38 BULLETIN 874, U. S. DEPARTMENT OF AGRICULTURE. 
If the primary cause for the ‘‘boom”’ was the marked increase in 
the net income of farms, itis In point to consider what conditions 
were responsible for this increase. 
It is sometimes asserted that it was due to the fact that the dollar 
had fallen to less than half its purchasing power before the European 
war. Sometimes this cause is invoked as the immediate cause of the 
rise in the value of farm land, on the assumption that if the dollar is 
worth only half as much as formerly it should require twice as many 
dollars to purchase the same farm as formerly. Sometimes the more 
indirect explanation is offered, that the fall in the value of the dollar 
has resulted in a great rise of the prices of farm products—specifically 
$23 hogs, $2 corn, etc. | 
It should be clear, however, that people buy farm land primarily 
because of the desire for the net earnings to be derived from owner- 
ship. Net earnings attributable to the land are not only dependent on 
the prices of products, but also on the expenses of production. «If 
prices of products are doubled and the expenses are also doubled, 
the net earnings attributable to the land, expressed in dollars, also 
will be doubled. If expenses increase in greater proportion than 
prices of products, net income will increase in less proportion than the 
prices of products. Conversely, if the expenses of production increase 
in less proportion than the prices of products net earnings will increase 
in greater proportion than the latter. 
As a matter of fact, the latter tendency seems to have prevailed 
during the period 1914 to 1918, inclusive. The December price of 
corn for Iowa increased 112 per cent from 1914 to 1918, while the 
price of oats increased 62 per cent. The January price of hogs in- 
creased 150 per cent from 1915 to 1919. 
On the other hand, the wages of farm labor without board increased 
112 per cent from 1914 to 1918, inclusive, and the average prices of 
17 important commodities used by farmers in production increased 
85 per cent.2, Moreover, during this period farmers-used many kinds 
of equipment bought at the earlier prices of the prewar period, such 
as machinery, work horses, harness, ete. It should be noted that the 
rise in prices of farm products reached its peak in August, 1919, a 
time when the ‘‘boom”’ was at its height. 
In short, expenses did not increase as rapidly as the prices of prod- 
ucts. Likewise, land values lagged behind, for some time was required 
before the increase in net earnings attributable to the land was fully 
reflected in the demand for land. There is a widespread belief in 
Iowa that the demand for land was even retarded during the war 
1 The January prices of hogs for 1915 and 1919 are taken because they are the nearest comparable figures 
to those for December of the preceding year in each case. The difference is cnly 1 month instead of 
11 months, as would have been the casein comparing December and January of identical years. 
2 Including various kinds of farm machinery, fertilizers, harness, lumber, fencing, and other items. 
These figures as wellas those for Iowa prices of farm products are from the ‘‘ Monthly Crop Reporter.” 
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