22 



MASS. EXPERIMENT STATION BULLETIN 405 



third of the farms had none of this debt; and 71 percent was owed by 18 percent 

 of the farmers, who owed more than $1,000 per farm and owned only 30 percent 

 of the assets other than land and buildings. The ratio between their debts and 

 assets was 1:2.1. 



Table 26. — Frequency Distribution of Farms on Basis of Amount of Debt 

 Outstanding Other Than Mortgages, March 1, 1941, 272 Massachusetts Farms. 



♦Current ratio is the ratio of current debt (all debt other than mortgages) 

 to current assets (all assets other than land and buildings). The debt equals 

 "1"; assets are shown as the number of times they were larger than the debt. 



It is difficult to generalize on why the debts were so high on a small group of 

 farms. However, most of the debt on farms owing over $1,000 represented an 

 accumulation of losses in the farming operations; in a few instances notes had 

 been used instead of mortgages to finance long-time obligations like buying the 

 farm or putting up buildings; and in a few other cases this large debt was owed by 

 those who were just getting started in farming or had very large operations. 



The amount of debt was not the only criterion for judging the current ratio, 

 Some types of farming, namely tobacco and onions, require only a small invest- 

 ment in current assets and a number of these had a low current ratio with a 

 small debt. 



1^ As has been pointed out, it is difficult to separate strictly short-term or operating 

 credit for one season from intermediate credit. From statistics contained in the 

 "Agricultural Finance Review, "^ it appears that seasonality of short-term credit 

 is relatively unimportant in Massachusetts, since notes to individuals do not vary 

 appreciably from January 1 to July 1 in the amount outstanding (Table 27). 



^Agricultural Finance Review, U. S. Dept. Agr., Bur. Agr. Econ., 4 (2): 91-92. 1941. 



Table 27. — Agricultural Loafis Other Than Real Estate Outstanding by 

 Selected Agencies, January 1, and July 1, 1941, Massachusetts. 



Loaning Agency 



Amount Outstanding 



January 1 

 1941 



July 1 

 1941 



July as 

 Percent of 

 January 



Insured Commercial Bank $1,943,000 $1,858,000 96 



Production Credit Association 626,000 768,000 123 



Emergency Crop and Feed (F. C. \.) 48,000 67,000 140 



Rural Rehabilitation (F. S. A.) 508,000 536,000 106 



Total $3,125,000 $3,229,000 103 



