Financial Status of Farmer Is Outgrowth of Over-Supply The financial situation confront-, big the farmer Is a direct outcome of hks efforts loyally to meet the demands of the war. With the war over, the bottom dropped put of wheat prices and the wheat farmer in thousands of In stances paid for his loyalty In fail ure. It at the time of the armistice a warning hand had been raised, as The Omaha Bee Is now raising its hand and voicing its demand for an adequate tariff, and wheat pro duction on a domestic basis, fanners would ha vs been saved from ruin, and others would have avoided the present debt burden under which they are laboring. Menaced by Debt. The indebtedness of farmers in various parts ef the United States, especially in the west, has grown to heavy proportions. There are a num ber of causes which account for this situation. Land values In the middle west rose sharply during the war and some land was purchased by farmers at inflated prices. The num ber of farmers, however, who bought land during these years is enot as large as usually thought. Sur veys that have been made Indicate that from 1* te 15 per cent of the farms in the United States changed hands during the years 1911 to 1920. It should also be noted that a great many farmers who purchased at eg horbitant levels have already loat their land. Still other farmers who did not buy land marked up the value of their land and other prop erty, placed too much reliance upon tills new and fictitious wealth and incurred liabilities in excess of their normal earning capacity. Frequently the scale of farm op eratlons and expenditures vras ma terially expanded to n.-jet the de mand for increased production as well as to reap the beneiit of war prices. In many parts of the dry land wheat regions on extraordinary series of crop failures was experi enced during the years 1917 to 1921. Farm operations in these years were conducted at maximum costs, and instead of profiting t»y high prices farmers piled up additional debts, 'ftie financial situation In these dry land wheat regions became, in fact, so serious that federal funds to the amount of $9,500,006 were provided in 1919, 1921, and 1922 for seed and feed loans to enable farmers to con tinue their operations. The degree to which farm debt lias been increased is shown to some extent by the census. The average mortgage debt per owner-operated farm, which in 1910 ranged from $1,960 to $2,949 for the principal wheat regions, about doubled by 1920. These census figures do not include the mortgage debt on farms operated by managers and tenants. In addition to the farm mortgage encumberance, a substantial part of farm indebtedness Is represented by personal, bank and merchant credit, for which separate ddta are sot available. The evidence does not Indicate iliat the total volume of farm in debtedness Is In itself of alarming dimensions. Its significance lies more especially in Us distribution. In some pans of 1h« more spe cial!,led wheat regions the burden of farm debt is much heavier than in otheip. Within every communi ty there are farmers who have very little or no debt, while others are very deeply involved. The situ ation on the average appears to be most serious in the specialized re glons whew wheat farming is con ducted a* k specialized industry anti under conditions of high crop risk. On the other hand, many farmers in the better wheat regions pur lbased land at inflated prices or Incurred other heavy liabilities dur ing the war and are now carrying burdensome debts. Worst in Wheat Regions. When ptlce deflation came in 1920. farmers who had accumulated large debts were seriously embar rassed. While the majority of them have been successful in tiding over their financial difficulties, a sub stantial number have not. This sit uation is brought out In a special inquiry made by the Department of Agriculture in the spring of 1923. Reports were secured from 15 states covering the period January. 1920. to March, 1*23. Out of over 63.000 owner-farmers Included In this this survey 4 per cent lost their farms through foreclosure or bank ruptcy, 4.5 per cent lost their farms without legal proceedings and a lit tle oyer 15 per cent had been spared because of the leniency of their creditors. Out of almost £6.000 truant-farmers, 7.2 per cent loot property through foreclosure or bankruptcy, 7.1 per cent last piop erly without legal proceeding*, and 21.* per cent retained their prop erty merely aa a result of the leniency of creditor*. According to this aurrey, the losses of farms and farm property were relatively ino»t numerous in the (treat Plains region. Applying the results obtained from thebe re port* to the 1920 census figures for owner* and tenants, it was esti mated that the percentage of farm ers who since 1920 had lost farms or other property ranged from 8.9 per cent of all farmer* In Kansas to 29.3 per cent in Montana. The seriousness of the situation is further reflected In the records of the bankruptcy courts. ‘While the total number of bankruptcy cases among farmers is not large. It must he remembered that farmers a* a rule do not resort to the bankruptcy courts when forced to give up prop erty to creditors. The significance of the record lie#, therefore, in the increase and distribution of such cases rather than in their absolute number. The records of the De partment of Justice show that dur ing the three pre war years, 1912 1914, an average of 5.5 per cent of all bankruptcy cases were farmers, while in 1922 the percentage was 14.4. The resort by farmers to bankruptcy courts was especially pronounced in the more *pecialtaed wheat region*. In the western win ter wheat region farmer bank ruptcy cases in the pje-war years averaged 8 per cent of all cases: in 1922 tills percentage had increas ed to 25. In the spriag wheat re glon the perosntage Increased from almost 52 per cent of all cases la the pre-war years to 41.9 per cent la 1922. The increase in bankruptcy among fanners In the Pacific north west states is also marked, particu larly in Idaho, where almost 4T per cent of an cases put through the bankruptcy courts in 1932 Involved farmers. The percentage of bank ruptcies among farmers In 1922 was especially high in Iowa, Kansas, Ns brasku. Colorado. North Dakota, South Dakota, Montana and Idaho, ranging from 32.8 per cent of all cases in Nebraska to Tt.S per cent in North Dakota. Preliminary reporta indicate that bankruptcies of farm ers for the fiscal year ending Juae 30, 1933. materially exceeded those of 1922. Fanner's Dollar Is Much Below Fair Basis The price which the farmer re reives for Ills wheat Is not the whole story. The farmer cannot count W« income in the gross. It’s the net Income that shows failure or prosperity. Therefore there must be taken out of the price of wheat the price of what the farm er must buy. This is sn old story but The Omaha Bee presents in this.review, figures and data on this and other subjects In order that the argument may he complete. till! V.O PRICE OF WHEAT AND THE PRICE ADJUSTED TO THE PUR CHASING POWER OF THE 1*13 DOLLAR. 1«*»-*1 TO 1*12-23. Attention la called to tbe accom panying chart prepared by the U. S. Department of Agriculture, showing the low value of wheat farmer’s dollar in terms of what he must buy. The farm price of wheat Is down nearly to pre-war level and the pur chasing power of a bushel is far below. The farm price August t, for the first time since the begin niug of the war. fell below the av erage for the corresponding month in the period 1909 1913, being 84 cents, compared with 91 cents. Since August prices have risen and are now slightly above the pre-war level. The November 1 average farm price was 95 cents. If the seasonal pries movements for this year, 1923-24, parallels that of last year, prices will .continue to rise slightly, reaching the highest point of the season in the early spring. The purchasing power of a bush el of wheat is more significant than the price of wheat. Although the average farm price of November 1 was above the 1909-1913 average for November, It is equivalent to only 60 centa per bushel in the pic-war period. A suit of clothes which coat the farmer in North Dakota 21 bushels of wheat in July, 1413, cost him 31 bushels in 1923, and a wagon which then cost him 103 bushels would now cost him 166. The cost of nearly everything the farmer buys is necessarily very high because of freight rates and industrial wagee which enter not only into the coat of manufactur ing but also the oost of transports 'Ion are far above their level be fore the war. With the November farm price ef wheat only 107 per cent of the pre-war average price, th» wholesale price of all com modities which la generally taken as h measure of the price level was 153 per cent in October. On .the basis of this price level the average farm price ef wheat should have been shunt tl.tt par bwahal far No renter to giro wheat pre-war pur chasing power at wholesale prices. The low price and purchasing power of wheat directly affects the income of about 2,008,000 farmer*. In large areas of North Dakota, South Dakota, Kansas, Nebraska, Motana, Idaho, and Washington farmers depend almost entirely upon wheat for their cash income. According to the census of 1919, 80 per cent of the farmers in North Dakota, 78 per cent In Kansas, and 86 per eedt in South Dakota grew wheat. A farm survey in the Palouse district of Idaho and Wash ington for the three years 1919 1921 showed that approximately 80 per cent of the cash income of the farmers in that district was derived from wheat; and in 1922, 79 per cent of the Income of farms sur veyed In Sheridan and Daniels ■ counties in Montana was from wheat. As a direct source of cosh income the wheat crop of the Unit ed States Is more Important than the corn crop, a large part of which is fed to livestock. In five years ending with 1922 farmers sold on the average 711.000.000 bushels of wheat and 544,000.000 bushels of com. Moreover, a large part of the corn sold is from one farmer to an other for livestock feed. Many wheat farmers produce other com modities than wheat, but the prieeu of many of these, such as 'oats, barley, and rye, are below pre-war prices. The specialised wheat farmer, as a rule, does not produce, or produces only for home use, the commodities such as corn, butter, eggs, cotton, and wool, which are now selling at relatively high prices. The low price and purchasing power of wheat Is far reaching in its effects, for not only the wheat farmer but practically all classes of business men whose income depends to any aatent upon the prosperity of the wheat farmer are adversely affected. Better Grades of Wheat Promise Higher Prices The importance of producing and putting on the market the best possible grade of wheat can not be over-emphasised. In foreign mar kets our lower grades of wheat meet in competition the best wheats of other lands and sell at a discount. On the other hand, the demand In our domestic markets Is for the wheats which have the highest milling value. The poorer grades usually sell, therefore, at substantial discounts, particularly when the preeentage of such grades is relatively large. Domestic Rates in Canada Are Higher The question of freight rates on wheat ia an important one. though only relatively eo. If the price of wheat can be brought to a domestic basis through the protection afford ed by an adequate tariff, that will hold back the surplus from other countries, and a reduced production following a curtailment of acreage, fair freight rates can be absorbed. In this connection The Omaha Bee calls attention to the conclusion of Secretary Wallace of the Depart ment of Agriculture, In the recent report to President Ooolidge, to which attention has already been called. "A reduction of freight rates to prewar levels," said the secretary, “would not raise the price of wheat sufficiently to give the wheat grow er prewar purchasing power.’’ Xeed Lower Wales. It ia also the opinion of the sec retary. however, that rates should be reduced and that they should re main In effect until the prices of wheat are more nearly on a par with the pi ices of other products. The Omaha Bee believes that tba lifficulty In connection with any such general rate reduction, how ever. puts this remedy in a sec ondary position, especially If they are to be increased again when prices of wheat are brought up. The chief stress therefore comes back to adequate tariff and reduced acreage in order that wheat prices may be as speedily as possible put upon a domestic basis. Attention la called to a statement qn wheat freight rates made In a recent report to the Federal Reserve board by Mr. John H. Rich, chair man of the boaid and federal re serve agent of the Federal Reserve bank at Minneapolis. Coats ef Hauling Heavy. ‘Official Investigations into the cost of wagon haul." said Mr. Rich, "indicate that in two of the repre sentative Montana wheat areas, the cost to the farmer to "haul wheat to the local station is In one area 2 cents per bushel per mile, and In the other 1 7 10 cents per bushel per mile. These figures, while very accurately computed, seem some what high. A better basis of cost is probably presented in the rates charged In a number of areas where it Is necessary to haul wheat vary ing distances, and where the truck ing rates are usually 1 1-3 cents per bushel for the first three miles and 1 cent per bushel per mile for the remaining distance. "Records of a leading grain carrying railroad, which moved more than 2.000.000 tons of wheat of the 1032 crop, show that the rail rood moved a ton of wheat one mile for the trucking cost to the fapner of moving one bushel one mile. The average wheat haul by rail was 340.6 miles, and the average rate per ton per mile was 1.091 cents. Converted to a bushel basis, the Message to The Bee From Secretary Wallace ' Mmuttmcmt or aomiculium i m «if ■ .• ' ~> tU^x. £... , -,_■ —aim wiiiii —mill railroad charged for hauling one mile leas than 8-100 of a cent.” It ia interesting to note in this connection a comparison of the rates on wheat on American and Canadian railroads for approxi mately the same mileage hauls. For this purpose a comparison ia shown in the following table: Expansion Due. The American rate ia that charged from shipping points named In the ftrat column to Omaha. The Cana dian rates are foi approximately equal distances. per per cert, cwt Mile- Am. Can Shipping point. age. Rte, Rle Billings. Mont. _8R4 .89% 4£ Amer. Kalla. Ida.. 1084 .58 49 Cheyenne. Wyo. ...507 .23 88 •Sheridan. Wyo.T49 .88 19% Denver Colo .580 .88 85 Grand Island. Neb. 145 19% IS Culbertson, Neb. . .295 .21% 24% IVdleville, Kan.150 .17% 18 Julesburg. Colo_888 .23% 27% Mitchell, 8. D.841 20% 27 Winner. S. D.289 .24% 24 Some of the Canadian rates are nursling. but it Is evident that the domestic rates in Canada are on the whole higher than in the United States. This la not so serious a matter to the Canadian wheat growers, because with only 9.000. 000 population to feed, the domes tic freight rates affect only a small portion of their entire production Canada’s Export Rates I^ss. It Is the export rate given by Canadian railroads that ia the im portant matter, and In that tha Canadian wheat grower has a marked advantage over the Ameri can wheat grower. Put the American wheat growers' prices on a domestic basis and he ran absorb domestic freight rate* that are fair to tha railroads. Production in Canada Growing Year by Year