CAPITAL-GOODS AS A FACTOR IN PRODUCTION 293 



tied up in the more permanent investments may mean that returns 

 upon land, labor, and the capital already employed are much reduced. 

 The producer of agricultural products, perhaps even more than the 

 manufacturer, needs to foresee the whole cost of carrying his enter- 

 prise through to a successful completion. Often the race is lost on 

 the home stretch. 



It may be answered that in these later stages of the productive 

 process the farmer can borrow such funds as he may need, upon the 

 security of his partly finished product. This is, no doubt, very often 

 the case. There are, however, at least two situations in which it is 

 not true. Even in prosperous communities, it often happens that 

 local funds are pretty well exhausted by the end of the planting season 

 and summer and fall applicants for loans, no matter how good their 

 credit, must be turned away. The other case is that of the less 

 prosperous community, in which large numbers of the farmers are 

 already using others' capital almost exclusively. The tenant farmer 

 of the South, living and operating his farm upon store credit, has 

 already pledged his crop not infrequently for all or more than it will 

 ultimately bring. Perhaps $25 used to hire more help at "chopping" 

 time or to secure a more rapid picking of the crop in a threatening 

 harvest season might return more in proportion than any other part 

 of the capital outlay. In the absence of such further investment, 

 serious loss results. 



But probably the most striking case at the present time is in con- 

 nection with the marketing of the farmer^ products. Much of the 

 pressure to sell is due to the farmer's inability to wait longer for the 

 income from his season's crops. If he could allow his capital to 

 remain tied up in the finished product until such time as the market 

 should demand his goods for immediate consumption, the higher 

 prices which he could then secure would well reward him for his wait- 

 ing. But if he cannot defer his consumption, he cannot secure the 

 rewards of waiting. 



Our only purpose here is to point out the relatively high 

 productivity which such "working capital" frequently possesses. 

 Evidently this situation gives rise to two concrete problems, one 

 for the farm manager in adjusting size of farm, choice of 

 crops, and general organization, and the other that of our rural 

 credit institutions. These will be treated in chapters vi and xv, 

 respectively. 



