BETTER FRUIT 



AN ILLUSTRATED MAGAZINE PUBLISHED MONTHLY IN THE INTEREST OF MODERN, PROGRESSIVE FRUIT GROWING AND MARKETING 



Banking the Fruit Crop 



By J. J. Rouse, Cashier Fidelity National Bank, Spokane, at Washington State Horticultural Convention, Kennewick, Wash., January, 1918 



WHEN the harvest days are over 

 and the pay check is in sight, 

 this subject of mine ceases to be 

 a problem. The H. C. or L. and the nu- 

 merous calls for Red Cross and Liberty 

 Bond subscriptions, and other worthy 

 causes which have to be supported at 

 this time, point the way for rapid dis- 

 bursements of the crop proceeds, so you 

 do not need any suggestions from me as 

 to final disposition of the proceeds via 

 the check-book route. If I am to in- 

 terest you at all, I take it that it must 

 be by a discussion of ways and means 

 of making, not only the crop itself, but 

 the crop prospects from soup to nuts — 

 or from blossom to loaded car, and in 

 transit to market — a basis for bank 

 credit, in order that the necessary ex- 

 penses of operation may be met as they 

 accrue. 



The ideal loan, sought by commercial 

 banks, is one of definitely fixed ma- 

 turity date — not too far in the dim 

 future, with an absolutely known and 

 proven self-liquidating power attached. 

 While live-stock loans have greatly in- 

 creased in volume and popularity with 

 Northwestern banks during the last few 

 years, as have loans arising from the 

 production and distribution of various 

 other products of this favored section, 

 yet wheat was for so a long a time 

 king of our agricultural products that 

 the term "Good as the wheat" still has 

 a real significance. If the horticulturist 

 would like to coin a new commercial 

 phrase, "Good as an apple in the box," 

 he must strive for the standardization 

 of his product and stabilize his market- 

 ing methods to an extent that will 

 approach "King Wheat" in sureness of 

 returns at harvest time, on capital in- 

 vested and labor and expense involved. 

 It seems to me that the various stages 

 of development through which the fruit 

 industry has passed and is passing, cor- 

 responds somewhat to like stages of 

 development through which wheat 

 farming has passed in this country, as 

 well as in the Middle West. There is, 

 however, undoubtedly one striking dif- 

 ference. Whereas the wheat farmer's 

 plant equipment — his land was obtained 

 partially by homestead entry, and the 

 balance at raw material prices, which 

 when developed into a producing plant 

 gave him, in the rise of land values, 

 compensation for the labor, time and 

 money expended in bringing it to a pro- 

 ductive basis, the orchardist, in many 

 cases, paid for raw lands and water 

 rights, which were simply the raw ma- 

 terials necessary for the construction 

 of a productive plant— a price equal to 

 the value of the plant when fully 

 equipped and running on a productive 

 basis. 



If we regard a farm or an orchard as 

 a plant for the production of food, this 

 state of affairs is comparable to a man- 

 ufacturer, who pays as much for his 

 site and the materials with which to 

 build his factory, as his factory is 

 worth when completed and ready for 

 productive operation. He is then faced 

 with a loss equal to the cost of labor in 

 constructing the plant, which loss must 

 be written off his books, or he is forced 

 to sell his output at a price sutlicient to 

 pay dividends on watered stock to the 

 extent of this increased plant cost. 



If his product is highly specialized 

 and non-competitive, he may for a time 

 be able to successfully follow the latter 

 course, but if he must compete with 

 other factories operating on a fair 

 value capitalization, whose stock is not 

 watered, and who are not forced to 

 earn dividends on excessive plant cost, 

 he will sooner or later find a readjust- 

 ment necessary. 



If Northwestern boxed apples are to 

 compete with other food products — and 

 by this I do not mean other apples 

 alone, but other fruits or foods which 

 can be made to take their place on the 

 table and in the dinner pail — then, in 

 my opinion, they will, after the close of 

 this war and the general fall in com- 

 modity prices, which is bound to fol- 

 low, have to be sold at prices to net the 

 grower, after cost of production and 

 marketing is met, a fair return — not on 

 what he may have paid for his land, 

 but on what it is worth. 



Of course, a good part of decreased 

 prices, which I believe is bound to 

 come, may be absorbed in correspond- 

 ingly decreased cost of production, 

 when labor and all materials will 

 doubtless be cheaper, but I do not be- 

 lieve you can successfully compete in 

 after-war markets, at prices which used 

 to pay reasonably fair interest rates, 

 for a few banner years only, on in- 

 flated land values. This inflation is one 

 of the principal reasons why the fruit 

 industry has been viewed with more or 

 less suspicion by the bankers in the 

 past, and is one obstacle in the way of 

 easily banking the crop, in the sense of 

 obtaining advances at the various stages 

 of progress from blossom to warehouse. 

 The grower who is the victim of this 

 inflation is more to be pitied than 

 blamed, and the early promoters and 

 exploiters of the fruit industry are no 

 more truly representative of the men 

 upon whom the future of the industry 

 depends than is the unscrupulous bank 

 promoter and organizer representative 

 of the men who have developed and 

 arc handling the banking business of 

 this country. Both are fly-by-night 

 parasites looking for easy-money com- 



missions, and there is no more place in 

 the general scheme of eternal fitness of 

 things for either than for a fifth wheel 

 for a wagon; and why chambers of 

 commerce and civic organizations the 

 country over, who had the good of the 

 fruit industry at heart, should have 

 been so completely led astray by the 

 wily orchard-land promoter as to assist 

 his game passeth understanding. The 

 only criticism that can be made of the 

 grower who sacrificed to the promoter 

 who sold him raw land at the price of 

 a bearing orchard six or seven years 

 of hard toil necessary to bring the 

 orchard to bearing is an apparent bull- 

 dog determination to insist that the pro- 

 moter was right and that the land is 

 really worth two or three thousand 

 dollars per acre, because during a few 

 banner years when few orchards were 

 in bearing and crops were poor else- 

 where and our big, red apples were a 

 new thing in the markets, he was able 

 to sell his crop at fancy prices which 

 paid dividends on his investment. 



It is no more fair to judge the fruit 

 business by these few exceptional 

 years, and fix orchard-land values ac- 

 cordingly, than it would be to infer that 

 we will always have two-dollar wheat 

 and adjust wheat-land values accord- 

 ingly. 



Your banker, if he is a safe man to 

 handle the finances of your community, 

 is not going to be so much influenced 

 in his judgment of what he may reason- 

 ably expect you to do, by what you did 

 at a brilliant start, as by the general 

 average of what you can do over a 

 period of years. He will also have 

 more confidence in your good judgment 

 if you list your land at sane values 

 on your financial statement, even 

 though your net worth appears smaller 

 than heretofore, for he will see that 

 you have had the nerve to face and 

 admit your loss, if you paid too much 

 for your land, and will have better 

 hopes of you for the future if he sees 

 that not only are you not trying to 

 fool him as to land values, but that you 

 have stopped trying to fool yourself. 



Another thing that will tend to in- 

 crease his confidence in you is a well- 

 kept set of books and records showing 

 exactly what you have been able to do 

 with your orchard since it first came 

 to bearing. Estimates and figures fur- 

 nished from memory in round, even 

 amounts are one thing, but actual 

 black-and-white figures are another 

 thing, 'l'he production of food is by far 

 and away the biggest industry in this 

 country, but undoubtedly the one about 

 which the least is known by accurate, 

 detailed bookkeeping. 



