24 AGRICULTURAL DISCONTENT 



were worth more also because of the improvements their owners had 

 made on them, the greater availability of markets, and the better roads 

 and schools which they had paid for, and because of the world's increasing 

 gold supply, which had inflated all prices. Undoubtedly, also, the specula- 

 tive spirit was influential. Farmers, instead of depositing their savings in 

 banks or investing in industrial stocks and bonds, bought more lands, 

 knowing that land values were sure to rise. Speculators who had no in- 

 terest whatever in farming bought land for the 6 or 8 per cent annual rise 

 in value that seemed a certainty throughout the early years of the century. 44 



This picture of high prices and general agricultural prosperity con- 

 trasted oddly with the fact that farm population relatively, and in many 

 communities actually, was on the decline. As already noted, the state of 

 Iowa, one of the richest in the corn belt and one almost exclusively de- 

 pendent on agriculture, showed an actual loss, a loss which amounted to 

 .3 per cent in the population of the state as a whole during the years 1900- 

 10. But in this state, as in many others, the most notable fact was the drift 

 of the people from the farms to the towns and cities. Wherever the land 

 was most valuable for agricultural purposes, it seemed that the decline in 

 country population was most marked. Cities everywhere had grown. 

 Iowa, in spite of its decrease in population, found that its principal city, 

 Des Moines, had an increase of 39 per cent during the very decade when 

 the population of the state as a whole was falling off. 40 



Several factors entered into the explanation of this exodus from the 

 farms of the Middle West. Of fundamental importance was the increasing 

 reliance upon agricultural machinery. With the new machines, fewer 

 farmers could produce more goods. "A boy with four horses and a modern 



44. Senate Document 705, 60 Congress, 2 session, pp. 20, 30, 40; Wallaces' Farmer, 

 XXXVI (September 15, 1911), p. 1260; XXXVII (December 6, 1912), p. 1716. 



An interesting formula has been worked out for the estimation of land values. 

 To obtain the present value (PV) of a farm, divide the expected annual increase (a) 

 by the expected rate of interest (r). Thus PV = a/r. If, however, the income of the 

 farm is expected to increase, then the value of the farm will also increase. To measure 

 this increase in land value for a given year, add to the present value the expected 

 annual increase (i) divided by r 2 . Thus V = a/r + i/r 2 . John D. Black and Others, 

 Farm Management (New York, 1947), pp. 737-38. 



45. Thirteenth Census of the United States, 1910, Abstract, p. 68. See also Wal- 

 laces' Farmer, XXXV (November 4, 1910), p. 1493; (November 18, 1910), p. 1540; 

 XXXIX (May 29, 1914), p. 851. 



