass section of Kentucky) or is this
form of organization likely to bring maximum profits under all cir-
cumstances ? (See questions 6-8.)

3. " Certain enterprises may be distinctly profitable when occupy-
ing a minor position in the farm business and distinctly unprofitable
if made major enterprises." Examine the farming of some particular
locality to ascertain whether this proposition is true and whether exist-
ing practices are well- or ill-advised if measured by this test.

4. "The head of a large factory can devise means for supervising
his men and for securing the execution of his orders. But the owner
of a farm can use hired labor to advantage only when his own example
and his own oversight supply the needed stimulus. The tasks of
twenty men engaged in farming would be spread over several hundred
acres and must present troublesome questions in assigning and super-
vising the work." Does this mean that farms must be limited to a
few hundred acres employing not more than five persons the year
around ?

Farmer X has his office at the top of his house, which is located
on a hill overlooking his farm. He has equipped it with a telescope
with which he watches his field hands, and he also has a Ford with
which to get quickly to any part of the farm. Do these devices
enable him to supervise his men adequately ? For how large a labor
force and for how large an area do you think such methods would be

28 OUTLINES OF AGRICULTURAL ECONOMICS

effective t Might it be extended still farther by the use of field tele-
phones? Can you think of still other means of overcoming the
factor of distance in supervising the operations of a farm ?

5. "Profits can be increased most easily by attention to the weak-
est points in a system of farming. The more vital the weakness, the
greater the increase in profits that can easily be made. It is both
easier and more profitable to increase low acre yields than high ones
and a small product per cow than a large one." Explain, relating
your answer to the principle of diminishing returns. Is this a uni-
versally valid statement ? Would it apply to the agriculture of the
whole country as well as to the practice of a single farm? By "low
yield" does the writer mean low absolutely or relatively to the capacity
of given instruments of production? How is capacity to be deter-
mined ?

6. "The Vegetable Growers' Co-operative Association of

have recently employed an expert to superintend their operations and
make researches into the celery and tomato diseases which have been
interfering with their success during the last few years." Explain
this in terms of efficient organization of agriculture.

ADDITIONAL REFERENCES

Card, Farm Management.

Pratt, The Organization of Agriculture.

Powell, Co-operation in Agriculture, chaps, i, ii, v, vi.

Wolff, Co-operation in Agriculture, chap. xiii.

Fay, Co-operation at Home and Abroad.

Aldridge, Farming Corporations.

Levy, Large and Small Holdings.

Carpenter, Profit Making in Shop and Factory Management.

Bilings, Seasonal Distribution of Farm Labor, Chester County, Penn.

Bulletin 528, U.S. Department of Agriculture.

Humphrey, "Labor Requirements of Dairy Farms as Influenced by Milking

Machines," Bulletin 423, U.S. Department of Agriculture.
Mowry, "The Normal Day's Work of Farm Implements, Workman and

Crews in Western New York," Bulletin 412, U.S. Department of

Agriculture.

TOPICS FOR SPECIAL PAPERS

The Place of the Promoter in Agriculture.

Choice of Crops as a Factor in Farm Organization.

The County Agent as a Factor in Agricultural Organization.

Business Enterprise in Farming.

Scientific Management on the Farm.

An Analysis of Co-operation as a Type of Agricultural Organization.

VII. RECORDS AND ACCOUNTS AS MEASURES OF
EFFICIENT MANAGEMENT

QUESTIONS

i. What is the purpose of a system of accounts? Are financial
items the only ones which should be recorded ? Explain.

2. What is the nature and purpose of "production records" on
a farm?

3. Should the farmer take a financial measurement of his business
at stated intervals ? What is its purpose ?

4. Why is a system of running accounts without periodic inven-
tory as likely to deceive the farmer as to enlighten him ?

5. What difficulties are met with in making a satisfactory inven-
tory ? Is it true that the accountant starts out with certain figures
of his own making and that, no matter how accurate his method, the
results cannot be any more correct than the figures with which he
starts, or which he introduces at later stages ?

6. Is it possible to secure units of valuation based upon a large
number of cases treated statistically ?

7. What is depreciation ? appreciation ? What benefit should the
farmer derive from keeping a careful record of these items ?

8. Should profits or losses due to changing values of the farm
property be kept separate from profits or losses from operation ? Do
you know of farmers who deceive themselves by not separating these
accounts ?

9. The financial statement of the ordinary commercial enterprise
shows " resources and liabilities." What is meant by these terms?
by "net worth"?

10. What would appear on the liability side of the farmer's finan-
cial statement ? If he has no outstanding obligations, would a sum-
mary statement of his inventory constitute his financial statement and
show his net worth ?

n. How should records of current receipts and expenses be kept ?
What is a ledger ? May the farm accounts be kept in this book alone ?

12. What is a journal ? a cash book ?

13. Since the farmer wishes to use as few books as possible and
since his transactions are usually neither numerous nor complicated,
what book or books should he use ? Why ?

14. If one is to get the greatest benefit from the keeping of
accounts, what comparisons does he need to make besides the com-
parison of his own financial situation from year to year ?

29

30 OUTLINES OF AGRICULTURAL ECONOMICS

15. Is it important also that he discover the source of his profits
or losses ? Do production records show the source of gain or loss ?
its amount ? Do general accounts show amount of gain or loss ? its
source ?

16. What is "cost accounting'' ? What records other than those
we have been considering will be needed in a system of cost accounts ?

17. What are overhead charges and what difficulties do they pre-
sent in cost accounts ? How may these be met ?

18. What principle should be followed in the charging for labor
or materials which are used in a particular enterprise but which would
not otherwise command any price ?

19. Show how cost-accounting methods reveal the competitive or
non-competitive character of farm enterprises. How does this affect
the farmer's practice ?

20. Is the value of cost accounting on the farm to be found in the
absolute figures obtained or in the comparative results (e.g., year with
year under changed methods, one crop with another, etc.) ?

21. Does the manufacturer use "cost of production" figures in
such a way as to influence the making of prices ? Does the farmer
do so?

PROBLEMS

1. "It is probable that no other business followed for sole support
could long survive the lack of an accounting system; yet in spite of
this lack the farming business continues to prosper. ! ' Can you explain
why the situation with reference to farm accounts differs somewhat
from other industries? Is that difference becoming less today?
Why?

2. "More farmers fail of financial success from a lack of business
methods and proper records than from ignorance in handling land,
plants, and animals, and in making them thrive." Do you agree?
Can you show certain particulars in which business methods are likely
to be improved as a direct result of the existence of a system of
accounts? Might some business blunders occur even on a farm
which had an admirable set of books? Is it conceivable that, if a
very elaborate set of books is undertaken, time may be spent upon
them which would be better employed in some active farm work ?

3. "Many farmers have found a diary a helpful means of keeping
a fairly complete record of their farm buisness. With a little care and
thought the value of a diary for this purpose can be greatly increased.
With some extra pages in the back for the farm inventory and sum-
mary, this book can easily be used to keep financial records of the
farm business." Is such a system a happy mean between the slipshod
methods of the farm without any financial record and the one which

ACCOUNTS AS MEASURES OF MANAGEMENT 31

employs labor on the books under conditions of diminishing returns
as compared with other farm employments ? For what sort of farm
accounting is the diary method adequate ? What are its limitations ?

4. "Most of the bulletins on farm bookkeeping and farm costs
deal with the subject from a purely statistical point of view without
involving principles of double-entry bookkeeping. Very often they
fail to provide for proper correlation and interpretation of results after
they are obtained." Does this involve one criticism or two of ordi-
nary methods of farm accounting? What are the merits of the
double-entry system? May single-entry accounts be "properly cor-
related and interpreted" ?

5. "When economic conditions have so changed as to make it
necessary to keep accounts on the farm, the farmer who says he doesn't
have time to keep them will be about as well off as if he told the ele-
vator owner to destroy the grain check, as he didn't have time to call
for it. In either case he is not getting all he should from the operation
of the farm." Are the two cases precisely analogous ? Explain fully.
Expound the word "necessary" in this quotation.

ADDITIONAL REFERENCES

Scovill, Farm Accounting. (In press.)

Roberts, The Farmer's Business Handbook.

Warren, Farm Management, chaps, xvi and xvii.

Cyclopedia of American Agriculture, Vol. IV, chap. vi.

Thomson, "The Use of a Diary for Farm Accounts," Farmer's Bulletin 782,

U.S. Department of Agriculture.
Mowry, "Machinery Cost of Farm Operations in Western New York,"

Bulletin 338, U.S. Department of Agriculture.
Valentine, American Economic Review, Supplement, March, 1913, p. 102.
(Also numerous cost-of-production studies of the U.S. Department of

Agriculture and state experiment stations.)

TOPICS FOR SPECIAL PAPERS

How to Make a Farm Inventory.

Outline of a Particular Set of Accounts and Their Results.
The Role of Cost Accounting in Modern Farming.
Work Records and Their Use.

VIII. PRINCIPLES OF VALUE AND PRICE AS RELATED
TO FARM PRODUCTS

QUESTIONS

i. Distinguish between price, exchange- value, and utility.

2. Which one of these coincides with the "actual value" or "fair
price" to which people so frequently refer?

3. Is value a quality which is absolute or relative ? Does it reside
inside an article or is it extrinsic to it ?

4. So long as an article remains unchanged, is its value unchanged ?
In your answer do you consider that an article is unchanged only so
long as its form or appearance is the same ? Would its value be
affected by a mere change in location ? a change in time ?

5. Does the market value of barley and rye in the United States
depend upon the character of these grains or upon the nationality of
our people or upon both ?

6. Do you think that the market prices of any of our agricultural
products would be revised if all private incomes above $5,000 were
suddenly swept away ? if every family were assured an income of at
least $3,000? What is the meaning of "effectual demand" ?

7. We often say that prices are low because the supply exceeds
the demand. Is this expression accurate and complete ? If supply
is in excess of all demand, what will be the price of the article ?

8. Show how youf own demand for fresh fruit is affected by the
principle of diminishing utility. What is marginal utility?

9. What is a marginal consumer? Explain the nature of his
influence upon prices.

10. In the case of crops which come upon the market in large bulk
during a short harvesting season, does the idea of marginal utility
of a last unit hold good ? Which bushels of wheat mark the margin
of wheat consumption ?

11. What idea of marginal utility governs the thrifty housekeeper
when she is purchasing a winter supply ofapples in the fall ? Does
the quantity stored depend upon what suppliers areasking for their
stocks ?

12. Explain what is meant by a demand schedule. Draw up a
schedule of the demand for cranb erries in accordance ii hnthe data
in selection 146.

13. Make a demand schedule for potatoes accord wg tot the best
information you can get. Make another for grapefruit. How do
they differ ? Why ?

32

VALUE AND PRICE AS RELATED TO FARM PRODUCTS 33

14. If a crop were doubled, would its price fall one-half ? Look
up actual price figures in the Yearbook of the United States Department
of Agriculture or elsewhere and compare the prices of good and poor
crop years.

15. If it appears that changes in supply result in more abrupt
changes in the price of some goods than in the case of others, how do
you explain it ?

16. In your own feelings, do you find that added units of some
goods are accompanied by a more rapidly diminishing utility than
others? Illustrate. Does your demand for some articles seem to
expand indefinitely?

17. What is meant by elastic demand? inelastic demand ? Give
several illustrations of each. Are there two separate classes of de-
mand or is it merely a question of degree ?

18. If there are several different uses to which a given article is
put, does that increase or decrease the elasticity of its demand ?

19. Does the existence of several fairly satisfactory substitutes for
a certain product have an effect upon the demand for it ? Does it
make the demand more or less elastic ?

20. Explain the effect that both these conditions (questions 18 and
19) are likely to have upon prices.

21. Is the demand for agricultural products in general elastic
or inelastic? Is there evident difference in the case of articles
of food and articles of wear? What other important classes are
there ?

22. Is our demand for food as such or for certain articles of food ?
for clothing or for certain textiles, skins, or other covering?

23. Are the great expenditures of bon vivants incurred to secure
(a) quantity? (b) quality? (c) service? What do you mean by
quality in this connection: (a) nutriment? (b) delicacy? (c) rarity?
How about the social cost and return of such expenditures ?

24. Does the cost of high living for some increase the high cost of
living to others ? Explain your whole chain of reasoning.

25. In general, does our demand for agricultural products rest
upon a rational basis? Are some of our demands irrational? If
possible, find in your own community an illustration of supplying the
market with a poorer instead of a better article simply because the
buyer demands it.

26. Millers say that the consumer demands bolted flour and
polished rice. Does the housewife know that there is any other kind
of rice or does she know the merits of other flour ? How did present
standards come into use?

27. Does the average consumer need the assistance of a pure-food
inspector and a health department to instruct and direct his demand

34 OUTLINES OF AGRICULTURAL ECONOMICS

in the present-day market? Can you cite any case in which they
appear to have set up an ill-advised standard for consumers ?

28. In what other ways does the government step in and alter
the character of public demand? What would be the effect of an
embargo upon the export of agricultural products ?

29. Show how public opinion may become a powerful factor in
demand.

30. By "supply" do you mean the total amount of goods in
existence v. stock? What other factors may enter into the supply
idea?

31. Is the supply of agricultural commodities limited absolutely
or only relatively ?

32. May the supply of an article which over a period of years is
only relatively limited be absolutely limited in a certain city at a
certain time?

^. Suppose that there is a very large quantity of peaches in the
Chicago market upon a given day; does the whole of this amount
exert an influence upon the determination of prices then and there ?

34. Suppose that there is an equivalent abundance of wheat in
Chicago; does it have an equally immediate and intense effect upon
wheat prices ? Explain both cases fully.

35. Do weather conditions represent absolute factors in the supply
of agricultural products? Can the reduction of supplies due to
unfavorable weather conditions be partially offset by additional out-
lays of labor and capital upon the crop ?

36. Show how costs of production determine the relative limita-
tion of agricultural supplies.

37. Try to find illustrations of farm products which are examples
of constant cost-goods; of diminishing cost-goods; of increasing cost-
goods.

38. Which of these classes is easiest to illustrate from agricultural
experience ? Which is easiest to illustrate from industrial experience ?
Is there any reason to suppose that a change in agricultural organi-
zation would alter these conditions ? Relate all these answers to the
principle of diminishing returns.

39. Is there such a thing as an oversupply of farm products
(a) from the standpoint of the consumer ? (b) from the standpoint of
the farmer?

40. How did it happen that farmers supplied grain and cattle at
such low figures as existed in the late eighties and early nineties?
Can you cite any region or line of production in which they are doing
the same thing now ? For the same reason ?

41. Does the mere fact that the per capita production of food
products is as large today as it was at sometime in the past indicate

VALUE AND PRICE AS RELATED TO FARM PRODUCTS 35

that prices today either are or should be on the same level that they
were then ? Why ?

42. What bearing, if any, does the tariff have upon supplies of
farm products in American markets ?

43. Butter is selling wholesale at 27 cents per pound with a steady
market. Then the government warehouse report appears, showing
10,000,000 pounds of butter less in storage than there was a year ago
at this date. The price jumps up three cents within an hour. Explain
the meaning of this advance and each step in the process by which it
is brought about. Is it justifiable ?

44. Is it conceivable that all the farmers producing a certain com-
modity might sell their product for less than some consumers would
pay for this total output ? How would it be possible for the farmers
to make sure that they were securing the maximum amount the
public was able and willing to pay ? Is this the result we should aim
to secure? How about the consumer's situation and the future of
the agricultural industry ?

45. Do farmers by having control of supplies have a potential
control of prices? Are there any limitations upon the results they
can accomplish through the exercise of this power ?

46. What difficulties of organization and administration would
confront the farmers of a given section in attempting to get together
to control the market by (a) holding their product for a certain price ?
(b) by limiting acreage in order to induce scarcity prices ? Illustrate
with reference to tobacco, milk, citrus fruits, apples, wheat, and cot-
ton. Give reasons in each case.

Compare with the possibilities of industrial control in the case of
anthracite coal, petroleum, packing-house products, sugar, and farm
implements.

47. May farmers organize to control prices without incurring the
penalities of our anti-trust laws ? Should they ?

48. If you had control of the supply of a certain commodity, what
principles would you follow in deciding upon the monopoly price
which you would exact from buyers ?

49. What is meant by " valorization " ? What functions, besides
merely naming a price, would the government have to undertake if it
attempted to valorize a given farm product ?

50. Is there a difference in purpose in case the government names
a maximum price ? a minimum price ? What difficulties of adminis-
tration would there be in these cases? From whom would objec-
tions come to either of these policies ? Can you suggest any other
means by which the government might better accomplish the same
result ?

36 OUTLINES OF AGRICULTURAL ECONOMICS

51. What was done to adjust cotton values in the fall of 1914?
What part did the government play in this ? What part did private
agencies play ?

52. Does the establishing of conditions of free and open compe-
tition effect valorization upon a natural basis? What is needed to
insure such a competitive condition ?

53. What is the process of cornering a market ? What limitations
are there upon the possibilities of doing so? What markets have
actually been cornered ?

54. Can the farmer prevent the cornering of the market?
Always ?

55. Are there many small markets within the larger market
process ? What do we mean by the cotton market, the wheat market,
or the egg market ?

56. Does the world-market for cotton determine the price which
the local buyer pays ? Does the local buyer's price have any influence
upon Liverpool conditions ?

57. What part do dealers play in the making of prices? What
is the "mechanism of the market" and what work does it perform?

58. What does it mean to say that prices in a certain city are
"out of line with the general market" ?

59. What is your idea of natural value ? of normal price ?

60. Do natural values change from year to year ? Is the normal
price of beef in this country rising ? Does normal price depend upon
cost of production ? Whose cost, where some produce at lower costs
than others ?

61. What does the wholesale grain or cotton or butter dealer mean
when he says that he considers prices above or below normal for this
year or this season or this particular moment ? Does he have costs
of production in mind ?

62. In the case of staple crops would it be possible around harvest
time to compute what should be the normal price adjustment for that
season ? Do farmers and traders do this ?

63. Is there a normal price for perishables ?

64. Can the dealer in farm products set aside the laws of supply
and demand ? Can he take advantage of their operation ? Can he
shape them to his purpose?

PROBLEMS

1. The preamble to some resolutions of a certain "Taxpayers'
Club" in August, 1914, read as follows: "Whereas, We note with
alarm that the price of food products has risen far beyond that called
for by the laws of supply and demand; and Whereas, This body
believes that this bad practice can and should be stopped, and the

VALUE AND PRICE AS RELATED TO FARM PRODUCTS 37

persons found guilty of such practices punished/' etc. Do you believe
that the first of these propositions is borne out by the facts of war
prices in the United States ? Do you think the Taxpayers' Club had
adequate information upon which to base its action? Upon what
data do you base your own conclusion ?

2. Do you agree with the second proposition of the foregoing pre-
amble ? Just what practices should be stopped ? By what means ?
Upon what grounds would judicial or executive officers decide when
a price was natural and right and when it was artificial and wicked ?
Is the situation analogous to public utility rate-making ? Should we
look forward to government regulation of food prices after the war ?
Would regulation of methods be better than regulation of prices ?

3. "The doctor goes out to see a patient and he knows what he
is going to get for that service. The lawyer knows what he is going to
get for trying a case. The banker fixes his rate of interest. The bus-
iness man figures up his expenses and adds in the per cent that he
wants for his profit. He knows what he is going to get. Everybody,
with the exception of the farmer, has some way to protect himself on
his investment. If we raise a bushel of corn that costs us fifty cents, we
don't know that we are going to get a fair remunerative price for our
labor and our product. If we raise one dollar's worth of stuff, we
should get one dollar for it and a legitimate profit over and above
that." Is the first part of this a correct statement of facts ? Is the
latter part sound economic philosophy? What is "a dollar's worth
of stuff" ? Could the world be run on a plan of guaranteeing every
man his costs of production ?

4. Can farmers control the price situation through the increase or
decrease of production as flexibly as can the manufacturer ? To what
extent can they exert such control ? Upon what consideration is the
acreage in a given crop determined today? Would a rational eco-
nomic basis of determining such acreage be possible? Would a
rather large " factor of safety" be necessary? Why? Examine the
figures for acreage and price of farm products as given in the Yearbook
of the United States Department of Agriculture to see whether it
seems that farmers govern their operations in such a way as to get
the benefit of accurately meeting market needs. The figures for
potatoes are perhaps the best to study. The accompanying chart
(Fig. 1) shows them graphically. Does the acreage of a given year
appear to be controlled by the price of the preceding year — i.e., the
acreage being reduced after a low price and increased after a high
price ? Is this change of such an amount as to effect a readjustment
and balance or to throw matters out of balance in the opposite direc-
tion? Is the situation more or less extreme in the case of crops
which take many years to come to bearing, such as fruit trees ?

38

OUTLINES OF AGRICULTURAL ECONOMICS

5. Fig. 2 presents a profit-and-loss chart prepared by Wallace's
Farmer after the plan of the Babson charts of general business con-
ditions. "As an average of the last ten years, in April, butter sold
at Elgin for 27.68 cents per pound, while corn was selling for 61 .1
cents per bushel. It took, therefore, the value of .4528 of a bushel of
corn to equal the value of a pound of butter. But during April, 19 16,
butter sold at Elgin for 34 cents, and No. 2 corn in Chicago for 76
cents. Butter therefore sold for .41 of a cent less than the price of

Fig. i . — Prices and acreage of potatoes

corn would indicate. In May, butter has sold on the average for
.3871 of the price of No. 2 corn per bushel in Chicago." In Novem-
ber, 1916, they wrote, "The long-delayed gain area H seems farther
off than ever. The price of corn has increased so much faster than
butter that the loss per pound for October reached a little over 7 cents.
It begins to look as though the rather numerous dairy cattle sales
which have taken place in certain localities were justified." In
February, 191 7, they add: "The slough of despond is becoming
deeper. Consumers' boycott leagues and oleomargarine substitution
have held down the prices of butter. The ten-year corn-butter ratio

40

OUTLINES OF AGRICULTURAL ECONOMICS

for January is .5296 of a bushel of corn to a pound of butter. This
year, with 98j-cent corn, the price of butter should be 52.17 cents,
as compared with the actual price of 37.5 cents. A loss of 14.67
cents is the greatest of any time in the past twelve years. After more
than three years of solid loss, it surely seems that we should emerge
into Gain Area H.

"What is the trouble ? Have the dairy enthusiasts induced too
many people to milk cows ? If so, the present grief period should
thin out the ranks sufficiently so that price conditions will eventually
be more favorable." Do you believe that some such methods of

Pttcf/vzzer or ror/4£

p/p/c^s avi/r or

§ 1

\ &&JZO

#&&o

?

#&5/\

&20

I

Fig. 3

studying the farm business statistically may be developed to the point
where farmers can make their efforts as suppliers fit profitably into
the demand schedules of consumers? Are other lines of business
using such methods of forecasting their future policies ?

6. Do you not ordinarily expect that a small supply will be accom-
panied by a high price and large supply by low price ? How then do
you explain the fact that "an examination of the market quotations
for the bulk of beef cattle sales at Chicago by days of the week indi-
cates that quotations rule highest on the days of largest receipts "?
Average figures for a two-year period are shown in the accompanying
chart (Fig. 3).

VALUE AND PRICE AS RELATED TO FARM PRODUCTS 41

7. There are seventeen cars of Imperial Valley cantaloupes in the
New York market on a certain raw and chilly Saturday morning in
early June. What part does the cost of producing these melons have
in the making of the price at which they sell ? Does the cost of pro-
ducing cantaloupes in the Imperial Valley have a part in determining
prices in New York on the following Thursday? How about this
cost of production and the average price of cantaloupes during the
next year's shipping season ?

8. "The services performed in the marketing process can be
classified under one of the following heads: (1) assembling; (2) stor-
ing; (3) assumption of risk; (4) financing; (5) rearrangement;
(6) selling; and (7) transportation." Which of these functions are
to be regarded as properly a part of the work of the agricultural pro-
ducer? Under what conditions and to what extent should some of
them be turned over to other agencies ? Why ?

ADDITIONAL REFERENCES

Seligman, Principles of Economics, chaps, xii-xvi.

Seager, Principles of Economics, chap. vii.

Ely, Outlines of Economics, chaps, x and xi.

Carver, Distribution of Wealth, chap. i.

Weld, The Marketing of Farm Products, chaps, xii and xv.

Taylor, "The Prices of Farm Products," Bulletin 20Q, Wisconsin Experi-
ment Station.

Nourse, The Chicago Produce Market (in press), chaps, vii and viii.

JCerr and Weld, " Prices of Wheat to Producers in Kansas," etc., H.R.
Document No. 1271, 63d Congress, 3d session.

Warren, " Crop Yields and Prices and Our Future Food Supply," Bulletin
341, Cornell Experiment Station.

Davenport, "The Relation between Yields and Prices," Circular No. 177,
Illinois Experiment Station.

(See also references at end of chapter following.)

TOPICS EOR SPECIAL PAPERS

Economic Effects of the Effort to Educate the Public's Demand for Farm

Products.
The Irrational Character of Supply.
Price as an Adjusting Force.

Can Agricultural Producers Organize for Price Control?
The Effects of a Boycott upon Prices.
Is the Farmer's Fear of Overproduction Justified ?
The Movement of Farm Prices Since the Civil War (or some shorter

period) with Analysis of the Reasons Therefor.
The Relation of Market Organization to Prices.

IX. MARKET METHODS AND PROBLEMS

QUESTIONS

i. What features distinguish the "exchange" from other forms of
market organization ? Is there a hard-and-fast line of demarcation ?

2. Make a list of as many lines of farm products as you can find
handled by the exchange method. Are new commodities being added
to the list from time to time ? What characteristics must such com-
modities possess ?

3. Explain the difference between "spot" and "future" transac-
tions. Why is future trading carried on? Did you ever hear of
future sales of eggs ? of apples ? of livestock ? Explain why or why
not in each case.

4. How does a "bucket shop" differ from a "legitimate" ex-
change ?

5. What practices does the regular produce exchange forbid?
Why? What power does it have with which to enforce its rules?

6. What is a warehouse receipt? Explain the system under
which they are issued and the advantages resulting from their use.

7. What arguments are brought forward to prove that exchange
dealing exerts a steadying influence on prices ?

8. Would it be correct to say that the grain exchange is a market
mechanism which operates to keep the markets in different cities in
line with one another ? Explain the method by which this result is
accomplished.

9. What is a basis contract? Suppose there were an abnormal
crop year, in which practically all the corn was of very inferior
grade; would the fixed differences of price provided by the Chicago
Board of Trade work equitably to all parties ? What results might
follow ?

10. Can you suggest any other method by which basis contracts
might be settled ? What does the United States Cotton Futures act.
say on this subject ?

n. Is it desirable to have national grades for staple farm pro-
ducts ? Why ? Do we have them at the present time ? How are
grades of apples, butter, and citrous fruit established ?

12. What is a hedging contract and how is it used? Show how
the farmer could protect his business by hedging.

13. What is a "bear" and why? a "bull"?

14. Would a bear raid on the market be harmful to the producer ?
Will the appearance of a strong bull interest result in higher price*
to consumers ?

42

MARKET METHODS AND PROBLEMS 43

15. Draw up as complete a list as possible of the farm products
which are handled through auctions. What characteristics make
them suitable for auction dealing ? Mention several that are entirely
incapable of being handled at auction. Why?

16. Does the auction system reduce the number of middlemen who
handle the goods between producer and consumer ? Does it add one
more link to the chain ?

17. What effect does it have upon the cost of selling? upon pro-
ducers' price returns ? upon consumers' prices ?

18. Take the auction method as applied to the commodity in
which you are most interested. What is the character of the demand
brought together in the auction-room? Does the auction reach
demand as fully as do private dealers ? Does it stimulate demand as
effectively as the private dealer ?

19. Point out the similarities and differences in the organization
and methods of the stockyards and the cotton or grain exchange.

20. Does the stockyards system make it easy or difficult for large
buyers to manipulate prices to their own advantage ?

21. Explain the method of the "call board." Does this method
of dealing bring about full and free competition among buyers ?

22. Does the name "broker" as used in the fruit and vegetable
trade carry the same significance as when applied to the broker in the
grain or cotton exchange ? the stock broker ? the real estate broker ?
What is a broker ?

23. Point out the distinction between car-lot wholesaler, commis-
sion man, jobber, and broker. Are they generally separate indi-
viduals ?

24. What is a speculator ? Describe the process of speculation.
Do all the classes of middlemen mentioned in the previous question
engage in speculation ? May persons outside the trade do so ?

25. Could some of these middlemen be eliminated from the mar-
keting process ? Is the work they do superfluous ? Could someone
else do their work more economically ? Back up all your statements
with adequate evidence.

26. What is the relative charge made by the wholesaler, the
jobber, and the retailer of oranges? Which does the most work?
Explain the services of each. Does each suffer the same amount of
loss or deterioration of goods handled? Does this enter into the
consumer's price ?

27. Are the middlemen who handle farm products specialists?
What is the jobber's specialty? What is the country shipper's
specialty ? Can you cite any new form of specialization which has
appeared in the handling of some commodity with which you are
familiar ?

44 OUTLINES OF AGRICULTURAL ECONOMICS

28. Is parcel-post marketing designed to lower consumers' prices ?
raise producers' prices? Can it do both? Point out the principal
difficulties from (a) consumer's point of view, (b) producer's point of
view.

29. Would there be an actual social saving in marketing by parcel
post — i.e., would there be less labor and material used up in the
process? Or would there simply be a redistribution of effort and
reward ?

30. Get some local transportation rates and costs of packing for
parcel post and for regular shipment. Figure how large a package of
eggs, butter, vegetables, or the like one would have to get in order to
make a saving of fifty cents. How much effort on the buyer's part
would this transaction involve ? Would it be worth while ?

31. Is parcel-post marketing a means of saving some goods which
would otherwise go to waste ? Is it a means of giving city dwellers
perishable products of better quality than can be secured under ordi-
nary conditions ?

32. What advantages are possessed by express companies for
developing and carrying on direct marketing operations which are
not enjoyed by the post-office ?

7,3. Are public markets an institution of great age or of recent
appearance? Why is there special interest in public food markets
today ?

34. Does retail selling in public markets stabilize prices in accord-
ance with actual ratios of demand and supply ? Does it avoid waste
or deterioration of the goods ? Does it effect greatest labor economy
in selling ? other economies ?

35. Discuss the principal abuses in the grain business, the live-
stock business, or the shipping of fruit and truck crops which led to
the movement for co-operative marketing associations. Has co-
operation eliminated them ?

36. What are the principal difficulties in the way of successful
co-operative selling organizations ? Are these due to (a) the nature
of the commodity ? (A) the nature of the producer ? (c) the nature of
the market?

37. What middlemen does the co-operative shipping association
eliminate ? Does it do the same work with greater economy or does
it get some easy profits that formerly went to the local buyer and
shipper ?

38. Does co-operative organization of growers oblige city whole-
sale buyers to pay more than they otherwise would for their supplies ?
Does it result in higher prices to consumers ?

MARKET METHODS AND PROBLEMS 45

39. Should a co-operative association have capital stock ? Why ?

40. What are the principal methods of arranging the control of
the co-operative organization ? Should every member have the same
voting power ? Why or why not ?

41. Have co-operators succeeded in building up a large enough
organization to control the whole process of selling any product in
distant markets to (a) jobbers ? (b) retailers ? (c) consumers ? Is one
of these their goal ?

42. Show the difference between the marketing ideas of the Cali-
fornia legislature and those of the market-director. With which do
you agree ? Why ?

43. Would it be feasible for state authorities to establish a
complete system of inspection and grading and then market the
product under a state brand? What economic benefits would
result ?

44. What gains would result from state- wide affiliation of pro-
ducers in a great shipping organization? Would it have to be
limited to a single commodity? What other limitations or diffi-
culties ?

45. Have you a state department or bureau of markets in your
state ? What is it doing or has it done ?

46. Give an outline of the activities of the Office of Markets of
the United States Department of Agriculture. Are they following
up the lines of greatest benefit to the public ? What other lines of
work would you suggest ?

47. Explain the market information service of the Office of
Markets. To whom is this information available ? What help is it
to (a) the grower ? (b) the shipper ? (c) the buyer ?

48. Give a brief explanation of the Landwirtschaftsrat system.
How would this organization compare with American conditions if
each state had a state market department affiliated with the Office of
Markets of the United States Department of Agriculture ?

49. Would such a national plan of market distribution be equally
applicable to the marketing of perishables and of staple products?
Why?

50. Do we have any kind of market organization today which is
nation-wide in its scope ? Try to get an illustration of one which is
co-operative in character and of one which is a private company or
corporation.

51. Do the plans of food control during war times form a workable
or desirable pattern according to which we should organize the dis-
tribution of agricultural products after the war ?

46 OUTLINES OF AGRICULTURAL ECONOMICS

PROBLEMS

i. "Distribution of agricultural products in the United States
has become largely identified with a speculative class of trading capi-
talists, because it has been found best for the producing and the con-
suming interests of the community that the risks of distribution should
be localized in a separate commercial class whose members are in a
position to inform themselves as to all the factors, past, present, and
prospective, affecting the future course of prices. If the risks fell
upon the farmer, it would increase materially the risks of capital
required, thus raise the rate of interest he would have to pay, increase
the cost of production, and consequently tend to reduce consumption
by rise of price to consumers/ ' Is this statement correct? Does it
constitute a defense of the middleman ?

2. "This bill [Cotton Futures act] legalizes and licenses gambling
in cotton futures, which we promised to suppress. Do you dare go
to the raiser of cotton — the farmer who makes from i to 20 bales of
cotton a year — and say, 'I voted to legalize gambling on the New
York Cotton Exchange. I voted for a bill that will increase the
number of "phantom" bales dealt in'? Such gambling in futures
increases the supply by the addition of the paper supply sold by the
' short ' speculators who are bearing the market, a practice which it is
admitted depresses the price of cotton." Do you admit all these
statements ? Is any factor overlooked ? Should all exchange trans-
actions be limited to spot dealings ? Give full reasoning.

3. Is speculation the same thing as gambling? "The American
system of distributing farm products is essentially a speculative system
from beginning to end — speculative in the sense that after the products
pass out of the producers' hands until they pass into the consumers'
control there is not a moment nor a stage in the distributive move-
ment during which the one who has legal control of the goods does
not run the risk of a rise or fall in the value of the property." Show
clearly where the line is to be drawn between speculative operations
which are beneficial and those which are harmful.

4. Show the relation and the distinction between speculation and
the manipulation of prices. "There is need of the greatest care in
reasoning upon the complex play of cause and effect in the emergence
of prices. Shall we say next winter that eggs are high because the
men who store eggs get together and boom the price? Or shall we
say they are high because exports from Russia and Denmark have
been cut off and some of the home supply called for by South
American markets, and be glad that the foresight of dealers led
them to accumulate so large a stock as they did last April ? " Answer
this riddle.

MARKET METHODS AND PROBLEMS

47

5. A certain auction company advertises: "In case of ' trouble'

in or near , divert your cars to the Auction Company.

Any cars of perishable goods arriving in damaged condition should
be immediately turned over to the Auction Company for dis-
position. Holding perishables indefinitely means deterioration, car
service, demurrage, waste of time and money." Why should these
particular cases be cited ? Is this the only field of auction selling ?
Is it the most important ?

6. "New Yorkers today are buying butter from Minnesota, eggs
from Iowa, cantaloupes from Arizona, and apples from Oregon.
Every one of these articles can be raised in our climate and the present
enormous cost of long-distance marketing saved." Is this argument
good? Can you show how the costs of marketing from a distant
point may be less than those from the near-by point ? What other
factors may influence the situation ?

7. " Whenever it is possible to make human nature over, eliminate
greed from one man, sloth from another, dishonesty from another,
and above all graft from the promoters, then co-operation in the
growing and marketing of produce will be a success and not before."
Suggest some ordinary business devices now in use by co-operative
organizations that have welded ordinary imperfect mortals into ef-
fective working systems. Have the courts upheld the right of the
association to demand that members live up to their agreements ?

8. There is much talk in certain quarters about the "scientific
marketing of farm products." Is there a science of marketing?
What is meant by the expression "a scientific approach to the prob-
lem of marketing" ? The following chart has been used to illustrate
unscientific marketing. What was wrong ?

CHART SHOWING MOVEMENT OF BARTLETT PEARS FOR ONE
WEEK, IN THE CITY OF NEW YORK

Day

Date

Cars

Boxes

Average

Monday

July 24
July 25
July 26
July 27
July 28

52

27

23
28

31

27,100

14,045
HJ65
14,550
16,195

$2.04

Tuesday

2 . 21

Wednesday

Thursday

2.48
2.48
2.57

Friday

9. The Industrial Commission (1900) said: "In the distribution
of livestock, of cotton, grain, tobacco, and wool, the main tendency
is to eliminate the more expensive middleman. The telegraph and
mail bring to the cotton and grain producers the prices of the world's
markets day by day. The shipper simply ascertains by what means

48 OUTLINES OF AGRICULTURAL ECONOMICS

the transfer from producer to consumer can be effected most econom-
ically. To err is to eliminate himself. An attempt to impose even
a trirlingly small excess of charges on cotton or grain at one distribu-
tion point will be taken advantage of by competing points.' ' Can
you illustrate the operation of such a process of elimination? Has
the same movement gone on since 1900 ? Is it apparent in other prod-
ucts than those mentioned, such as fruit, truck, and dairy products ?

10. " Two years ago tomatoes were scarce and high. This enabled
the co-operative association to sell its product, even the inferior stock,
at high prices. The buyers were on the ground grabbing for the cars.
The association took all the credit, claiming they forced the wicked
buyers to bid over each other. News of the great profits went round
and this year everybody had tomatoes, oodles of them. As a result,
the association blew up. Buyers would not even bid, but asked for
goods on consignment. Acres of fine tomatoes went to waste. The
law of supply and demand stepped in and changed the order as it
always has and always will." Does this point to a limitation and a
danger which co-operative associations must face? Explain. How
can it be met ?

n. "A correspondent points out that two articles of food are
practically always to be found in every part of the United States, and
almost always at a low price when the distance which they are trans-
ported is taken into account. The two articles are oranges and
bananas. The price of the latter, in fact, is almost stable and uniform
all over the country year in and year out, although bananas are a
perishable product and are shipped thousands of miles. The market-
ing of oranges and bananas is extensively organized — the former by
co-operative associations, the latter by a trust.' ' Should we look to
organizations like the United Fruit Company to reduce marketing
costs in the future ? Have the meat-packers reduced costs ?

12. "A conspicuous feature of the American grain market is the
existence of a large ' visible supply' during the greater portion of the
year." Exchange reports from day to day record the increase or
decrease of this visible supply and make comparisons with conditions
of previous years. Competitive dealing in the light of this informa-
tion tends to eliminate large profits to middlemen. "On the other
hand, products such as fruits and vegetables, where no storable supply
exists, because of their perishable nature, have shown but a slow
tendency to get rid of the more expensive methods of distribution."
Explain the two propositions here laid down. Can you show that
the organization of the produce trade today is such as to make pos-
sible the securing of fairly reliable information as to the visible supply
of even perishable commodities ? Is this calculated to have a stabil-
izing effect upon prices ? How ?

MARKET METHODS AND PROBLEMS 49

13. A prominent railroad official estimates the following annual
losses due to our "loose system of distribution":

100,000 cars of fruit and vegetables which rot on the ground
for lack of shipping and storage facilities and knowledge
of receptive markets, at $350 a car $ 35,00,0,000

Loss in cornstalks, rice, flax, and other grain straw, now

burned 250,000,000

Additional amount which the farmers should receive if by-
co-operation they knew when and where to sell their
products to best advantage 1,500,000,000

Total. $1,785,000,000

Are all these items "losses" or "wastes" in an absolute or only
in a relative sense ? If all could be eliminated would the nation be
a billion and three-quarters richer ? Would farmers ? In case you
had power to remedy one of these three defects each year for three
years, in what order would you go at them ?

ADDITIONAL REFERENCES

Brace, Organized Speculation.

Powell, Co-operation in Agriculture, chaps, vii and viii.

Weld, The Marketing of Farm Products.

Huebner, Agricultural Commerce.

Adams, Marketing Perishable Farm Products (Columbia Studies, No. 170).

Nourse, The Chicago Produce Market (in press).

Wiest, The Butter Industry in the United Stales, chaps, v-viii (Columbia
Studies, No. 165).

Hibbard and Hobson, "The Marketing of Wisconsin Butter," Bulletin 270,
Wisconsin Experiment Station.

Industrial Commission (1900), Distribution and Marketing of Farm Products,
Vol. VI of the Commission's report.

Bohannan and Campbell, "A Preliminary Study of the Marketing of Burley
Tobacco in Central Kentucky," Bulletin 202, Kentucky Experiment
Station.

More and Dorland, "Commercial Handling, Grading, and Marketing of
Potatoes," Farmers' Bulletin 753.

Potts and Meyer, "Marketing Creamery Butter," Bulletin 456, U.S.
Department of Agriculture.

Schleussner and Kitchen, "Marketing and Distribution of Western Musk-
melons in 191 5," Bulletin 401, U.S. Department of Agriculture; Bulle-
tin 315 on similar subject.

Bassett, et al., "Co-operative Marketing and Financing of Marketing Asso-
ciations," Yearbook of the U.S. Department of Agriculture, 19 14; "Public
Markets," ibid.

Sherman, et al., "Studies of Primary Cotton Market Conditions in Okla-
homa," Bulletin 36, U.S. Department of Agriculture.

SO OUTLINES OF AGRICULTURAL ECONOMICS

McConnell and Carp, "A Study of Cotton Market Conditions with a View
to Their Improvement," Bulletin 476, U.S. Department of Agriculture;
see also Bulletin 457.

U.S. Commissioner of Corporations, Report on Cotton Exchanges.

, Report on the Beef Industry.

jr-, Report on the Tobacco Industry.

U.S. Department of Labor, " Butter Prices from Producer to Consumer,"
Bulletin 164, Bureau of Labor Statistics.

"Sugar Prices from Refiner to Consumer," Bulletin 121, Bureau of

Labor Statistics.

TOPICS FOR SPECIAL PAPERS

An almost infinite number of suitable themes will occur to the person
who examines those lines of marketing with which he is most closely
in touch. A few others may be mentioned:

The Good and Evil of Speculative Trading.

Anti-Option Bills and the Regulation of Future Dealing.

National Grades for Farm Products.

The Usefulness and Limitations of Auction Selling.

Methods of Handling and Selling Tobacco, Wool, or Other Local Product.

Modern Organization of the Trade in Perishables.

City Marketing Problems, Public Markets, Parcel Post, etc.

Achievements and Difficulties of Co-operative Selling Associations.

How Wide Should Be the Scope of the Co-operative Selling System ?

The Movement toward Federation of Local Co-operative Associations.

The Market News Service of the Bureau of Markets.

The Market Department (or regulations) of (your state).

Market Developments of the Last Three Years in New York.

The New California Legislation.

Foreign Trade in American Farm Products (or some particular article) .

X. TRANSPORTATION AND STORAGE FACILITIES AS
FACTORS IN THE MARKETING OF FARM PRODUCTS

QUESTIONS

i. Is there a complete analogy between the railroad's charging
what different classes of traffic will bear and the farmer's incurring
transportation costs proportionate to the value of his product ?

2. Does charging according to value of service and according to
cost of service produce approximately similar rates in the case of
railroad traffic ? ocean carriers ?

3. Do farmers gauge their outlays upon road-building in accord-
ance with the value of the products to be hauled ?

4. Explain the principal steps by which the exportation of agricul-
tural products of the Mississippi was made practicable and profitable.
What effect did this have upon prices in the Middle West ? in Mas-
sachusetts ? in England ?

5. Explain how both the supply and the demand side of the market
for cantaloupes are affected by the development of cheap refrigerated
transportation from the Far West. Do low railroad rates harm or
benefit the eastern farmer ?

6. What would be the effect upon city milk prices if our railroads
were swept out of existence ? What effect has the building of electric
lines had on milk prices ? Explain both cases.

7. Would the additional work needed to take proper care of the
eggs on the average Mississippi Valley farm be an expenditure of
labor under conditions of diminishing or increasing returns ? Might
it be sometimes one and sometimes the other ? Check your answer
against the figures in Agricultural Economics on p. 579 showing
monthly distribution of losses from bad eggs.

8. Explain the method of buying eggs "loss off" and its effect
upon the egg business.

9. Is the local creamery's method of buying milk according to
butter-fat test and selling the product co-operatively suited to the
marketing of eggs also ? Is this method in actual use ?

10. Does every improvement in the transportation system, such
as quicker service, lower rates, or better refrigeration, tend to move
the field of production still farther from the consumer ? Is this result
desirable or even tolerable ? Explain.

n. Give a brief account of the method by which cars are refriger-
ated. See what you can find out about pre-cooling methods.

12. How do you explain the fact that the average wagon haul was
shorter in 191 5 than it was in 1906 ? How much shorter was it ?

51

52 OUTLINES OF AGRICULTURAL ECONOMICS

13. Does the farmer consciously figure the cost of team hauling
as a factor in his selling price ? Is the indirect effect the same as if
he did ? How ?

14. Does a straight road make the cheapest hauling between two
points ? Is the actual cost of hauling upon a given road the average
of the cost upon its several parts ? the cost of its most difficult por-
tion ? Why ?

15. Take the roads of some farming section with which you are
familiar. Assume that you have a limited amount of labor and
capital to expend upon them — say $200 and 250 man-days of labor.
Could you apply this with largest returns by (a) scraping and side-
ditching present roads? (b) by resurfacing with gravel or crushed
stone ? (c) by cutting down grades ? (d) by relocating- the road
along a contour line ?

16. Explain the "red ball" or similar special freight service for
perishable farm products. How do the rates of speed on such prefer-
ence freight compare with rates on ordinary freight ? on passenger
service ?

17. Go to your local freight agent and find out how charges on
the different classes of service compare; on car-lot and less than car-
lot rates. What is the minimum carload ? Is this the maximum ?

18. What is a "passing report" and what purpose does it serve?

19. What is the "diversion" privilege and how is it used in the
marketing of agricultural products ? Explain its advantages.

20. Can you demonstrate that there are economic gains from the
granting of concentration rates which justify the Interstate Commerce
Commission in compelling the railroads to grant such rate conces-
sions ?

21. Explain the purpose and method of storage-in- transit. Does
the use of this privilege result in a social saving or merely an individual
gain?

22. Is car shortage in the United States a matter of an absolute
scarcity of rolling stock or of a relative undersupply of certain types
of cars at particular times and places ?

23. Is the car supply handled in such a way as to give it maximum
power to satisfy shippers' needs ? See what you can find out about
the methods followed by the railroads to supply shippers' needs.

24. Do shippers sometimes interfere with the efficient utilization
of cars ? How could this be avoided ?

25. How has the problem of the rapid and economical handling of
products at the railway terminal been met in the case of (a) iron ore ?
(b) bulk grains? (c) package freight, particularly fruit, vegetables,
poultry, and dairy products ? Is the loss due to poor facilities greater
or less in the last case than in the other two ? Is it more difficult to

TRANSPORTATION AND STORAGE 53

devise adequate methods and equipment for handling this class of
traffic ? Why ? Do you know of any place where it has been done
satisfactorily ?

26. What is demurrage and why is it charged? What is "free
time"? "reciprocal demurrage"? Look up "average" agreements.

27. Are food products injured by cold storage for thirty days?
three months ? nine months ? Can the business judgment of dealers
be relied upon to keep the storage period down to safe limits ?

28. Should the consumer be told when he is buying storage goods
or left to judge goods entirely by appearance and flavor ?

29. Would prices presumably be affected by placarding cold-
storage goods as such? Why? Would the supply situation be
affected thereby? the demand situation?

30. How long are eggs actually held in storage on the average ?
poultry ? beef ? What natural or economic forces tend to limit the
period ?

31. Can cold storage be used as a means of manipulating market
stocks of food products as a means of securing abnormally high prices ?
Are there any automatic checks upon such speculative operations?
Relate your answers to the principles of value brought out in the
preceding chapter.

32. Does the average American farmer prefer to sell his products
to the professional traders at harvest time or to hold them to some
future time in the hope of getting a higher price? Why? What
commodities ?

^. In case he stores his crop, is any advance in price a net gain ?
What deductions must be made from such gross profits ?

34. Is the cost of storage on the farm greater or less than the
dealers' cost of storage ? Is the loss or deterioration greater or less ?

35. Does it cost the farmer more to deliver his products to the
dealer or shipper at harvest time than later, or does it cost less ?

36. Is it certain that there will be an advance ? Would there be
if producers hold their goods off the market now and all dump their
product later? in case they "hedge" at the time of putting in
storage ?

37. Even if there should be an advance in price, is it certain that
the farmer will be in a position to take advantage of it ? What might
prevent his doing so ?

38. Does the fact that farmers are in a position to store their
crop or to sell it at once, as they see fit, improve their strategic situa-
tion in bargaining with prospective buyers ? Explain.

39. How is it possible for the farmer who needs money at once to
pay debts to get this money and still retain control of his product, so
that he may benefit from a later advance in the price ?

54 OUTLINES OF AGRICULTURAL ECONOMICS

40. Explain the " public " warehouse system. Do we have any
government-owned warehouses for agricultural products ? Would it
be desirable ?

PROBLEMS

1. "The volume of export business is an important factor in the
price of mill feed, such as bran. In recent years ocean rates on wheat
have been considerably less than the rates on flour, thus decreasing
export trade in flour. Mills in this country have the capacity to
grind every bushel of our wheat, and every bushel ground in this
country leaves sixteen pounds of mill feed for the American farmer.
Millers have for years been trying to secure an equalization of wheat
and flour rates on ocean vessels. Should dairymen join with them
and accomplish this result, mill-feed supplies would be enlarged and
prices lowered.' ' Is this a case of discriminatory rates? Is a rate
of fifty cents more on flour than on wheat justified by greater cost of
handling ? Draw up as full a list as you can of cases of discrimination

(a) between different sections of production of agricultural products,

(b) between different farm products or between farm products and
manufactured articles, etc.

2. "Nobody appears to try seriously to lay the blame for high
prices at the door of the railroads. In the five-year period 1884-88
the average cost of carrying a bushel of wheat from Chicago to New
York by rail was 16.32 cents; in 1908, 10.60 cents. The railroad
gets only about 1 cent a pound for bringing butter from the Mississippi
River to Boston, and chickens are brought from Chicago for about
J of a cent a pound. Whether or not, in spite of this situation, the
railroads are still charging too much and making profits too large
would take the most expert investigation to determine. " Have rates
upon farm products in general fallen in proportion to the Chicago-
New York rate on wheat? Is the comparison with previous rates
or a study of the net profits of the roads the better basis for judgment
on the correctness of rates ?

3. "All employees of the railroads have instructions 'to secure
additional revenue.' Very few lines can be trusted. They will
promise you lower adjustments and then they will begin to plan
increases instead of reductions. Look back over the past four years
and you will find many increased rates, lengthened schedules, higher
refrigeration charges, and other underhand methods which are eating
at the arteries of your business and impeding the proper distribution
of fruits and vegetables." Contrast these bitter words with the quo-
tation above (2). Can you explain the difference? (The former is
from the Massachusetts [19 10] cost-of-living report, the latter from
the Traffic Committee of a trade association [19 16].)

TRANSPORTATION AND STORAGE 55

4. "The extent to which rates should be graduated according to
distance is still one of the greatest transportation problems. Some
believe in ' postage stamp' rates, others in a rigid adherence to the
distance principle. It is believed by most students of the problem,
however, that the compromise system gradually developed by the
railroads — in spite of many inconsistencies and discriminatory prac-
tices— has worked out to the greatest advantage of everyone con-
cerned and has been a great factor in the orderly development of the
country." Explain this fully. Do you agree?

5. "Until the railway service of the United States became finally
and fully connected East and West (about 1861) the greater part of
the substantial food of each community was of necessity produced
within a short distance of the populous centre. Under these condi-
tions the best land of each state, near towns and cities, was neces-
sarily devoted to the production of the coarser staples, i.e., Indian
corn, hay, meat, potatoes, and the like. When distribution became
less costly, those coarser and more bulky products of agriculture
became border crops, and much land which had previously been
devoted to their production in the East was now released and became
used for market gardens, small fruits, and such purposes." Was
there an economic gain to society from this process ? Was there a
benefit to eastern landowners ? to western landowners ? to workmen
(a) in their cost of living? (b) in their industrial opportunities?
(c) otherwise?

6. "The agricultural promotion projects of railroad companies
include, not only efforts to make farms yield greater returns and to
increase the number of farmers, but also efforts to make more land
available for farming purposes." May the zeal of the roads to get
traffic lead to the opening up of unprofitable or less profitable areas ?
May it lead to local or to general overproduction ? A grower writes:
"You railroad people have got us to raise a whole lot of stuff and now
we can't sell it." Is such a difficulty temporary or permanent?
What was the economic benefit or harm wrought by Mr. J. J. Hill's
agricultural development work ?

7. In a certain Red River Valley community in i860, "the
principal crops as measured by the number of bushels in order of their
importance were corn ( !) , potatoes, oats, wheat, and rye. Small quan-
tities of butter, cheese, tobacco, maple sugar, barley, hay, and
slaughtered animals were also produced. This period of diversified
agriculture lasted until about 1876. After that more railroads and
cheaper freight rates brought the one-crop system and the bonanza
farms for which the Red River Valley is famous." Can we lay the
blame for the one-crop system on the railroad in general ? Was there
an economic gain to the people of the United States when the Red

56 OUTLINES OF AGRICULTURAL ECONOMICS

River Valley went in for wheat-raising? Explain. Is a one-crop
system profitable to the railroads ? Why ? Is there a suitable degree
of diversification which is still more profitable ? Why ?

8. A bill was introduced in the present Congress (1916-17)
designed to limit the period for which any food products might be
held in cold storage to three months. Was it a wise measure?
Explain just what effect it would have upon the present organization
of the egg, butter, and meat business.

9. "The general belief that any reduction in freight rates will go
to the producer is entirely erroneous so far as it applies to wheat.
The reduction which was intended for the producer in fact went to
the consumer, reducing the price to the farmers of the entire world.
Even if the entire freight charge were wiped out, it would not, in the
long run, add one penny to the price received by the farmer, because
sellers in the Liverpool market would offer wheat lower." Is this
argument sound? Might it appear to be quite true under certain
circumstances and doubtful or not true under others ? Does the fact
that this statement was based upon the experience of 1898 have any
significance ? that it was uttered by a Dakota farmer ?

10. "The farmers' elevators are slowly, year by year, driving out
the independent and the line elevators. Now they are trying to get
co-operatively owned terminal elevators. There is also a movement
for state-owned terminal elevators. Thirty years ago the railroads
owned and controlled the terminal elevators, for in no other way
could adequate storage be found for their grain shipments. Abuses
of various kinds arose, but there also grew up adequate government
supervision and control." What advantages can you point out that
there might be from taking terminal elevators out of the control of
the railroads ? out of control of other private corporations ? Would
it be better to make them state institutions or to have them owned
and operated co-operatively ?

ADDITIONAL REFERENCES

Johnson and Huebner, Railway Traffic and Rates.

Weld, The Marketing of Farm Products, chap. xi.

, Private Freight Cars and American Railways (Columbia Studies,

1908).

White, "Demurrage Information for Farmers," Bulletin 191, U.S. Depart-
ment 0} Agriculture.

" Reducing the Cost of Food Distribution," The Annals, November, 1913.

National Conference on Marketing and Farm Credits, Proceedings of the
third annual conference.

King, A Study of Trolley Light Freight Service and Philadelphia Markets.

" Economic Surveys of County Highway Improvement," Bulletin 393, U.S.
Department of Agriculture.

TRANSPORTATION AND STORAGE 57

TOPICS FOR SPECIAL PAPERS

How Transportation Facilities and Costs Influence the Farming Condi-
tions of County (or other area).

An Economic Survey of Local Highway Needs.

Latest Development in Refrigerated Car Service and Their Effect on
Farming.

Present Methods and Services of Cold Storage Warehouses.

How Local Marketing Operations are Affected by Storage in Transit or
Similar Special Traffic Arrangements.

Relations of the Public Warehouse to the Farmer and the Public.

Why Public Warehouses Should Be Compelled to Make Periodic State-
ment of Their Holdings.

Terminal Facilities in (some near-by city).

The War and the Transportation of American Food Products.

The Routing of Shipments of Grain and Cotton in the United States with
Reasons Therefor.

XI. THE RENT AND VALUE OF FARM LAND

QUESTIONS

i. What is meant by " distribution " in the language of the
economist ? Distribution of what ?

2. It has sometimes been said that distribution is the only really
important problem in practical economics. Is this true? Is the
amount to be distributed something about which we need not worry
or over which we have no control ?

3. What relation does this section bear to the section dealing with
production ? to that which deals with consumption ? Can you show
how good distributive conditions would improve conditions of pro-
duction ?

4. Who are the parties to distribution? By what mechanism,
devices, or institutions is the process of distribution effected ? What
is an economic institution ?

5. State briefly the so-called Ricardian doctrine of rent. What
is meant by "original and indestructible powers of the soir' ? (Look
back to chapter iii, particularly Section C, in answering this question.)

6. What is meant by a "differential" return? Under what con-
ditions will there be no differential ? Would we then have a no-rent
society ?

7. Is such a condition a practical possibility? Do we have rent
at the same time 'at which there are unused lands ? fertile lands which
are unused ?

8. What is the margin above which differential productivity is
measured ? Are we concerned about physical productivity or value
productivity ?

9. When we talk about using the "best" land first, do we neces-
sarily mean the most fertile? What advantage may lead to its
employment in advance of other land ?

10. In general, what will be the trend of prices of the product
when poorer and poorer areas of land are taken into cultivation?
What effect will this have upon the returns of better tracts?
upon rent ?

11. Do high rents and high prices of agricultural products go hand
in hand? Can you identify one as cause and the other as effect?
Which is which ?

12. Show clearly the application of the principle of diminishing
returns to the case of land rent. Is there an intensive as well as an
extensive margin from which we measure differential returns and
compute rent ? (See Problem 7, chap, iii.)

58

THE RENT AND VALUE OF FARM LAND 59

13. Can you describe a condition under which all the land within
a given country would command a rent payment ? Under such a con-
dition where is the datum line from which you measure your no-rent
margin ? Suppose this to be an island cut off from communication
with all other lands, does this alter your answer? Would such a
condition (i.e., rent for every acre) be possible over the whole earth?

14. Are advantages of land which are due to its situation " origi-
nal and indestructible'' ? Are transportation companies restricted in
their power of upsetting such natural conditions? (This question
should be related to several in the preceding chapter.)

15. Is the actual productivity of a piece of land due to its own
intrinsic qualities or to the way in which some person is employing
it, or to both ?

16. Does the man who operates his farm more skilfully than others
and therefore secures from it an extra return get the benefit of this
difference, or does he have to hand it over as rent ?

17. Is there an average or ordinary degree of efficiency of farm
users which is discernible to those who are bargaining over rent pay-
ments ?

18. Do the good farmers tend to locate on the good lands and the
poor farmers tend to be relegated to the inferior lands? Why and
how?

19. What do you mean by "good" and "poor" farmers in the
preceding question? If the landlord is looking for the tenant who
will pay him the largest rent, is it certain that he will find this require-
ment met by the man who is technically most efficient ? May some-
one else overbid him because he is willing to live more cheaply or work
longer hours or do more disagreeable tasks ? Are these types of com-
petitive efficiency?

20. Does the payment which is referred to in ordinary commercial
usage as rent differ from what we have been discussing as economic
rent?

21. Define contract rent and distinguish it from economic rent.
Does it include payment for the use of other things than land ? Does
it, in the case of bare land, represent a market price for the use of land
which is different from theoretical amount which would cover the
exact economic differential ?

22. Do contract rents tend to crystallize about certain more or
less customary rates? Do farms of different quality lying side by
side often rent for the same price ? Do farms rent for the same rate
in good years that they do in poor years ? Are such rates averages
of the productivity of a period of years ?

23. Does cash or share rent conform more closely to actual con-
ditions of productivity ? Why then do we continue both systems ?

6o OUTLINES OF AGRICULTURAL ECONOMICS

24. Are many forms of so-called renting contracts also contracts
for labor? Illustrate by Iowa bushel-renting and southern share-
cropping.

25. May such a contract also be a contract for supervision or
entrepreneurship ? Illustrate by the stock-share lease.

26. May it also be a contract for the use of capital-goods ? Give
several illustrations.

27. Do the general propositions as to the play of supply and
demand forces in the making of prices hold good in the bargaining of
landlord and tenant ?

28. Does the ordinary purchaser of farm land buy with a view
to the return which the land may be expected to yield ? Is it correct
to think of him as buying an income ?

29. How much is an income of $500 a year worth ? How much
would you have to invest in farm-land bonds at par to get an income
of this amount ? in individual mortgages ? in a hardware and feed
business ? Are all these incomes equally sure year in and year out ?
Do they all involve the same amount of responsibility and labor of
superintendence on the part of the recipient ?

30. Suppose that in a given community it has been usual to get
8 per cent on good first mortgages, and a change in rural credit
arrangements makes it possible to secure such loans at 5 per cent, is
it likely that persons who buy land will pay more or less under the
new conditions ?

31. What would be meant by the statement that land value is the
" capitalization " of its economic rent? What is the capitalization of
a corporation ?

32. In your home community does land actually sell for a sum
which capitalizes its earning power at the going rate for similar
investments ?

33. Cite any conspicuous departure from this rule with which
you may be familiar. Can you explain it ?

34. What is overcapitalization of a corporation? May land be
overcapitalized? Can you cite a good example and explain the
reasons ?

35. What would be the difference between a speculative stock
and an investment stock? Is land a frequent object of speculative
activities? Why? What effect does this have on market values?

36. Does speculation in land have any relation to the question of
tenancy ? Explain.

37. What effect does the growth of urban centers have upon farm
values in the region, and why? improvement of transportation

THE RENT AND VALUE OF FARM LAND 61

facilities ? change in the technique of farming ? rise in the general
level of prices ?

38. Does the value of inferior lands (e.g., swampy, semi-arid,
rough) tend to be higher or lower today, compared with the prices of
the better lands, than it was ten or twenty years ago? Give full
reasons for your answer.

39. What was the value of " abandoned " farms twenty years ago ?
Why were they abandoned ? What is their value today ? Why ?

PROBLEMS

1. "Rent tends to vary inversely with (1) efficiency of managers,
workmen, and equipment in competing regions as a whole, (2) prices
of farm equipments, wages, and other operating costs, and (3) the
abundance of good land." Are these propositions true? If so,
explain and illustrate. If not, point out any errors.

2. Suppose that wheat is raised by a uniform system of extensive
cultivation and that the demand is such as to take 300 units (of a
million bushels each) at a price which would pay the current rate of
wages to one- third of a day's labor (and its suitable capital equipment).
The wheat land is of three grades, A, B, and C. On the first, 100
days' labor will produce 300 units of produce; on the second, 100
days' labor will produce 250 units; and on the third it will produce
200 units. Under these conditions how many grades of land will be
used? Will rent be paid? How much? Suppose the increase of
home population or the opening of a foreign market creates a demand
for 550 units at a price equivalent to two-fifths of a day's wage, what
rent will be paid and to whom? Now, if the demand increases to
600 units at a price to pay the wages of one-half day's labor, what
land will be utilized and what rent paid upon each grade ? Make a
chart to illustrate the three conditions.

3. In case there were only two grades of land, A and B, but that
a second hundred days' labor on A would produce 250 units of product
and a third like application would yield 150 units, whereas a second
application of labor to B would produce 200 units and a third would
give 125, what land would be used and what rent would be paid under
each of the three price conditions ? Make a chart to illustrate.

4. "The doctrine of rent breaks down because the doctrine of
marginal cost is absurd. Suppose that the marginal cost of wheat
to a certain farmer is 70 cents per bushel and that wheat is selling
for 70 cents. If the average cost to this farmer is 50 cents, he will
be under strong incentive to increase his output. This marginal cost
does not operate so powerfully as average cost in price determination,

62 OUTLINES OF AGRICULTURAL ECONOMICS

and thus the rent theory breaks down." Is this view correct? If
the fact is as stated, does it constitute an impeachment of the doctrine
of rent or of the farmer's economic intelligence ?

5. "Under conditions of free competition the landlord cannot get
a penny more than the economic rent of his land. Likewise, if com-
petition is free and active, the tenant cannot get the land for a penny
less than the amount of its economic rent." Show carefully, step by
step, how this process of adjustment would be worked out. Is com-
petition of this sort the rule in American farming communities?
What is the long-run tendency ?

6. A Congressional committee reports: "One of the many causes
contributing to the advance in prices is the increased cost of produc-
tion of farm products by reason of higher land values." Explain fully
how this operates from cause to effect or, if you think the statement
incorrect, explain fully your grounds for differing.

7. "The profit required by the landlord is in proportion to his
risk and trouble. In Tompkins County, New York, the landlords who
rented for cash made an average of 5 .2 per cent; those who owned
part of the stock, paid part of the expenses, and received half of the
receipts made 9 per cent. The tenants who rented for cash made an
average of $604 for their labor; those who rented for a share made an
average of $342." Does this statement correspond with the facts in
your own community? Does this apply to economic rents or only
to contract payments from lessee to lessor ? If one rents bare land,
furnishing neither stock nor implements, is there likely to be a higher
average rental paid in the sharing of product than in cash renting ?
What risk is involved ?

8. "The first settlers are seen to have established themselves on
the barren soil of Massachusetts. The whole continent was before
them, but, were the reader inclined to designate the soils of the Union
least calculated for the production of food, his choice would fall upon
the rocky lands first occupied by the hardy Puritans. Everywhere it
has been the lighter and poorer soils which have first been used." Is
this a refutation of the fundamental propositions upon which our rent
theory rests ? Explain fully.

ADDITIONAL REFERENCES

Standard texts in general economics.

Special treatises on distribution, e.g., Carver, Distribution of Wealth.

Johnson, "Rent in Modern Economic Theory/' Publications of the American

Economic Association, 3d series, Vol. III.
Walker, Land and Its Rent.
George, Progress and Poverty.
Carver, Principles of Rural Economics, chap. v.

THE RENT AND VALUE OF FARM LAND 63

Taylor, Agricultural Economics, chap. ix.

, "Two Dimensions of Productivity," American Economic Review,

Supplement, March, 191 7.
Tichenor, Farm Contracts between Landlord and Tenant

TOPICS FOR SPECIAL PAPERS

The Theory of Rent Illustrated from Concrete Farming Practice.
Local Renting Contracts.

The Rate of Capitalization Exhibited in Local Land Values.
Analysis of the Different ial Advantages Which Are Taken into Account
in Valuing Farm Lands.

XII. LAND TENURE AND LAND POLICY

QUESTIONS

i. Does the landowning farmer work harder than the tenant?
Why ? Is he likely to follow a better farm practice ? Why ?

2. Explain the reasons, both of inclination and of necessity, which
would explain a smaller percentage of livestock on tenant farms.

3. Does tenancy produce as good results as ownership under a
one-crop system of farming ? Why ?

.4. Is tenancy as satisfactory as ownership if the term of the lease
be long ? How long should it be ?

5. What sort of a rotation can be followed under a one-year-lease
system ? What effect does an extremely short tenure have upon the
tenant's equipment of implements ? of stock ? upon his policy with
regard to fertilizer ? upon his acre-yields ? Give the reasons as fully
as possible in each case.

6. Is a one-year-lease system "a national waste"? Explain.

7. Does the fact that a certain group of tenants are making larger
labor incomes than farm-owners in the same community indicate that
the former are better farmers ? What does it indicate ?

8. Show that many types of leasing arrangements are, in fact,
business partnerships. *

9. Is share renting suited to extensive or intensive forms of agri-
culture ? Cite illustrations to prove your point. Do you know of any
cases which are inconsistent with your general statement ? Can you
explain ?

10. What type of lease is most suited to the non-resident land-
lord ? Why ? What type does the landlord who is a retired farmer
and lives near by prefer? Why? How about the small- town
banker ?

n. Explain the stock-share plan of renting and point out its
advantages. Do you agree that this is particularly desirable for the
young farmer ? Why ?

12. Does stock-share renting form a natural transition between
wage-work and farm ownership? Explain the steps by which this
would be brought about.

13. Is this equally true of ordinary share renting or the share
cropping of the South? How about cash renting? Point out the
difficulties of relying upon cash renting alone under present conditions
in the United States.

14. If it appears that on the average the landlord makes more
when he rents on some share system, why does the tenant use this

64

LAND TENURE AND LAND POLICY 65

method ? By the same token, why does the landlord ever consent
to the smaller returns which he averages from cash renting ?

15. If "247 tenant farmers made an average labor income of
$870 from an investment of less than $2,500 while farm-owners with
over twelve times this investment made less than half as large labor
incomes," would you say that the purchase of land should be the first
ambition of every young farmer ?

16. What do the figures in the previous question indicate as to
the rate at which economic rent is capitalized in the land values of
this community ? Can you explain the situation ?

17. Would the stock-share type of lease be suitable to the principal
kinds of farm enterprise which are carried on in your community?
If so, would certain of its details require modification ? How does it
differ from arrangements now in vogue ?

18. If you think that the stock-share lease is not practicable in
your community, are the reasons for its unsuitability (a) the kinds of
products raised? (b) the inability or unwillingness of landlords to
participate to the necessary degree? (c) undesirable quality of the
tenant population ? (d) other reasons ? Explain fully.

19. Is the proportion of tenancy in the United States increasing
or decreasing ? At how rapid a rate ? How does the rate of the last
census period compare with that of the one preceding ? Give reasons.

20. How do the proportions in different sections of the country
compare with one another? Why? Does the tendency appear to
be for such differences as exist to disappear, to increase, or to remain
stationary ? Can you assign any reasons for this situation ?

21. What is a "part owner" and why should he be distinguished
in our statistics ? Does he partake more of the nature of an owner
or of a renter ? How ? What qualities peculiar to himself has he ?

22. What reasons are there for presenting the statistics of tenancy
in terms of the acreage held under the various tenures instead of the
number of operators of the different kinds ?

23. If the figures be presented in this latter form, what different
conclusions is one likely to draw as to the relative prevalence of farm
tenancy in different sections of the country ? Does it alter one's con-
clusions as to a drift toward or away from tenancy ?

24. Do the figures indicate that farm operation by managers is
increasing or declining ? Is it relatively important as compared with
other forms of operation ?

25. Should we put in a separate class those farm-owners whose
property is encumbered with a mortgage ? Show what peculiarities
this class presents and how they are related to other groups.

26. What arguments can be adduced to show that farm tenancy
in the United States is a progressive and wholesome condition ? Do

66 OUTLINES OF AGRICULTURAL ECONOMICS

these arguments square with the facts in your own community or is
tenancy an indication that the farm operator is going backward ?

27. Does the experience of other countries give ground for fear
that the inevitable tendency is toward an ever-increasing percentage
of non-owning farmers and harder and harder conditions for these
tenants ?

28. Is this equally the testimony of all the countries of Europe ?
If conditions in some are worse and in others better, how can you
account for the differences ?

29. Are conditions in America such as to make us more susceptible
to such dangers or relatively to protect us from them? Give your
reasons.

30. If all farmers leased their land from their respective state
governments or from the federal government, is it likely that we
should talk about a " tenancy problem " ? Why or why not?

31. Under such a system do you think land would be better
utilized or not so well utilized? Why? Would there still be an
economic rent accruing ? If so, should a payment of this amount be
made to the government for the use of the land ?

32. Under the foregoing system show how the individual farmer
would be worse off or better off, as the case may be, than under
existing conditions of private property in land.

^. Show how society would be worse off or better off. Mention
probable administrative difficulties and abuses.

34. What is meant by " private property in land" ? by ownership
in "fee simple" ? by an "estate" in land? May there be forms of
ownership which are limited in character ? Are there any which are
absolutely unlimited ?

35. Explain the conditions under which the landlord- tenant rela-
tion in agriculture is mutually desirable. Is it conceivable that the
whole industry could be organized upon a basis of ownership of the
land by a class of inactive owners (of land and possibly of equipment)
and of active operators who contribute labor and management, the
former receiving a small but certain and regular return upon their
investment and the latter the fluctuating but larger gains of business
entrepreneurship ?

36. Does the foregoing condition exist in other lines of business ?
Does the ordinary merchant consider it essential that he should own
the property he occupies ? Why ? Does the big manufacturing or
transportation company own the landed property with which it works ?
Supposing that on the average thj bonded debt of corporations equals
the value of their real estate, what bearing does this have upon the
preceding question ?

LAND TENURE AND LAND POLICY 67

37. Are there reasons why it is more essential that the farm opera-
tor should also be the farm-owner than that industrial and mercantile
operators should own the land they use ? Explain fully.

38. Has the land policy of the United States aimed to secure the
benefits of personal ownership to the man who works the farm ? What
measures have been taken toward this end ? Has the desired purpose
been accomplished? Have some results which it was desired to
avoid in fact been brought about ? Was the defect in the system or
in the way in which we have applied it ?

39. What are the most promising means of redirecting that move-
ment toward the intended goal ?

40. Explain the purpose and mode of operation of a graduated or
progressive land tax. Has such a measure ever been agitated in your
state ? By what interests, and with what result ? If not, try to get
the history of such a movement in some other state.

41. Describe the "small holdings" movement in England. What
has been the effect of the European war upon farm tenure in England ?

42. Is "the tenant problem" one thing or many? Is it to be
solved by some panacea or are a large number of present maladjust-
ments in the socio-economic relations of the various parties to our
agricultural industry to be gradually removed by separate and partial
reforms ?

43. Is there some abiding source of difficulty which will probably
always cause mankind to be confronted with a land problem ? What
is it?

PROBLEMS

1. "It is estimated that three out of every four Iowa tenant
farms are leased from year to year. Short-time speculators invariably
use one-year leases containing the sale clause. As the rent and price
of the land advance, they are free each year to raise the rent or sell
the farm. As a rule, they know very little about farming and direct
or allow methods that exploit the land. On such places tenants fail
to equip the farm with the necessary tools and livestock to operate
it most successfully. Neither tenant, landlord, nor society is getting
the highest returns from the farm." Is such a condition one which
tends to grow worse or gradually to correct itself ? Is it one which
could be met by any practicable form of legislation ?

2. "Perhaps there is no important provision in the average con-
tract that is so neglected as the one which calls for a reward to the
tenant and the landlord for the unexhausted improvements made on
the farm." Point out the evil results that flow from such a situation.
Is there also an injustice in not being able to charge either party for

68 OUTLINES OF AGRICULTURAL ECONOMICS

impairment in the property ? Is there any simple way of measuring
the value of such items ? How about slow-acting fertilizers ?

3. "The principal reason why there are not more tenants renting
under the stock-share lease is to be found in the tenant's and land-
lord's dislike for any method of renting which requires common counsel
and close co-operation. The tenant chafes under the landlord's
supervision, and the landlord distrusts the integrity and ability of the
tenant." Do you observe similar conditions in your community?
Why is it the case ? How can the situation be remedied ?

4. "We are still in the period of development of American agri-
culture when we are using much of the original equipment of American
farms. It will be when present equipment has passed its usefulness
that the real significance of the transition from ownership to tenantry
will become apparent. Either old, tumble-down houses, the ghosts of
a former prosperity, inhabited by a low-grade population willing to
live in inferior quarters, will survive, or a new type of houses built for
tenants will appear." Explain what this means in terms of your own
community. Do you agree with the same writer's further conclusion
that "alleviative policies, such as planning tenant houses or devising
tenant contracts, cannot offer a permanent solution of the problem;
we should seek to*remove the causes that have made the appearance
of a tenant class in America possible"? What are these causes?
How are they to 'be removed ? Might the last word in the quotation
be changed to "inevitable"?

5. "Half of the farm lands in Texas are included in 2 .7 per cent
of the farms." What are likely to be the results of this condition?
Is the same situation found in other states ? Why ?

6. "We cannot think straight on the land problem if we are going
to assume that there is anything morally wrong in owning land. This,
that, or the other individual landowner may abuse his power; but the
general institution of private property in land is a question of expe-
diency— not morals." Do you agree? Does the socialist ? Does the
single-taxer ? Point out why you believe it expedient or not expe-
dient that we have private ownership of land upon existing terms.
State any modifications in the present system which you believe would
be expedient.

7. (a) "The same progress which makes intensive farming neces-
sary tends also to augment the numbers of those who must hire the
land which they cultivate." (b) "Tenancy is not the normal state
of man, and we have been accustomed to look on the American farmer
as necessarily the owner of the acre he tilled." Is there a clash of
opinion between these two statements ? Explain each of them and
set forth the truth of the matter.

LAND TENURE AND LAND POLICY 69

8. "In considering the relative merits of ownership and tenancy
from the standpoint of society, we should not forget that there are
many men who should not be trusted with a farm absolutely under
their own control. The reason they fret under a landlord is because
they prefer to farm by easy and wasteful methods." What truth is
there in this view ?

9. "On the other hand, we have the large and stubborn fact that
the best agriculture in the world is carried on under the tenancy
system. The most efficient system of general farming is found in
England, where the tenancy system prevails; and the most efficient
growing of agricultural specialties is found on the very small gardens
in the neighborhood of Paris, where the land is not generally owned
by the gardener." Can you cite similar evidence in this country?
Can you explain how the English tenant system has been worked out
so satisfactorily? Would a similar adjustment in America be
desirable ?

ADDITIONAL REFERENCES

Spillman and Goldenweiser, "Farm Tenantry in the United States," Year-
book of the U.S. Department of Agriculture, 1916, p. 321.

Carver, Selected Readings in Rural Economics, chap. iii.

Taylor, "The Decline of Landowning Farmers in England," University of
Wisconsin Bulletin q6.

, Agricultural Economics, chaps, xi-xiii.

Kinnear, Principles of Property in Land.

Report of the Industrial Commission (1900), Vol. X.

"Proceedings of the Twenty-ninth Annual Meeting of the American Eco-
nomic Association," American Economic Review, Supplement, March,
1917.

"Studies in Farm Tenancy in Texas," Bulletin of the University of Texas,
1915, No. 21.

"Systems of Renting Truck Farms in Southwestern New Jersey," Bulletin
411, U.S. Department of Agriculture.

TOPICS FOR SPECIAL PAPERS

The Proper Place of Tenancy in American Agriculture.

How Tenant Farming May Be Made Good Farming.

Opening the Door to Ownership of Land.

The Evils of Short Leases and How They May Be Avoided.

The Landlord as Partner.

Curbing the Speculator in Farm Land.

Absentee Landlordism.

Comparison of "Part Owner" with Encumbered Owner.

XIII. INTEREST ON FARM LOANS

QUESTIONS

i. When the farmer makes a business loan, does he do so because
he expects it to add to the productivity of his farm enterprise ? Is
money productive ? How does he expect to make the money a means
to increased production ?

2. Does his willingness to pledge certain security and obligate
himself to make certain interest payments depend upon his estimate
of the technical possibilities of certain capital-goods ?

3. Would it be correct to say that the demand for capital depends
upon the opportunities for productive use of certain definite capital-
goods in conjunction with the other factors of production ?

4. Does the borrower know that these uses will actually prove
profitable? Upon what, then, does he base his decision to demand
a certain amount of capital at a given interest rate ?

5. In general, should it be said that the demand for agricultural
capital in the United States has been strong? Why? What effect
has this tended to have upon interest rates ?

6. Is the tendency for the demand for capital in agriculture to
increase or decrease in recent years ? Why ?

7. If some forms of capital-goods are more effectual in increasing
the productivity of agricultural labor, which are the ones which deter-
mine the farmer's demand for capital ?

8. Are our general principles of diminishing utility and marginal
uses applicable here ? May changes in technique bring about sudden
readjustments of our demand for capital and of the wants which fall
along the margin ? Give several recent illustrations.

9. Does the principle of substitution enter into the determination
of the farmer's demand for capital ? How ?

10. When we speak of marginal demand for capital, do we admit
that there are other less pressing demands for capital which are pre-
cluded from any active part in the rate-making process? What is
the force that excludes these submarginal desires for capital and
locates the particular margin on our demand schedule ?

1 1 . Is capital ever a free good ? Why ?

12. Does capital have a cost of production? What is its cost of
production ?

13. Analyze as carefully as you can the forces which make for a
high cost of producing agricultural capital; a low cost. Has the
supply of agricultural capital in America been abundant and cheap
or scarce and high ? Why has this been the case ?

70

INTEREST ON FARM LOANS 71

14. When we speak of the supply of agricultural capital, do we
mean to imply that it is supplied by the farming class? Is what
the farmers themselves accumulate a considerable factor in the
situation ?

15. What circumstances tend to direct a generous share of the
general capital supply of society toward agricultural uses ? In gen-
eral, has the farmer had ready access to these outside sources of
supply ? Give several concrete cases to illustrate, and explain care-
fully.

16. If some persons are so wealthy that they are readily able to
put aside something for the capital fund, and some are so frugal by
nature that they find it relatively easy to save part of their income,
and others are so improvident or have incomes so little above the
mere necessities of life that saving is extremely difficult, to which of
these costs of saving does the interest rate correspond ? Why ?

17. Does a high standard of living tend to keep the interest rate
up ? Does a high cost of living ? How ?

18. Do you think that the development of industrial insurance
systems has any effect on the interest rate? keeping savings banks
open all night in industrial centers ? baby bonds ? postal savings ?
Explain each.

19. Show what besides the market price of capital-use is often
included in the gross or contract rate of interest. Are these factors
in the case of farm loans so important as to justify a large spread
between gross and net interest rates ?

20. Are there wholesale and retail rates of interest ? middleman
charges ? Are these high or low ?

21. Can farmers bring about a lowering of these items in their
cost of borrowing? How? Does the competition of lenders tend
to reduce them ? Do you think the competition between the federal
farm loan banks and other lenders will hasten this process ?

22. Explain the advantages of the Torrens system of land transfer;
the difficulties in the way of its general adoption. What is the present
status of the question in your state ?

23. How do rates actually paid by farmers for loans in different
parts of the United States vary ? Are these gross or net rates ? Can
you point out where rates are high because of extraordinary risk ?

24. Show where and why middleman charges are high; low.

25. If it were possible to strip the gross loan rate down to the
actual supply-and-demand price of capital-use, should we still find
different rates of payment ? Why ?

26. Are there zones (similar to the " markets" for commodities)
more or less disconnected from one another and having rates peculiar
to themselves ?

72 OUTLINES OF AGRICULTURAL ECONOMICS

27. Does this mean that conditions of demand within one zone
differ from those in another ? Show how and why. Are there also
different demands within the zone? If these are equalized for the
whole of any given market in accordance with demands at the margin,
why are not the different zones so equalized ?

28. Is there one supply of capital for the whole United States,
equally accessible to the borrowers of all zones or districts ? Is the
supply of capital more mobile than that of wheat ? labor ? straw-
berries ?

29. If financial institutions were so changed as to make capital
extremely mobile, would that tend to equalize the supply in all
markets and bring interest rates to a parity ? How ? Do you know
of any movement which contemplates doing this ?

30. Is there a seasonal fluctuation in the demand-and -supply
situation of agricultural capital which causes variation in interest
rates? Is there a similar fluctuation in industrial demands for capi-
tal ? Is it conceivable that a very highly developed banking system
would offset these seasonal and sectional variations in such a way as
to equalize demand and supply and stabilize interest rates ? Can you
point out how this is being done today ?

31. How do you account for the rapid increase in the number of
small banks in farming communities, particularly in the Middle West,
in recent years ? What effect do you think they have had on the
farmer's method of conducting his business? Have they had any
effect on his interest rates ?

32. Do you believe that the reduction of the minimum capital
required of national banks from $50,000 to $25,000 has had any bear-
ing on the situation ? What is the minimum capitalization of banks
organized under your state laws ?

7,7,. Can you give any reason to show that the bank might be
justified in charging the farmer a higher rate of interest on his short-
time loan than it charges the merchant or manufacturer for similar
accommodations ?

34. In general how do the rates of interest upon short-time loans
compare with those upon long-time loans ? Why ?

35. What is a usury law and why are such laws passed? Are
they ordinarily effective? Why? May they be made so? How?

36. Is a more effective line of attack upon high interest rates to
be found in the elimination of all unnecessary demands upon the loan
fund ? in the facilitating of capital accumulation ? in the directing of
capital toward regions now relatively undersupplied ? What forms
of legislation might have such aims in view ?

INTEREST ON FARM LOANS 73

PROBLEMS

i. "The most common complaint is to the effect that farmers have
been discriminated against in the rates of interest they have been
obliged to pay. While the railroads have been borrowing at from
4 to 6 per cent and the industrials at from 5 to 7 per cent, the farmer
has been paying on the average around 8 per cent." Can you explain
these differences in rates ? Why should the capitalist single out the
farmer for discriminatory treatment ?

2. " Distance from financial centers is a factor affecting interest
rates. Data show that the average cost of loans rises as one proceeds
outward from the leading financial centers. It is believed that such
variations can be considerably lessened, but the remedy appears to lie
in institutional rather than individual effort.' ' What does this mean ?

3. "The interest rate is approximately 50 per cent higher in the
newly settled part of the state than in the older part. In other words,
the fluidity of capital is so poor as to require an inducement repre-
sented by a 50 per cent increase in advantage of movement in order
that it may flow to the pioneer sections of the state." Does this
appear to be a typical situation ? Suppose the whole country were
thus divided into two great sections with rates of 6 and 9 per cent,
respectively, and our credit institutions were so improved as to secure
a complete fluidity of capital. Would the interest rate fall to a uni-
form 6 per cent ? Explain carefully.

4. It appears that in the foregoing case the farmers of the older
section "are using local money, and this money is almost all obtained
from private, mostly small, lenders," whereas the money in the newer
sections is much of it procured through a trust company in a distant
city. Are the rates mentioned, therefore, strictly comparable as inter-
est upon capital ? Should such facts be taken into account in making
comparative statements of rates upon loans ?

5. "In many parts of the country the farmer is charged extortion-
ate and inexcusable rates of interest, regardless of usury laws and a
decent regard for human necessities." When is an interest rate
"inexcusable" ? Is this question akin to the problem of just or fair
prices ? Can it be answered absolutely or only relatively ? Is there
such a thing as a "normal" rate of interest?

6. It is asserted that now for the first time in our history the West
is able to finance its own crop movement. How does this come
about ? What does it mean in terms of the interest problem ?

7. "Farmers want their personal loans to run longer than other
bank patrons, as a rule. While this means a smaller amount of
negotiation by the bankers to place their money, it often means
that they must pass by other patrons whose more rapidly moving

74 OUTLINES OF AGRICULTURAL ECONOMICS

businesses would enable them to pay higher rates on loans running for
shorter periods. Likewise, the farmers usually repay their loans at a
time of the year when bankers must handle low-rate commercial paper,
if anything at all, to occupy their funds until the new demand arises
from the farmers/ ' Can you illustrate these statements from the
experience of your own community ? What effect do they have on
the willingness of bankers to supply capital to the farmer and upon
the rate of interest charged ?

8. "Rural credits and capital are scarce only when borrowers are
wasteful, shiftless, or untrustworthy, or when soil or climatic condi-
tions are such as to render the loaning of money unsafe. Within my
own recollection, mortgages bearing 10 and 12 per cent have been in
force on Michigan farm lands — upon farms which now command a
mortgage rate of 5 per cent. What has brought about this result ?
Nothing more than the increased productivity of the soil due to more
efficient farming methods. And when the farms of our western
states, where rates are now exessive, are brought to this advanced
state of cultivation and productivity, a similar decrease in rates will
naturally follow. In states where high rates now prevail the high
rate merely compensates for the risk." Is this reasoning sound?
Analyze carefully.

ADDITIONAL REFERENCES

Besides general economic texts, such as those of Marshall, Taussig, Selig-
man, Ely, and others, the student might consult any of the special
works on distribution, notably: Carver, The Distribution of Wealth;
Clark, The Distribution of Wealth.

One particular point of view is expounded in great detail in: Fisher, The
Rate of Interest.

An excellent eclectic discussion may be found in: Cassell, The Nature and
Necessity of Interest.

For interest rates of American farmers, consult: " Costs and Sources of
Farm-Mortgage Loans in the United States," Bulletin J84, U.S. De-
partment of Agriculture; "Factors Affecting Interest Rates and Other
Charges on Short-Time Farm Loans," Bulletin 409, U.S. Department
of Agriculture. (See also references at end of next chapter.)

TOPICS FOR SPECIAL PAPERS

Mobility of Capital as a Factor in Interest Rates.

The Farmer's Access to Non-agricultural Capital.

The Demand for Capital as Affected by Changing Farm Technique.

Middleman's Charges as an Element in the Cost of Loans.

High Interest Rates as a Sign of Progress.

Low Cost of Capital-Use v. Low Rates of Interest.

XIV. RURAL CREDITS

QUESTIONS

i. Is the rural-credit problem something which has come upon us
suddenly in the last few years ? Is the present agitation something
in the nature of a reappearance of a difficulty which had been acute
in the past, become quiescent, and then again broken out ?

2. What was the time of the earlier manifestation of this problem ?
What were the circumstances which caused it to command public
attention at that time ?

3. Was the real trouble at that time too great difficulty in securing
loans upon farm mortgages ? too lavish and easy extensions of credit
on western farms ? Is it possible that there were several somewhat
inconsistent phases of the matter ?

4. What was the nature of the remedies advocated at that time ?

5. Can you discern any significant change in the general outlook
revealed in present-day discussions of the problem ?

6. What did the Census report of 1890 show as to the purpose for
which incumbrances were incurred ? Point out several of the signifi-
cant local or sectional peculiarities.

7. Were the loans in the main for nominally productive uses?
Were these expenditures the most productive employment to which
capital could be put in the United States at that time ? Explain.

8. In what sense could loans made for the purpose of securing
better dwellings, water supply, and the like, be said to be productive ?

9. Might it be said that every effort of the farmer to make the
agricultural industry more productive tended to increase its capitaliza-
tion and to enlarge by so much the rural credit problem ? FrOm this
point of view were we better off before we had a rural credit problem
or after ? Would it be good policy to check the growth of agricul-
tural capitalization?

10. Did the farmer who increased productivity profit by the
increase ? Did society ? Did any individuals lose ? Who, and how ?

1 1 . What institutions for supplying the farmer with capital grew
up in the latter part of the nineteenth century ? Explain their method
of operation.

12. Point out the beneficial character of their work. Indicate any
abuses which were allowed to creep in or harmful effects of their
operations.

13. Was the borrower the only one to suffer from the unscrupulous
mortgage company? Can you draw a line between the evils of the
system and the sins of those who conducted its operations ?

75

76 OUTLINES OF AGRICULTURAL ECONOMICS

14. Have some of the old mortgage companies survived down to
the present time ? Why ? Are they doing the same kind of business
today ?

15. Do they buy mortgages with their own funds and sell them
to their clients as opportunity offers or do they merely negotiate a
transaction between two other parties — borrower and lender ?

16. Do they issue debentures? Explain the debenture system.

17. What are the points which a mortgage company emphasizes
in recommending a particular mortgage to prospective purchasers?
Show the relation of these features to the desirability of the loan.

18. How does it come that life insurance companies have such
large sums to invest in farm mortgages? Are there any special
features about the cost of production of this capital ?

19. Is the percentage of such funds which is invested in farm
mortgages growing or falling off ? Why ? Can you explain why their
lendings are very large in some sections of the country and relatively
small in others ?

20. How liberal is the life insurance company in the size of loan
it will place on a given farm? Does this meet the farmer's needs
fully ? How can it be supplemented ?

2 1 . How about the rates of interest and other charges on insurance-
company mortgages ?

22. Explain the method followed by the insurance company in
making loans. Is it entirely separate from all other rural-credit insti-
tutions or does it overlap and work through the others ? Explain.

23. From the investor's point of view how does the drainage-
district bond differ from the ordinary mortgage ? from the debenture
of a farm-mortgage company ? from the mortgage he buys from his
bank?

24. How does it differ from the farmer's point of view ? Is it a
desirable way of securing capital on a credit basis ?

25. How does it come that the implement companies are in the
lending business? Are they extending or withdrawing from these
activities? Are their terms liberal or otherwise? Is it their own
capital ? If not, whose is it, and why could not the farmer borrow
it direct?

26. How did the southern store-credit system come into being?
Is it necessary? Is it economical? In order to get away from it,
what line must be followed ? In what does its strength consist ?

27. Explain the " cattle bank." Do commercial bankers also lend
direct upon " cattle paper " ? Is there any reason for the continuance
of the cattle bank as a separate institution ?

28. Why do the farm mortgage bankers claim that there is need
to continue to avail ourselves of their specialized services ? What do

RURAL CREDITS 77

they regard as their part under a scheme of rural credit legislation ?
Has this been realized under the Federal Farm Loan act ?

29. Show how bankers may organize the handling of cotton under
the system of commercial banking already developed for other lines
of business.

30. The cotton crop has been financed largely through banks in
the past also, has it not ? In whose hands ? Wherein does the differ-
ence in the present system consist ?

31. Explain the nature and purpose of a rate sheet. See how it
compares with its parent, the " borrower's statement" of the regular
commercial banking world.

32. What provisions of the Federal Reserve act were designed to
extend the credit facilities of the farmer ? Which of these is the most
important ? Why ?

33. What is the meaning of " commodity" paper? How is it
employed ? Has its use benefited the farmer ?

34. Have there been any proposals to change those provisions of
the Federal Reserve act which related to rural credit ? What changes
have been made ? Can you give the reasons for these changes ?

35. Give a brief account of the Landschaft banks of Germany. Is
there any other type of rural-credit institution in Germany ?

36. Look up the Credit Foncier (Herrick). What changes would
be necessary to remodel our mortgage companies into such an insti-
tution ?

37. Do you believe that our rural-credit problem is to be solved
through a resort to co-operative agencies ? Is the federal farm-loan
system co-operative in character ?

38. Can you see any reason why co-operative action should have
a larger place in the supplying of short-time credit than of long-time
credit, or the reverse ?

39. What are the principal difficulties in the way of co-operative
credit ? Is it certain that what has been done in Europe can be done
here ? that it should be done here ? Give particulars.

40. Are European institutions for rural credit given financial aid
by the government ? What reasons can you advance why our govern-
ment should do so ?

41. Are there valid reasons why it should not ? Does it do so ?

42. What is a " credit union" and how does it facilitate credit
extension ?

43. Is the lending of some particular state fund upon moderate
terms by preference to home-owning farmers a form of state aid ? Is
it a desirable practice ?

44. Would it be desirable for each of the states to establish a rural-
credit institution after the pattern of the Missouri Land Bank?

78 OUTLINES OF AGRICULTURAL ECONOMICS

Would it be desirable for each state to have one built upon some other
pattern ? Give your reasons carefully.

45. Do you see a field for state activity in extending the facilities
for short-time loans ? by making loans itself or by creating favorable
conditions for the making of loans by regular credit agencies ? Why ?

46. Explain the organization of the federal land banks; the
national farm-loan associations; joint-stock land banks. Show the
relationship and proportion of government aid, co-operative action,
and private enterprise in the system.

47. Is it likely that existing mortgage companies will transform
themselves into joint-stock land banks? Why? How many new
joint-stock land banks have sprung into existence ?

48. Does it appear that existing farm-mortgage companies will be
put out of existence by the coming of the farm-loan system ? Why ?

49. Does the new system give the farmer an opportunity to reduce
the actual expense of making a loan to the minimum ? How ? Does
the longer time for which mortgages may be made operate to reduce
costs ?

50. Does the system put the farmer in touch with cheaper sources
of capital ? How ? Does the government guaranty have any bearing
on this question ? How about tax exemption ?

51. Explain the method of issuing and selling bonds. Will the
land banks sell these bonds direct to the public ? Is there any other
method of sale ?

52. Explain the meaning of " amortization " and the method used
in the federal farm-loan system.

PROBLEMS

1. "Our federal reserve system will undoubtedly serve as an
important step in connecting farmers with outside capital, especially
because of the opportunity afforded for the discounting of agricultural
paper. At the same time, it is clear from the study of present sources
of short-time loans to farmers that there is a large portion of our
farming population that is not in a position at present to take advan-
tage of the federal system." Explain both these propositions and
show how the difficulty is to be met.

2. "The business ability and business habits of the farmer are
tested when the banker asks for a statement of the borrower's busi-
ness. If he is in the habit of keeping accounts and can explain the
nature of his resources and liabilities and thus indicate accurately his
financial standing, the wisdom of granting the desired loan as well as
the proper terms thereon can readily be determined. If this informa-
tion be lacking, the banker is in doubt about the safety of the loan,
he is likely to charge up his uncertainty to the borrower's account in

RURAL CREDITS 79

the form of a higher rate of interest." Is it also possible that he may
refuse a loan that really is worthy ? What lesson does this carry for
the farmer who is angry at being asked for a statement and to the
one who has no records or accounts ? Is it easier for the big bank or
the little one to get borrowers' statements ? Why ?

3. "The investigations made show the need for personal credit to
be more acute than for land credit. It is easy to get land credit equal
to 50 per cent of the land value, but the temptation is great for the
farmer to tie nearly his entire wealth in land, leaving himself little or
nothing for operating capital. Being heavily in debt on his land
cripples his personal credit, but he is usually worthy of personal
credit." If the farmer has an equity in his land of 50 per cent or some
considerable fraction of its value, would he be more or less eligible
for personal credit than the man who has no property ? Is commer-

' cial or short-time credit supposed to be secured in the enterprise for
which the loan is made or to lean upon some outside security ? Is it
possible to have this situation in agriculture or is the nature of the
risk too great ? greater than in the case of merchants and manufac-
turers ?

4. "The farmer can get credit for very short periods of time, but
what he needs is credit extending over a period corresponding to the
length of time required to bring to fruition the project for which the
loan is made. In the case of dairy cows it is perhaps two or three
years. For many farm operations it is nine months or a year, and
the usual 90 or 120 days at the bank is too short." Do the transac-
tions which in other lines of business are financed with 90-day loans
actually liquidate themselves within that period ? How, then, is it
managed? Would the same plan be equally applicable for the
farmer ?

5. "One of the basic defects of the Farm Loan act is the fixing
of the maximum interest rate by statute. The law of supply and
demand will control the rate in any event, and a fixed maximum may
conceivably render the act inoperative in the communities most in
need of increased facilities." Do you agree with this writer ? Might
one logically agree with part of the statement and take exception to
part ?

6. "Another defect is to be found in the system of joint guaranties,
putting good, bad, and indifferent securities in the same category,
penalizing the good for the advantage of the inferior." Is it true that
securities are pooled ? What bad ones get in ? Are the good penal-
ized?

7. "While it is undoubtedly true that the adoption of a land-
credit system providing for a low rate of interest and a longer term
of loans repayable by amortization would enable a man of small means

80 OUTLINES OF AGRICULTURAL ECONOMICS

eventually to become a landowner, it does not follow that farms thus
acquired would be farms of profitable size or that the percentage of
farm tenancy would decline." Does the lowering of interest rates
effect an immediate improvement in the condition of borrowers on
land security ? Does it produce an equal benefit to later purchasers of
land? Explain. Does stimulation of effort to become landowners
seem likely to have the effect of increasing small holdings? What
does farm-management study indicate as to the relative productivity
of such farms ?

8. "It is inevitable that lower rates for farm mortgages will result
in greatly enhanced farm values. And the lower rates being brought
about by legislative enactment, and not firmly based upon better
crops and improved conditions on the farm, their value will be arti-
ficial and inflated. And where the man in moderate circumstances
is able now to accumulate enough money to make the down pay-
ment on a contract, if land values increased 50 per cent, or doubled,
his payment would not be large enough to be acceptable. Even
though he were able to purchase, he would have increased interest to
pay on the inflated price, as well as additional principal. " Is this
a valid objection to the federal farm-loan system ? Explain.

ADDITIONAL REFERENCES

Her rick and Ingalls, Rural Credits.

Morman, Principles of Rural Credits (includes bibliography).

Moult on, Principles of Money and Banking, Part II, chap. ix.

Putnam, The Land Credit Problem.

Robins, The Farm Mortgage Handbook.

Wolff, Co-operative Credit for the United States.

Stewart, An Analysis of Rural Banking Conditions in Illinois.

Cameron, The Torrens System.

Kemmerer, " Agricultural Credit in the United States," American Economics

Review, II, No. 4.
The National Conference on Marketing and Farm Credits, Report of Third

Annual Session.
Hibbard and Robotka, " Farm Credit in Wisconsin," Bulletin 247, Wisconsin

Experimental Station.
United States Investor, November 11, 19 16.
Publications ot tne Federal Farm Loan Board.
Reports of the Federal Reserve Board.
Farmers' Bulletin 654, "How Farmers May Improve Their Personal Credit. "

TOPICS FOR SPECIAL PAPERS

Causes of the Increase in Farm Mortgages Prior to 1890.
The Relation between Farm Mortgages and Free Silver.
The Populist Movement.

RURAL CREDITS 81

Present Status of the Farm Mortgage Company in the United States.

Land Mortgage Institutions in the State of .

Personal Credit Conditions in Your Home Community.
The Relation of Rural Credits to Better Farming.
The Fight to End Store Credit.

Efforts of Bankers to Extend Their Business with Farmers.
Achievements of the Federal Farm Loan Act.

Are Additional Institutions for Extending Agricultural Credit Needed ?
The Change from Dealer's Book Credit to Bank Credit with the Federal
Reserve System

XV. AGRICULTURAL WAGES

QUESTIONS

i. Is it relatively easier or more difficult to isolate and identify
the share of the total returns of the industry which go to labor in the
case of agriculture than in the case of a railroad company ? a steel
mill ? a large mail-order house ? a corner grocery ? Why ?

2. Is there a tendency to have more of the labor in agriculture
performed upon a wage basis today than it was a generation ago?
Why ? Does this have any bearing upon the problem ?

3. Regarding wages as the price paid for labor, what differences
does it show as compared with commodity prices ?

4. State the law of diminishing utility as applied to labor employed
in agriculture. What sets the margin at which price is determined ?

5. Economists refer to demand which grows out of the demand
for another article as " derived demand." Is the demand for labor
a case of derived demand ? The primary demand is for what ?

6. If labor demand is a derived demand, does its intensity depend
upon the value or price of the objects of primary demand ? Will the
farmer hire more three-dollar-a-day labor to raise two-dollar wheat
than to raise wheat which he expects will not bring more than one
dollar?

7. Does the principle of substitution operate in determining the
demand for agricultural labor ? How ?

8. Is the marginal worker one of minimum efficiency or unfavor-
able situation ? What is marginal labor ? Are they necessarily found
in the same person ? Are there any reasons why they are likely to
coincide ?

9. Does the supply of labor depend upon the number of human
beings ? upon the number who are available ? upon the number who
are both available and competent to perform the particular task?
upon the number available multiplied by the degree of their com-
petency? Are there any other factors?

10. Mention all the factors you can which influence the avail-
ability for agricultural work of residents of the United States.

n. Mention all the factors which have influenced their efficiency
in that work.

12. Is our agriculture undersupplied with labor at the present
time ? What does that mean ? How could it be remedied ?

13. Certain persons in the Pacific states have urged the suspension
or repeal of Asiatic exclusion laws and agreements. Would this
remedy the situation ? Whv ? If so, would it be advisable ? Why ?

82

AGRICULTURAL WAGES 83

14. Does the supply of labor depend upon its cost of production ?
Explain carefully. Should we try here as elsewhere to lower our cost
of production by every means possible ? Why ?

15. In general has the supply of labor in American agriculture
been scarce or abundant? The demand keen or slack? The price
high or low ? Are you talking of hired labor or self-employed labor ?
Would your answer be different in the two cases ?

16. Would it be different if you are speaking of wages being high
or low as compared with agricultural wages in other countries or as
compared with wages in other industries in America at the same time ?

17. Can a scarcity price for labor be readily corrected by drawing
workers from other employments or from a region of abundance to
one of scarcity ? Explain both cases.

18. What noticeable changes have come about in the last few
years to alter the conditions of supply of farm labor? in 1892-96?
in 1917?

19. Do you think that the supply of labor in dairy work tends to
be relatively more or less scarce than that in other lines? Why?
That in raising truck crops ? Why ? In " tractor farming " ? Why ?

20. Does the farmer have to devise methods of farming which
will enable him to offer high wages in order to secure a supply of farm
labor today? What "methods of farming" does this imply ?

21. Does he have to offer attractive work? How can he do so?
Does he have to offer attractive living conditions? permanent
employment ?

22. May the skilful farmer so plan his operation as to reduce his
need of workers considerably? Is this equivalent to an increase in
the supply of labor ? Does it have points of superiority ? What ?

23. Outline some of the most important of these ways of increas-
ing the effective labor supply.

24. Is farming considered as desirable socially as other callings ?
more so? Are conditions undergoing a change? Why? What
effect is this likely to have on the supply of labor in agriculture ?

25. Are country living conditions more attractive or less attrac-
tive than city conditions to the rank and file of people ? Why ? Are
they more or less healthful? Be very cautious until you have
figures.

26. What proportion of our population must be induced to follow
farm life under present organization of agriculture ? Are we keeping
up these supplies from within or do we have to draw upon outside
resources ?

27. Is it desirable to increase our supply of farm labor through
immigration ? Why ? Through immigration from all sources ? Are
the reasons for your answer economic or social ?

84 OUTLINES OF AGRICULTURAL ECONOMICS

28. Do we seek immigrant labor (a) to make a wage class in our
present agricultural industry? (b) as independent farmers self-
employed and if possible land-owning? In the second case is the
purpose to have these farmers displace the present agricultural popu-
lation or to develop new lands or to reduce present areas of farms and
increase the intensity of cultivation ?

29. Explain the difference between nominal wages and real
wages.

30. Has this difference usually been adequately kept in mind in
presenting the data of farm wages ?

31. Does adding the cost of country board to the farm hand's
cash wage make it comparable with city wages ? Why or why not ?

32. Should union dues or temptations to fritter away money on
trifles be taken into account in connection with the city worker?
Should they be offset by some factor such as " psychic income" ?

33. How about relative steadiness of employment and length of
the working lifetime ? accident and occupational disease ?

34. In general what has been the trend of wages of hired farm
help ? How do you explain regional differences ?

35. Should all these figures be corrected to allow for changes in
general price level ? Divide by the index number of general prices.
What is your conclusion ?

36. How has the labor return of the self-employed farmer been
moving? How about his purchasing power? How has the war
affected this ?

37. How does the remuneration of labor in agriculture compare
with that in other callings ? Which group of other workers is quali-
tatively best suited for comparison ?

38. Would you conclude that returns in agricultural and non-
agricultural employments are equalized through the process of com-
petition at the present time or are in a state of flux ? Explain.

PROBLEMS

1. The account book of a New Jersey farmer of 1850 contains the
following entry: "Hired Daniel McSugh for one year for $100.
Rented house to William Harris for $25 per year, and pay him 50
cents per day." Can you explain these rates of wages? In 1848:
"Rented house to Perry Simmons at $2 per month, and pay him
50 cents per day for a year, not including wet or bad weather. Car-
penter work $1 . 25 per day and board." Does this throw any further
light on the situation ?

2. "Until recent years, the problem of farm labor in the United
States was almost entirely confined to the quantity of the supply, but

AGRICULTURAL WAGES 85

during the last decade or two not only the amount of the supply rela-
tively has almost critically declined, but the quality has almost
absolutely declined, or has failed in an important degree to keep pace
with the need for labor, more skill, and more intelligence." What
does this mean? That was written in 191 2. Do you think condi-
tions are improving or not ? Is cheap and abundant labor an abso-
lute good ? How about the farm labor in China ?

3. "The agricultural element in populations has declined, and
still the people are provided with food and raiment. Some of the
countries have food and fiber to sell and other countries need to buy;
but it is logical that the relative decline of the agricultural element
must eventually reach a point at which it is at equilibrium with indus-
trialism." Do you agree ? Is it likely that this will be reached by a
back-to-the-land movement or only after still further diminishing of
the rural proportion ? Which condition do we desire ? Why ?

4. "If the farm does not meet the competition of other employ-
ments, it must suffer the loss of some of its laborers. The effect of
the farm to meet the competition for its labor is often apparent within
a rim of country surrounding cities of considerable size." How do
you think the effects of this competition would be manifest ? Do you
think it also possible that the city would furnish a supply of specialized
or of seasonal laborers which would have the effect of reducing labor
costs within this affected zone ? Does the type of agriculture prac-
ticed in the vicinity of cities have any bearing on the question ?

5. "The tendency among farm workers is toward a demand for
average wages by persons of inferior skill or defective reliability, so
that practically the difference in wage rate is not so great as in the
real value of the service." Does this mean that there are conven-
tional prices for labor? Is the tendency likely to be stronger or
weaker in case the labor should become organized into unions or other
associations ?

ADDITIONAL REFERENCES

Besides the standard texts in general economics, the student might con-
sult some treatise dealing especially with distribution, such as,

Carver, Distribution of Wealth, chap. iv.

Report of the Industrial Commission (1900), Vols. X and XL

Carver, Principles of Rural Economics , chap. v.

Warren, Farm Management, chap. xi.

Funk, " Value to Farm Families of Food, Fuel, and Use of House," Bulle-
tin 410, U.S. Department of Agriculture.

Social and economic surveys of rural communities appearing from state
universities and experiment stations and the United States Department
of Agriculture,

86 OUTLINES OF AGRICULTURAL ECONOMICS

TOPICS FOR SPECIAL PAPERS

Immigration and the Supply of Farm Labor.

The Relation of Agricultural Technique to Farm Wages.

The Equivalence of Farm Wages and Those in Other Occupations.

Causes and Results of High Wages to Farm Labor.

Reconciling High Farm Wages with Low Cost of Agricultural Labor.

XVI. SOME PROBLEMS OF AGRICULTURAL LABOR

QUESTIONS

i. Is the length of the working day on the American farm such
as to be a menace to the health of the workers? Does it entail
enough discomfort to become a factor in wages? Does it drive
workers away or discourage them from coming into agricultural
employment ?

2. What is the length of the working day in your neighborhood?
Could farmers cut this down by shrewd management ? Is there any
tendency to get away from the extremely long day? How is it
brought about ?

3. Is a set working day of ten or nine or eight hours practicable
in agriculture ? Explain. Could the farm employ two shifts during
rush periods? What do you know about night work in agri-
culture ?

4. Have living conditions for the farm hand improved as fast as
the standard of living has risen for the typical American farm family ?
as rapidly as the standard of living of wage workers in cities has
risen ? Why ?

5. Do we have any class of agricultural workers for whom living
conditions are relatively worse than anything known in agriculture in
the past ?

6. Does it appear to be necessary to improve the conditions of
employment and of living for agricultural workers today ? Why ?

7. Describe some of the movements which seem to promise suc-
cess in this direction.

8. Does intemperance constitute a problem of rural labor in your
community? Do you believe that recent "dry" legislation has les-
sened the evil for the country as a whole ?

9. If farm hands resorted to drink because of the "barrenness of
farm life," is the problem being solved by removing its cause ? Is it
in your experience a problem of the resident, permanent workers, or
of the floating, seasonal labor ?

10. Explain the nature of the accident hazard in farm work.
What proportion of this risk could be eliminated by proper preventive
measur es ? Are there still considerable hazards inherent in the occu-
pation? Do they tend to grow more or less extensive with the
development of the business ?

11. Are there any "occupational diseases" connected with agri-
culture? Is the general health risk higher or lower than for city
dwellers ? What are the possibilities in this direction ?

87

88 OUTLINES OF AGRICULTURAL ECONOMICS

12. Do state labor departments have jurisdiction over agricultural
labor ? Would more activity in this direction be desirable ? Explain.

13. Explain the advantages and shortcomings of private labor
exchanges as a means of distributing the farm-labor supply. Look
up the work done by public agencies in your state; by the United
States Bureau of Immigration. Is such public activity extending?

14. Describe the Japanese "contract" system of handling agricul-
tural labor. What are its good points ? its evils ? Do you know of
the same system being used by other classes of workers ?

15. Could Italian, Greek, and similar labor groups be utilized
without the intervention of the padrone? Are there abuses in the
system as now operated ? Could they be removed by requiring all
padrones to be supervised by state agents in a manner similar to that
used by some states with private employment agencies ?

16. Is women's labor in this country increasing or decreasing?
Is there a proper and wholesome field for women's labor in farm
work ? for labor other than that of the women and girls of the farm
family ?

17. Is there harmful use of the labor of (a) American women,
(b) immigrant women, (c) negro women, in agriculture today on a
large scale?

18. If so, could our labor laws be so framed as to reduce the evil ?
as entirely to eliminate it ? Why ?

19. Is there a type of child labor in agriculture which is normal
and beneficial? Some which is improper and harmful? Give par-
ticulars.

20. Describe the child-labor conditions in your own section and
what action if any is taken to safeguard the child.

21. Explain the worst instance of child labor with which you are
acquainted and outline the measures which would be necessary to
cope with cases of this sort.

22. Show the relation of the question of child labor to the educa-
tional system. What effect does this have upon the future labor
supply ?

23. Are there any distinctly agricultural workers' unions in the
United States today ? Are agricultural workers being absorbed into
other general labor organizations ? What ones ?

24. What is the general labor philosophy and policy of the organi-
zations which are getting a foothold among rural workers ? Is it a
correct and wholesome effort to improve the condition of the worker
through proper and feasible means ?

25. Does labor organization take hold on regular or itinerant
workers in agriculture ? To what extent has it appeared in your
section ?

SOME PROBLEMS OF AGRICULTURAL LABOR 89

26. Does the history of older agricultural regions seem to indicate
that labor organization is bound to come eventually ? Why ?

PROBLEMS

1. "Recently the wages of orange-pickers were raised to $2 . 25 per
day. They now demand $2 . 50. I.W.W. leaders seem to be respon-
sible for the agitation. Mexicans, Japanese, Filipinos, I.W.W. , ask
for the same wages, regardless of the number of boxes picked per day."
This applies to conditions of March, 19 17. Explain the economic
issues involved. The dispatch continues: " Unless new labor can be
secured from other points, no doubt total shipments will be affected
to a considerable extent." Trace the results in that case.

2. It was expected that employers would fight the advance
demanded in the foregoing case. What will determine the outcome
of such a struggle? "I know of farmers who shut down operations
this year because they could not break even, whose men were riotous
and saucy for fifty dollars a month; whose same men came back crying
for their old jobs at thirty dollars after the farmer had been compelled
to sell out. When unskilled farm labor exceeds fifty dollars a month,
I defy you to break even — I don't care what you are raising: apples,
potatoes, wheat, barley, corn, or milk." Does this shed any light
on the problem ?

3. "The farmers' wives do their share of the work. In 26 per
cent of the families the women work in the fields during the rush
seasons; in two- thirds of the families they help milk and do the chores."
Is this "their share of the work"? Is the question one of morals,
economics, social standards, health, or what ?

4. "Even the 'desirable' immigrant from Northern and Western
Europe who brings with him on an average $55 can at best only ob-
tain employment as a farm hand, which depends primarily on the
demand for farm labor, and here he is confronted by the fact that the
American farmer cannot even keep his own sons on the farm." Does
this indicate that the farm-labor market is over-supplied ? Explain.

5. "There is not the intense competition for place among men in
the country that there is in the city. In the industrial and com-
mercial world positions are graded so that there is always a more
desirable one just ahead. There is no place where one can stop to
take a breath without fear that someone will step in ahead of him.
But the farmer may become old-fashioned and yet make a good liv-
ing. He has very little need to fear that someone else can crowd him
out if he does not want to go." Is this true ? Is it a desirable or an
undesirable condition ? It was written as a partial explanation of
the lower death-rate in the country, Would this have any bearing
on your answer ?

go OUTLINES OF AGRICULTURAL ECONOMICS

ADDITIONAL REFERENCES

For additional references, see preceding chapter.

TOPICS FOR SPECIAL PAPERS

A Plan for Shortening the Labor Day through Better Management.

The Proper Restrictions upon Child Labor in Agriculture.

How to Reduce Farm Work Accidents.

Harmful Results of Women's Field Work and How to Check It.

Living Conditions of Farm Laborers in ■ County (or other district).

Improving the Distribution of Seasonal Labor in Agriculture.

XVII. PROFITS IN AGRICULTURE

QUESTIONS

i. Distinguish "pure" profits from other expressions in which the
term is used more loosely.

2. What is meant by speaking of profits as the "residual" share
in the distributive process ?

3. Does the ordinary farmer think of a distinction between his
labor return and something to be labeled " profits "? Why not?
Would it make his farm operations more intelligent if he did ?

4. When extraordinary returns upon a farm enterprise are secured,
to what does the farmer ascribe the excess ? Is he correct in doing
so? Why?

5. Is the amount of profits determined on the principle of price?
If so, what are the supply and demand factors involved ?

6. Do pure profits accrue only to the owner (or controller) of
capital ? Explain carefully.

7. Have farmers secured a special return — profits — as a result of
the European war ? Is this a chance profit ? Has it had any element
of foresight? If so, is it still profits? Is there any element of
monopoly gain?

8. Is agriculture ordinarily a field for the creation of profits ? of
monopoly profits? Why? Is it possible to have some element of
monopoly gain in farming ? other than ownership of scarce natural
agents ? of unusual labor abilities ?

9. Would it mean anything to say that profits are derived from
business enterprise solely and not from technical 'operations as such?
What is meant by enterprise or entrepreneurship ?

10. Does business enterprise always entail risk ? Are losses, then,
a part of the general phenomenon of profits? May we call them
negative profits ?

1 1 . Are the risks which attach to agriculture the sort which give
rise to profits ? Explain.

12. Are farmers as a class inclined to be venturesome in
their business operations? Be extremely discriminating in your
answer.

13. Does the willingness to assume risks benefit the one who does
so ? Temporarily or permanently ?

14. Does it benefit the public ? Temporarily or permanently ?

15. Can you show any relationship between profits and progress ?

16. Does the evidence seem to show that American agriculture
keeps close to a no-profit basis ? If so, would this be a reason for

91

92 OUTLINES OF AGRICULTURAL ECONOMICS

congratulation of ourselves as a nation ? Why ? A cause of anxiety ?
Why?

17. Does it appear that profits appear more often or in larger
volume in industrial or mercantile enterprises than in agriculture?
Is this because of the nature of the business or because of the kind of
persons who are engaged in it? Does the character of the people
reflect the character of the business ?

18. Do you see any reason to suppose that changes are coming in
the organization of the farm business which are likely to alter its
profit-rendering possibilities ?

19. Are the possibilities of securing profits from a business limited
in accordance with the opportunities of introducing new efficiencies
of organization ?

20. Are these in turn limited by the existence of a machine tech-
nique ? Is machine equipment taking a more important place in ag-
ricultural industry today ?

PROBLEMS

i. "On the average, the farmers who hired the most help made
the largest labor incomes. Those who directed less than $150 worth
made no more than hired men's wages. The average labor income of
those who directed over $800 worth of labor was $1,1 94." What does
"labor income" mean in the vocabulary of the farm-management
survey ? Do you find an element of profits added to the wages of the
farmer in the cases cited here ?

2. "The gleaning of profits consists simply in utilizing natural
resources, the labor of other men, or units of capital with a higher net
productivity than others can. Such superior directive ability is
possessed in differing degrees by different men, and, also, the ability
to get hold of these other productive agents depends upon various
factors many of which are institutional in their nature, such as heredi-
tary distribution of wealth." Does the farmer's profit depend upon
his ability to utilize much capital, many men, and extensive acreage
(or highly productive land) up to the maximum productivity or at
least a better than average performance ? Does it depend upon his
financial ability to get control of these things ? If he has the ability,
can he get the use of other persons' property ?

3. "In this war crisis the farmers have shown themselves just as
unscrupulous in taking advantage of the extremity of others as a
means of securing fat profits for themselves as any coal baron or
trust magnate ever was." Are some profits legitimate and others
not ? If so, where is the line to be drawn ?

PROFITS IN AGRICULTURE 93

TOPICS FOR SPECIAL PAPERS

Profits Which Grow Out of the Lowering of the Cost of Production of Farm

Products.
Personal Qualities Related to Profits.

Institutional Factors in the Obtaining of Profits in Farming.
The Emergence and Elimination of Profits.
Landowner v. Worker as Claimant to Profits.

SYLLABUS

It was explained in the preface to Agricultural Economics that " the
decision to use the fourfold division into consumption, production,
exchange, and distribution grew out of a desire to make the book most
serviceable to present users, rather than out of any personal devotion
to conservative ideals in the matter of economic exposition.'' For
such teachers as might desire to follow another order of presentation,
I have here sketched an outline syllabus of a course organized upon
a different and, I believe, a better plan.

I strongly feel that it is worth while to begin with chapter i (even in
those courses in which only a short time is available) in order that
the student may get his problem in its larger setting before going on
to the study of its details. Of course much is glossed over in this
first survey because nearly all of the remainder of the subject is implicit
in the general statements of this introductory chapter.

After the idea has been made clear that the farmer as economist
is seeking to learn how to administer his affairs in a world organized
on a basis of price, it is well to go at once to a study of the general
principles of value and price. These are next applied to the cost-goods
with which the farmer must deal — land, labor, and capital. This
leads into a discussion of the work of the organizer, first in the field
of production, and secondly in the marketing of his product. This
view of the marketing process readily dissolves into the picture of the
distributive process as the outcome of a system of bargaining for the
services of persons or of productive goods.

Finally the distribution of the proceeds of the industry into private
incomes gives us the condition which determines the possibilities of
consumption, and this, explained in terms of its effects upon the health,
numbers, and economic motivation of society, completes our circle
of thought by taking us back into the market-place where the
farmer sells his products and bargains for control of the agents of
production.

While references are made by chapter and selection, the instruc-
tor will no doubt find that some readings will need to be broken up and
others quite possibly used in more than one connection. Where it is
desired to shorten the course to the length of one semester, it will
probably be found best to drop chapters vii, ix, x, and xiv, or the
larger part of them. Chapter i can be treated summarily and chap-
ter iii should not need very lengthy discussion with agricultural
students.

94

SYLLABUS 95

I. Introduction — the Character of the Problem:

Agricultural economics the problem of administering price- relationships
in the farming business (including its domestic aspects), chap. i.

II. The Nature of the Price-Making Process:

a) Meaning of supply and demand (chap, viii, A).

b) Nature of the market (chap, viii, B).

c) Function of the market (chap, viii, D).

III. The Factors of Production:

a) Services of land and their value, chaps, iii and xi, A.

b) Services of human beings and their value, chaps, iv and xiii, A.

c) Services of capital-goods and their value, chaps, v and xiv, A.

IV. How the Costs of Production Are Determined:

a) Entrepreneurship, chap. vi.

b) Managership, chap. vi.

c) The services of accounts, chap. vii.

V. How Prices of the Product Are Determined:

a) Markets for farm products, chaps, viii, C, D, and F, and ii, B.

b) Methods of selling, chap. ix.

c) Marketing facilities, chap. x.

d) Control and regulation, chaps, viii, E, and ix, F.

VI. Distributing the Income from Agriculture:

a) The landlord, chaps, xi and xii.

b) The capitalist, chaps, xiii and xiv.

c) The worker, chaps, xv and xvi.

d) The question of a surplus, chap. xvii.

VII. Consumption as a Part of the Economic Cycle (chap, ii) :

a) The farmer's standard of living:
i) Present consumption.

2) Canons of economic consumption.

3) The difficulties in the way of a satisfactory condition I ,

b) Consumption standards of the non-agricultural population and

their effects upon farming:

1) Nature of popular demand.

2) Effects on agriculture.

3) Means of altering public attitude.

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