Chapter V. How Operators Obtained Capital 



THE focus of this study is on obtaining farming capital in the present 

 and future. However, the experience of farmers in getting established and 

 in developing their operations may be brought to bear on problems of the 

 present. ^^^ It is of interest to determine how the present operators get estab- 

 lished, how they obtained subsequent capital, whether the operators of the 

 large farms obtained their capital in ways different from the operators of 

 the small farms, and whether the younger operators obtained their capital 

 in different ways from the older operators. 



Educational and occupational histories were obtained from the survey 

 farms plus the date, kind and size of beginning farm operations, the sources 

 of beginning capital, the principal additions and changes of capital, and 

 current debts. 



The cases were sorted into four size of herd groups. Within size groups, 

 it was possible to examine how operators got their initial capital, to ob- 

 serve how this differed with date of start, and also to observe the com- 

 plete employment and capital accumulation record of each operator. 



The four size groups used here were: (1) large — 39 or more animal 

 units; (2) large medium — 29 to 39 animal units; (3) small medium — 

 20 to 28 animal units; and (4) small — 19 and under animal units. The 

 experiences of all four size groups were examined. Within the large and the 

 small groups there were some rather distinct uniformities and between 

 these groups there were some distinct differences. The large medium and 

 small groups represented rather definite gradations in capital accumulation 

 experience between the two extreme sizes, but their experiences were less 

 uniform. Hence the following description and analysis is devoted mostly 

 to the Large and Small size groups. 



Present operators of the large farms got established as operators early 

 in life — after a relatively short period on the home farm. The most com- 

 mon major sources of starting capital were inheritance and family assist- 

 ance. ^^ For a smaller number of cases, credit was the major means. At least 

 three "patterns" were evident among these latter cases: (1) some of the 

 older operators had bought their farms largely on credit but apparently 

 had been able to save rapidly enough to change equipment and expand 

 herds with the times, (2) some operators around 50 years of age had used 

 credit rather heavily to acquire successively larger farms, herds, and equip- 

 ment, (3) some younger operators used credit very boldly or used large 

 amounts of credit plus rather unusual supplementary capital sources. 



Credit was the most important source of growth capital for most of the 

 present large operators. Other sources were more important in some cases, 

 and there were supplementary sources in most cases. Most of the younger 

 operators still had significant debts. 



13 We do not, of cours°, have the histories of those who failed to get established or 

 who for various reasons left farming in the areas studied. 



1^ Family assistance includes such things as father-son partnerships, renting or buying 

 the home farm on favorable terms, backing for credit, use of father's equipment, and 

 other means by which family capital enables one to secure farming capital more readily. 



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