EFFECT OF DEPRESSION ON FARMER.

Hawera & Normanby Star, Volume XLI, Issue XLI, 7 May 1921, Page 3

EFFECT OF DEPRESSION ON FARMER.

Mr Henry C. Wallace, Secretary of Agriculture,1 U.S.A., has issued the folio ,vmg statement on the agricultural situation: "Let me speak first of the agricultural situation in general. 1 think if we can get an understanding of this the proper work of the Department of Agriculture will become apparent. We must approach it from two angles— ■J St'i present conditions, which are decidedly unusual, and second, conditions which may develop in the future. . "I doubt whether the people of the .kast realise just what has happened to the farmers of the producing" sections; rake the grain and live stock producing country of the Central West, for example, and I speak of this because it is the region with which I am most familiar, and also because it is the region which gives us our great surplus crops. We have the finest rural civilisation, taken as a whole, the world has ever seen; our farmers average very high, in intelligence; they produce more per man than almost any other farmers in the world; they have adopted the most advanced system of extensive farming yet developed. Notwithstanding all this, they are now in a most trying period and are suffering §eVfere financial losses. . Farmers throughout the nation, especially those | m the South and West, are experienc--Img exactly the same trouble. The cotton farmers in the South, the rice farmers, the cattle and sheep growers of the Far Westv; the fruit growersall are passing through this 1 same valley /of discouragement and financial stress. ''People who are not familiar with agriculture, find it hard to understand the situation. They refuse to believe that the depression is as serious as it really is. They point to the high value of our land, to the high prices at which farm products were selling prior to this heavy drop, to the large number of automobiles owned by farmers, to the apparent wealth and comfort on every side, and they refuse to take seriously what the farmers say concerning their troubles. . ~,-." "There are two causes for this widespread agricultural depression. One is the high cost of production last year. If* we include all the factors which properly enter into the cost of produc- - tion we find, for example, that the cost of producing a bushel of corn in lowa, the greatest corn State, was more than 90 cents. This includes the land cost,, the labour cost, and everything eke which ought to be included. "Many people say, 'You are figuring the land at an inflated price. You should not do that. The farmer did not pay that price for the land. He wants dividends on water.' "It is true that the land charge is considered on the basis of its value a year ago, but it is also true ,that the advance in land prices was not nearly as. great as many people suppose. They hear of the occasional sales at 400dol. or oOOdol. an acre, and assume that that represents the average. Nothing' of the sort. The average advance in the' value of our rich corn-belt land was only about 60 per cent above prewar values. It must be remembered also that in the principal corn States over half the land is farmed by tenants, and these tenants mostly had to pay rent on the basis of the advanced ' land values. It is true, further, that if we omit the land charge altogether the price which the farmer can get for a bushel of corn is still considerably below what it cost him to produce it. The largest item of cost in corn production is not land, but labour.

Some Have Prospered. "The man who has been farming his own land and who has saved his money has prospered. The five years prior to 1920 were profitable years, especially to the grain grower who was so fortunate as to have good crops. If he exercised ordinary intelligence he made more money than he ever before made at farming. Those years were not so profitable to the live-stock farmer. The man who grew his own live stock and own grain and fed his grain to the live stock, on the whole, made money, although not as much as if he had sold the grain instead of feeding it. The man who bought the live stock and bought the grain and fed the grain to the live stock, on the average, lost money. "When hogs were selling at 20dol. per cwt everybody seemed to think the hog feeder was growing rich, but most of the time when hogs were selling at those high figures the men who had to buy the grain to feed the hogs lost money. Price Drop Disproportionate. „ "The second came of -the farmer's trouble is this: Prices of farm products have dropped out of all proportion to the prices of other things, as well as out of all proportion to the cost of production. "For example, the price of corn and oats to-day on the lowa farm is about 20 per cent below the normal price of these crops before the war. The present price of fat cattle and hogs'is from 20 to 25 per cent above the pre-war normal, if we take Chicago prices, but on the farm the prices of both cattle i and hogs are down to pre-war normal. "Now, note the prices of some of the things the farmer must buy: Wages of farm hands are about 100 per cent above the pre-war normal, railroad rates are from 70 to 90 per,cent above pre-war normal, such basic commodities as pig irony coke, petroleum, lumber, ! Portland cement, are far above the pre-war normal—from 100 to 150, and in some, cases 200 per cent above the pre-war normal. Factory wages and railroad wages are both more than 100 per cent above the pre-war normal. "In other words, while the farmer is selling the things he produces at prices no higher, and for great surplus crops lower than the pre-war normal, he must buy practically everything he needs at prices from 50 to- 150 per cent above the,pre-war normal. The severe agricultural depression is inevitable as long as such condition exists, and this depression will certainly be communicated to industry and business generally. "It is a situation which should challenge the very beet thought of the entire nation. If it continues the trouble wMI be communicated to everyone. We are brothers one of another. Anything } which hurts tRe farmer will very soon be. communicated to all of our citizens. The farmers represent probably 35 tc 40 per cent of the- population. Anything which seriously, affects their buy-

ing power will bring trouble to the people who make or veal in the things the farmer buys. "It is a terrible indictment of our modern civilisation when this great country is in the period of what almost might be called economic chaos because of our great surplus food supply, while . across the seas in both directions al- ( most half the world is suffering from want of food. If our statesmen had given more thought to getting the world back on a sound economic basis and, perhaps, had spent less time on idealistic schemes and theories, they would have rendered a greater coni tribution to the peace and orderliness and happiness of the people of the earth. Must Find Outlet for Surplus. "Now, as to this present situation, surely tne duty of' the Department or Agriculture is evident. We should do everything possible to find' an outlet fo rtiiis great food surplus. We should search for ways to produce more cheaply. Our scientific men should try to find new uses for our surplus crops. We should help develop more efficient marketing systems, straightening curves and lowering the grades between the producer and trie consumer. It is a time for every man who can. help to ; take hold. As in the days when we dragged our fire engines by hand to the scene of the fire and every good cieizen rushed out and took hold of the long rope and did his bit, so we must do now. Every good citizen, no matter in what business he may be engaged, should do what he can to help the farmers through this period of depression, not for the sake of helping the farmer alone but for the sake of helping himself. "We cannot hope to reach normal conditions until we arrive on a price level which will be fair to all our people and all products. Farm products must come up in price and other products come down until the normal relation between them has been restored. This, talk of bringing prices, whether farm prices or other prices, back to the pre-war normal is morally wrong and economically impossible. We incurred a heavy national debt on the inflated prices. If we could force all prices back to the pre-war normal— which we can not—-it'would be equivalent to just about doubling that debt. We can pay off our debts much easier if we maintain a price level more nearly the level at which the debts were incurred. Of course, the excessively high prices which prevailed during the war cannot continue, but if we should try to bring about a level, say 70 per cent above the pre-war normal, everybody would be better off. ' 'We will get through this period. The nation is not going bankrupt. The farmers are not going bankrupt. Neither are they going to lie down on their job. Gradually farm prices will be brought into fair relation with other prices, and we will go ahead hitting on all cylinders. But there is another thing in the long run —a more important phase of our agricultural problem which we. have been slow in considering. Let me sketch briefly the development of 'our agriculture. Farmers Often Produce at Loss. "The farmers of the United States during the past 70 years have, on the a-verage, produced and sold grains and live stock at less than the cost of production if we take into consideration all the factors which properly enter into production, cos Us. What 1 mean is that if the farmer would .practice a sound system -of business economy, charging a fair interest on the capital invested, both in his farm and his farm equipment, ■ a fair wage for the actual labour expended on the farm against his receipts from the marketing of his crops, it will be found that he has not- received for ; them enough to cover his actual costs. We will omit the value of the fertility of his soil, which is, in effect, a portion of | his capital and which he has marketed in his crops, but which we will simply throw in for good measure, although this must be replaced if crop production is to be maintained. I know that when a, statement of this kind is made many people question it. They think of individual farmers whom they have known and who have become very well to do, but I am speaking of the average farmer, the farmers as a mass, and the statement I have just made is an absolutely truthful statement which has been abundantly corroborated by scientific investigation. c "The farmers have been able and willing to sell their crops at less than the actual cost of production because, first,,they have been willing to accept the value of the farm as a home, as a place to raise their children, as a part of the substantial reward for their work; and second, be"ause as our population has increased there has been a steady increase in the value of the farm land. ,In times past, therefore, the young farmer who could get enough ahead to make a .very small payment | on a piece of land—enough to give him a foothold —and who had a lot of | hard work in him, and who had a good wife, as most of them have, has been able, by living very economically, denying himself and his wife the luxuries and many of the comforts of life, to hang on, paying out on t;he farm, and finally to see it growing into a valuable piece of property. "During all this period we have been a great surplus food producing nation. We have grown more food than our own people could consume. As a result we have had to compete with the farmers of the world in the great consuming markets and take prices fixed by that competition. Another result of this great surplus of food was to'stimulate our industrial development and to build up bur commercial enterprises of all kinds, until now more than one^ half of all our people live in the cities and industrial centres. Consumption Overtakes Production. "The steady increase in the value of our land and the relatively low prices for farm products has caused a constant drift of young farmers to theowns and citieß, where they thought they could secure better pay for their labour and could see better opportunities to advance themselves in a material way. In some of our heaviest , prodacing.States there are not as many people on the farms to-day as there were 30 or 40 years ago. This movement from the farm to the city has j been a perfectly natural movement and j fully justified by conditions. It will I continue as long as the cities offer greater financial rewards, greater op- . portunities for advancement, , inor,e '■ comfortable living conditions, and bet- : ter social, educational, and religious I privilege's. It is the inevitable result jot economic conditions, and no amount jof talk extolling. the beauty of farm i life can stop it. Nor has this relative aechne in the producing population been a very serious matter up to the present time. Certainly it has not been j serious from the farmers' viewpoint. |W c have made . great advances in ' methods of production. The development of labour-saving machinery has I enabled us to increase our production pfcr man. Notwithstanding our • increase in total population and the' decrease in farm population, we have until very recently steadily increased food . production per thousand of total population. This increase has come both trom the use of labour-saving machin- , cry and from bringing into cultivation . new areas of fertile land. We cannot . keep up this gait in the future. Con-

sumption has almost overtaken production under normal world conditions. Reclamation Depends on Prices. "Most of. our* fertile land which, can. be farmed profitably without expensive reclamation has been taken up. We still have large areas of swamp land and dry land and cut-over land, but the lands, cannot be profitably reclaimed and farmed unless we can depend upon higher relative prices for farm products than prevailed before the war. So, also, we can greatly increase the productive power or a lavge area of the land in surplus producing States, pro- | vided we can depend upon prices which j will cover the increased expense. Under our system of farming we have produced far more per man than almost any other nation, but we have not produced nearly so, much per acre as in the nations of Western Europe, ' for example. Our greatest increase of food production in the future must come from increasing our acre yields, but this, in turn, depends upon, prices which will justify the increased cost. "The farmer is the one man engaged in a big business who has had no voice in fixing the price of the things he produces. He has been compelled to take whatever prices he could get. His cost of, production has not at any time been considered in-determining "this price. In times' of small crops prices have sometimes been high. In times of large crops prices frequently have been ruinously low. Very large crops^ as a rule, give the farmer fewer" dollars than small crops. Farming seems to be one business in . which large production is always penalised. ,"No doubt when we get through this period of world readjustment and get squared away on an orderly basis there will be a gradual increase in the value of farm land, provided our national policy is fair to agriculture, but this increase will be much slower than in times past. The speculative value has been taken out of the land. The farmer can no longer depend upon the increase in the value of his farm to make good lo:-ses suffered through his farming operations year by year. Farmers' crops must sell higher relatively in the future than in the past.

Fertility-Nation's Greatest Asset. "We seem to have been going on the theory that the fertiliy of our soil, especially in the great corn and tame grass country, is inexhaustible. To the nation this is a most dangerous theory. We must set about in earnest the development of an agricultural policy which will enable us to feed our people at fair prices and at the same time retain the fertility, of our soil, our greatest national material asset. "The increase in tenancy has aroused great concern. Many people seem to think that tenancy is in itself an evil Not necessarily so. As land advances tenancy increases. This ha% always been true everywhere, and it is not necessarily a bad thing inltself. The farmer who has a limited working capital can far better afford to rent -than to own after the land has reached a fairly stable value based on its productive power. Men are willing to invest their money in land and accept a very low rate of interest because of the security of the investment, but there are evils which grow out of the tenancy system .which must be corrected."

"If we are to make this* a self-sus-taining nation agriculturally, as President Harding put it in one of his speeches, there is no time to be lost in studying these great problems It is not a question of production alone; it is a question of the farmer being able to sell what he produces at a price wmch .will justify him in continuing-to produce. We are the best producers in the world; but our sales system is very bad indeed. We. must study everything which influences both production and price. We -must look into the matter of competition from farmers of foreign lands, where the agriculture is still bein gexploited and where, the standards of living are very much below the standards which we demand for our people. We must look into world conditions, both of supply and demand, and produce more intelligently and adjust' our various crops to the probable needs; We must look into the administration of our credit machinery. Those who control the finances of the country and who have in their power to influence, either directly or indirectly, the extension of credit can exercise a largfe amount of control over the prices of farm products. The same thing is true of the administration of our transportation system. Through the simple device of regulating the flow of cars the prices of farm products can be sent up or down at the will of those who exercise such contipl. We had some costly experiences along this line during the war. "In short, the people of the nation must come to understand that our prosperity as a nation depends upon a prosperous and wholesome agriculture. "I cannot now speak in detail of the many lines of work in the Department of Agriculture/ We have here a magnificent body of men and a splendid organisation. We are going to" try to use the scientific and nractical knowledge of these men wlierever it can best be used to promote the agriculture of "the nation."

A Hawera resident, who has lately been among some of the inland settlers of North Taranaki, stated to a reporter the other day what he learned regarding their views of the present slump. He said, inter alia: This slump is only forced upon the country, and was very essential for the staying of speculation and the resumption of production, an 4 would only be a short one. In a couple of months, particularly so as we learn of the future of our butter-fat prices, we will see a marked improvement in the prices of fat stock and farm produce generally. Particularly noticeable among the older settlers was this opinion expressed, as several were regretting that they had not got a bit of rough winter feed to spare to enable them to avail themselves of the easy market among the young dairying stock which was being offjbred at one of the local sale yards. A great numI ber of these farmers, who at normal times utilise their farms for grazing and general fattening purposes, intend to farm for a dual purpose, as many homesteads are admirably situated for first-class dairying. Observing the country generally, he stated that it possessed many natural resources suitable for dairy farming, as there were large portions of valleys and river flats already under cultivation, and were producing eye-opening root crops, some of them as large as many South Taranaki dairy farms themselves. One thing is certain, that the adjacent dairy factories will increase then- output during the coming season.

Agriculture is in reality a great * branch of human and veterinary hy giene, for without it man and domesticated animals ccnld not subsist. The agriculturist, by producing the food supply of m<my, ?nd also the material to house, clothe snd bury him is the first man in every community; but his callins:, in this country, is only thought of as inferior 'to the exchangsr, who produces nothing, yet waxes fat un ihe ignorance of the multitude. It is quite time our educational authorities impressed upon children under their care that the agriculturist , was the most important man in the . community.