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
<r»Bttaard Fra* Face Thrse.)
advantage In the superior quality
of their wheat. It is high in pro
tein and much valued by foreign
millers for mixing with softer
wheats. The hard spring wheat of
Canada for many years has sold
at small premiums over both Amer
ican hard spring and hard winter
wheats In Liverpool, although at
times the price has fallen slightly
below. During the pant two years
the premiums paid for No. 1 north
ern Manitoba over American No. 2
hard winter wheat in Liverpool
when prices on both grades were
reported Iiavo averaged 9 cents.
Rales of American hard spring
wheat In Liverpool have been limit
ed and quotations aro scattered.
When quoted during 1923 the
premium on No. 1 northern Mani
toba has been about 5 cents over
No. 2 dark northern spring wheat
In Llvcniool. The excellent quality
of the Canadian wheat is attested
also by the fact that American mill
era purchnse and import it in con
siderable quantities, even though
subject to a duty of 30 cents. Cana
da's more advantageous position
in the production of hard spring
wheat is apparent. The present
Canadian spring wheat crop is
placed at 450,000.000 bushels. The
volume of superior hard spring
wheat competes with the spring
wheat crop of Minnesota, North
Dakota, Routli Dakota and Mon
tana, which Is estimated this sen
son at 143.000,000 bushels.
As Indicated in greater detail
elsewhere, more favorable freight
rates give the Canadian wheal
farmer subatantlai advantages over
a great many American producers.
Most of the wheat exported from
Canada moves from the head of
Lake Superior to Montreal end the
Atlantic seaboard of the United
States by way the Oreat Ijikes.
This affords cheap water rates for
a good portion of the haul to the
seaboard. Canadian wheat also en
joys the advantages of a relatively
lower freight rate from tho west
ern provinces to the head of the
, lakes. compared with the rates te
Duluth from corresponding |ti
lances In the nerthweet
