LEADING FEATURES OF THE WHEAT INDUSTRY 207 



will be high. Though much of farm capital is durable, 

 there are a large number of goods which the farmer finds 

 it necessary to renew annually, and thus his outlay on 

 working capital is increased. It would be a difficult 

 matter to arrive at a definite statement as to the actual 

 outlay on capital ; for the size of the holdings, the method 

 of cropping, the general outlay of the farm, the system 

 of farming pursued, all differ greatly in different com- 

 munities, and even in the same community. The ratio 

 of the amount paid in wages to the interest on fixed 

 capital plus the amount spent in circulating capital 

 is undoubtedly smaller in agriculture than it is in 

 the manufacturing industries. This fact is often lost 

 sight of in discussing the relation of the rural industries 

 to the urban industries. It should be remembered that 

 the smaller the above ratio is the greater is the total 

 output per individual, and the more productive is an 

 industry. 



( b ) Financing of Farmers. But having arrived 

 definitely at the conclusion that the necessary capital for 

 farming is a relatively large sum, in logical sequence 

 we must ask ourselves what facilities are found in the 

 wheat growing area for the provision of this capital. 

 Two main sources of credit are open to the farmer. 

 These are ' l stock and station ' ' firms, and the banks. The 

 former are more enterprising in this matter than the 

 latter. That such should be the case is not surprising; 

 for the banks have call obligations which demand a 

 more cautious policy than is the case with commercial 

 firms. In consequence we find that the banks prefer to 

 have as customers only those men who have considerable 

 securities in land or buildings to offer as a basis for 

 credit. Thus, a man who has the freehold of a con- 

 siderable area can obtain at the bank a substantial over- 

 draft as working capital ; but on account of the nature 

 of the security the banks do not make it a part of their 



