December 1, 1922. 

 To the Governor: 



The state of Montana as a whole is feeling its dependance for 

 prosperity upon an improvement in the business of agriculture, more 

 sharply now than at any time since the commencement of the marked 

 farming depression. A brief summary of some aspects of the present 

 condition of agriculture in Montana and a consideration of outstand- 

 ing causes may not be out of place before attempt is made to review 

 the work of the Montana Department of Agriculture, Labor and In- 

 dustry. 



Most of Montana's present agricultural area was settled recently, 

 and under conditions of moisture, markets, transportation costs and 

 price relations, that obtained ten years ago. The farmer's contract 

 to own land and to farm here was made in consideration of conditions 

 which he reasonably expected would continue. Radical changes that 

 have taken place have increased his load while detracting from his 

 power to bear it. It is society's duty, not from any altruistic desire 

 but solely for its own protection, to analyze the conditions that now 

 hold the business of farming at a relative disadvantage, and to work 

 for their betterment. 



Stimulation of demand for cereals arose out of the War, following 

 a period of unusually bountiful and profitable grain production in 

 Montana. Led by the government of the United States, every group 

 and person in contact with the farmers united in insisting upon the 

 production of more wheat. Commencing with the crop of 1917, the 

 acreage of wheat and the cost of operation of farms soared, while 

 because of subnormal rainfall and unfavorable weather during growing 

 seasons, both individual and aggregate production dropped off sharply. 

 Indebtedness came easily, especially to plant for more wheat. A suc- 

 cession of "dry years" having no precedent in extent in records of 40 

 years kept in Montana, withheld a reward to the farmer who year by 

 year sank further into debt. County and national governments be- 

 came creditors through advances of cash for seed grain and planting 

 costs. This indebtedness v/as incurred under conditions of vast infla- 

 tion. In the summer of 1920, drastic deflation was instituted having its 

 first and heaviest effect upon agriculture. In view of what is printed 

 below about the relation of freight rates to the existing agricultural 

 situation in Montana, it is interesting to note that this radical shrink- 

 age in farm values was accompanied by an abrupt rise in transpor- 

 tation costs to market. 



Sunk into debt, with a general price relationship operating wholly 

 against him because while the price of that which he sells has sunk 

 to the level of a decade ago, the price of everything he has to buy is 

 way above the pre-war level, the farmer of the United States is faced 

 with the task of paying off his inflated debt with a dollar that is 

 vastly harder to get than when the obligation was incurred. The re- 

 sult has been a curtailment of the agricultural purchasing and paying 

 power that is shocking the rest of the population into attention. 



Production and Freights: Where farmers are dependent upon a 

 distant market for their crops as in Montana, freight charges to a 

 great degree direct farm values. Within the last decade, and chiefly 

 since Montana farm lands passed into the hands of their present 

 owners, freight on farm products to terminal has been increased from 

 30 to 75 per cent. It is as though the farmer who purchased his land 

 under the assumption that it was 1,000 miles from a price-making 

 market, awoke to find that forces entirely beyond his control had 

 shoved it away until now it may be 1,500 miles distant from the point 

 where its value is regulated. This may be aptly illustrated in the 



