self. In regions where land values are stationary, we would not expect landlords to be satisfied with an average income of 4 per cent.

From a careful study of all available data, we are led to believe that the farmer is receiving only nominal wages and interest on his capital. In certain years he makes good profits, but adverse weather conditions or low prices in one year will often wipe out the returns of a period of years. Again, the agricultural districts which have been studied are much above the average of the general country so that the income of the ordinary farmer in all probability would be less than that indicated by the data given in the foregoing tables.

The only available data on this point, and which lead us to the same conclusion, are the paper by Professor W. J. Spillman on "The Farmer's Income," issued in Circular No. 132 of the Bureau of Plant Industry, of the United States Department of Agriculture.

These same farm management studies clearly demonstrate a wide difference in the efficiency of farm organization. Certain principles, such as the organization of the farm enterprises to secure the maximum use of labor and uniform good quality of business, are of the utmost importance. Untold possibilities are within the reach of the ordinary farmer through more efficient organization of his entire farm business without any increase in capital or labor. It is in this direction that the farmer can increase his profits, without raising the price of products sold.

EFFECT OF FARM CREDITS ON INCREASING AGRICULTURAL PRODUCTION AND FARM EFFICIENCY

BY HOMER C. PRICE,

Dean, College of Agriculture, Ohio State University, Columbus, Ohio.

It is a noteworthy fact that agricultural production in the United States is falling far short of keeping pace with our increase in population. In the decade 1899-1909 the total production of cereals only increased 1.6 per cent while the population increased 21 per cent. The result of this condition has been the rapid falling off of our agricultural exports and the increased price of farm products. During this same decade the value of farm products advanced 80 per cent and notwithstanding the increased price of farm products the average annual value of agricultural exports during the last half of the decade was only $964,449,000 and during the first half $874,657,000. When compared with European farming, American agriculture is characterized by its extensiveness and low crop yields. The average crop yields of the leading European nations, except Russia, are at least double the average yields per acre of the same crops in the United States. But on the other hand the average acreage cultivated by the American farmer is much greater than that cultivated by the European farmer so that the production per farmer in American agriculture is far greater than in any of the European nations. The high production per farmer in America is due to the extensive use of labor-saving machinery, our abundance of arable land and its natural fertility. That we have reached our limit of agricultural production under methods practiced in the past is generally admitted. The public lands that are suitable to farming have all been occupied, no revolutionary labor-saving machinery is likely to be invented and future increase of agricultural production must come principally from increased farm production, through increased crop yields, better live stock and more economical and efficient methods of farm management.

Increased Farm Credit

Extensive farming is always accompanied by a low investment of capital per acre for equipment and operation. To increase agricultural production on our present area means an increased investment in the equipment and operation of our farms. Increased crop yields are obtained (1) by controlling the water supply, either by drainage or irrigation (depending upon conditions); (2) by increasing the fertility of the land by adding plant food through commercial fertilizers, stable manure or growing and plowing under suitable crops; (3) by improving the physical and chemical conditions of the soil through the application of lime; (4) by deeper and more thorough tillage of the soil; (5) by growing more productive and disease resistant varieties of crops; (6) by controlling insect and fungus enemies of the crop. All of these operations increase the cost of production. If the cost of any one of them does not show a proportional increase in the crop yield the operation is not justified. But as a matter of fact these operations under the right conditions show much more than a proportional return in the crop production. Why then are they not more generally practiced? Primarily because of lack of capital or proper credit facilities for financing the American farmer.

One of the most striking differences between the agriculture of the European countries that are most commonly compared with our own is the rural credit systems. Germany, France, Denmark, Belgium, Holland, Ireland have rural credit systems that have been organized and developed to meet the needs of their farmers. In America we have failed as yet to recognize that the credit need of agriculture is different from other industries. The turnover of capital invested in agriculture is slow. Investments made in permanent improvements such as buildings, fencings, drainage will not be returned in less than fifteen to twenty years and investments made in farm operations such as growing crops and feeding live stock will not be returned ordinarily in less than a year. Consequently short time loans such as are suitable to mercantile and other industries in which the turnover of capital invested is frequent, are not adapted to the needs of the farmer.

The rates of interest charged on farm loans are another important factor that deter American farmers from utilizing more exten

sively our present credit facilities. Investigations show that interest rates on farm loans are materially higher than prevail on loans made to other industries on security not as safe as given by the farmer. This is due in part to the fact that farmers have not organized to borrow their credit in large sums but each farmer has negotiated his own loan as best he could and the expense of making and collecting the loan is high. The present system of making farm loans is exceedingly expensive for both lender and borrower and is comparable to our cumbersome and expensive methods in vogue for distributing and marketing farm products.

Farmers can make a comfortable living at present prices of farm products by following farm methods that have prevailed in the past and even though they are convinced that they could make more by practicing improved methods they refuse to borrow capital for this purpose under present conditions. The farmer who has surplus capital is usually a man of years who prefers to loan his money at interest rather than to invest it in his farm. He is past the time of life when he cares to make any radical change in his methods of farming or to invest in slow paying permanent improvements. No industry is harassed more severely with labor troubles than farming; and increased investment in farm operations means an increase in farm labor. The farmer past middle age with a comfortable competence says, "I know I could make more out of my farm if I would invest more in it, but I will leave it to the younger men to take up these new methods. I am too old to begin and farm labor is too scarce."

The fact that farmers are heavy depositors in the banks is often advanced as an argument that there is no need of any change in our rural credit system or any call for more credit in agriculture. The farmers who have deposits on interest are not the men who need the credit neither are they the men who are increasing agricultural production.

The men who need better credit facilities are the young men and middle aged men who have the future before them and are the determining factor in the future development of our agriculture. No kind of credit system will influence the older farmers to materially change their methods.

Kind of Credit Needed

Two distinct classes of credit are needed by farmers: First, short time loans that provide working capital for operating the farm. Such capital is spent to pay farm labor, to purchase seed, commercial fertilizers, feeding stuffs and the turnover will probably be at least once a year. Such loans are ordinarily made on personal security or mortgage on personal property of the farmer. In the corn belt and the more prosperous agricultural communities the existing banks furnish this class of credit fairly satisfactorily. But in the Southern States and the less prosperous sections of the North the crop lien system frequently prevails. Under this system the farmer is financed not by the bank but by local merchants who furnish farm supplies on credit charging the highest retail price and interest, taking for their security a mortgage on the growing crop. As soon as the crop is harvested it must be sold to pay off the debt to the merchant. As a consequence the farmer is forced to sell regardless of market conditions. Furthermore the cropping system is fixed and cannot be changed. The merchant knows what he can safely expect from a crop of cotton or a crop of tobacco but he does not know what a crop of alfalfa or a crop of clover will return or what to expect from live stock if a farmer is furnished credit to buy and feed live stock. Such a credit system results in a minimum agricultural production and a constantly decreasing farm efficiency because the constant cropping of the land in crops that are sold depletes the fertility of the farm.

H. E. Esswein of the Ohio College of Agriculture working in the rural life survey of the state in 1912 reports conditions in the white burley tobacco district as follows: "Tobacco growing is partly in the hands of tenant farmers who remain on one farm for short periods of time in many cases for only a year, or for two at the most. So numerous are tenants in some sections that well informed persons say that 90 per cent of the tobacco grown there is done by tenant farmers usually on the shares, one-half of the crop, or onehalf of the proceeds of the sales goes to each party. The landlord furnishes his tenant a house, a garden or truck patch, horses or mules, and a few farm implements. Owing to the fact that tobacco is a crop from which one cannot hope to get returns for at least a year from sowing the seed, a system of advancing money to tenant