CHAPTER 71 



The farmer's Capital 



More capital is now required for farming than formerly. Land costs 

 more, livestock is more valuable, labor is dearer and the necessary equip- 

 ment more extensive and costly. During the decade 1900 to 1910, the 

 average value of farms in the United States nearly doubled. 



How to Secure Capital. — Capital is brought into existence by work, 

 and its accumulation is the result of consuming less than is produced. If 

 one has a dollar and spends it for an article of consumption, the process will 

 not increase capital. If the dollar is used to purchase an implement such 

 as a hoe or a spade, the purchaser becomes a capitalist to that extent. 

 He now possesses articles of production that are as truly capital as was 

 the dollar. 



In farming, the easiest way to secure capital is to become a tenant. 

 That this method is being taken advantage of is set forth in a preceding 

 chapter. For several decades the percentage of tenant farmers has been on 

 the increase. If one has a very small capital, it is usually undesirable to 

 attempt to farm on the very small area that the money will purchase. It 

 is much better to put all of the capital into equipment, livestock, labor 

 and seeds, and operate a rented farm. In 1910 land made up 70 per cent 

 and buildings 15 per cent of the average value of all. farm property. 



Cash Transactions. — Because of inadequate facilities to secure credit, 

 farm implements, fertilizers and other necessities are often purchased on 

 time, the manufacturer acting as banker as well as a dealer. As a rule, 

 the price paid for purchases made in this way differs from the cash price by 

 two or three times the usual rate of interest. Under such conditions, it is 

 economy for the farmer to borrow the money at a bank if possible and pay 

 cash for his purchases. One's credit is frequently jeopardized by allowing 

 innumerable little bills to go unpaid. This may be avoided by establishing 

 credit at a bank and borrowing enough to pay bills promptly. 



One should not promise to pay an obligation too soon. A payment 

 made in advance of the promised time strengthens one's credit much more 

 than a payment delayed. 



Payment by check is preferable to payment by cash. A check serves 

 as a receipt. For this reason, it is well to indicate on the check the item 

 for which it is drawn. 



Agricultural Credit. — The increased capitalization of farming in 

 recent years has emphasized the need for an adequate system for agricul- 

 tural credit in this country that will meet the needs of farmers, just as such 



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