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tive, effects a change in the capitalized value of the land. The value of farm land increased during a 20-year period as follows:

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Within a period of twenty years, farm land values increased more than 200 per cent. At first glance, this seems to indicate that the farmer became immensely more wealthy by this appreciation in land value. But this seeming benefit must be heavily discounted on account of changes in the price level and the purchasing power of money. The price level of all commodities increased nearly 200 per cent between 1900 and 1920, and therefore the major part of the appreciation in land values was simply an adjustment to the new price level. The increased land value of the twenty-year period did not represent purely increased purchasing power, but, to a very large degree, merely a tendency of land prices to keep up with general prices.

And yet, in spite of this qualification, the farmer gained a substantial increase of wealth. He was steadily becoming more prosperous, and this was chiefly because of the appreciation of his land in value. This appreciation in so far as it was real and not a mere rise of price level was due to the rising real income of the farmer. When the agricultural depression of 1920 arrived, the inflation of land values was wiped out. Farmers who bought land at the high peak found their property mortgaged for far more than it was worth. The deflation of land values caught upwards of one million farmers in bankruptcy. Such gains in wealth as had been made before 1920 were liquidated unmercifully. The appreciation in land values that had at one time looked so attractive proved then to be disastrous to the mass of farmers. Speculation in land values proved to be a calling which the farmer had not mastered.

The farm classes have never acquired riches from returns on their labor, because they have received on the average lower income than the workers in other occupations. The only income resembling a profit which the farmer has received has been the pure appreciation of his land values. If a farmer was lucky enough to buy land when it was cheap and sell it after it had undergone appreciation, he was richer for the transaction. But in order that he might make that gain, some other farmer must have bought the land at a high peak of value, and then lost it by foreclosure or sold it deliberately at a time of deflated value. One gain was built upon the other loss. The dreams of wealth held by the farmer have been rudely shattered by the alternating inflation and deflation of land values, and by the changes in general price level at

the same time as the changes in farm land prices have occurred. Some gain has accrued from appreciation, some bankruptcy has occurred, some net increase of real farm wealth has occurred, but the increment of farm wealth due to appreciation of value has not been sufficient to give the farmer an amount of property commensurate with that enjoyed by other classes of producers.

The Balance of Population between Agriculture and Industry.-To preserve a proper balance in the economic system, it is essential that the right distribution of population be maintained between farm and urban communities. What distribution is "right," from the economic viewpoint, depends upon a number of conditions. What proportion of farm to urban population is right at one stage of a country's development becomes wrong at a later stage. In order that the balance of population. between country and city may be right continuously, the proportion must change from time to time in order to make adjustment to new conditions of production, new inventions, new standards of living.

The population of the United States increased from 75,000,000 in 1900 to 105,000,000 in 1920. This increase of 30,000,000 people went almost entirely into the urban communities. Farm population remained almost stationary during the twenty-year period. This fact is reflected in the numbers of gainfully employed over ten years of age in agriculture,-10,248,935 in 1900, and only 10,682,944 in 1920. During the period, there were 12,500,000 gainfully employed people added to our population, but their employment was found in town and city, not on the farm. The balance of population was maintained by adding to the workers and consumers in urban communities and by leaving the number of farmers practically unchanged. Since 1920, agricultural depression has driven a great many more people from the farms, although we do not yet have the exact census estimates. Meantime, the total population has increased to the estimated number of 112,826,000 in 1924, or an annual rate of increase of 1,778,850 since 1920. Population at the rate of more than one and a half millions yearly is being crowded into city and town, and requires to be fed by a farm population that is practically stationary, or even actually on the decline.

According to the statistics, the per cent of increase of city population between 1900 and 1920 was 60 per cent, whereas that for farm population was only about 4 per cent. On the basis of 1900 as an index of 100, the number of persons engaged in leading forms of production in 1920 is shown by the following indexes:

Agriculture
Manufactures
Mines
Railroads

104

208

170

199

While agriculture was employing a virtually stationary number of workers, manufacture employed more than double the number and mines

and railroads nearly doubled the number that had been employed in 1900. The new workers are almost exclusively workers in factory, mine and railroad.

But in spite of this drastic change of proportions between farm and non-farm population, the farmers increased the production of food fast. enough to keep pace with the increase of city population. Speaking with approximation, we find that in 1900 each farmer, with his hired man, fed on an average about six other people than himself (not counting his family) and one more person abroad. By 1920, each farmer, with his hired man, fed on an average about nine other people and one more person abroad. Today each farmer feeds at least three more people than twenty-five years ago. Fewer farmers feed more people. Not so large a per cent of our population needs to be rural as a generation ago. Whereas in 1900 it required more than 40 per cent of the population to feed the whole population, today it requires less than 30 per cent to feed the whole. The efficiency of the farmer has enabled him to feed the rapidly growing city population. Increased efficiency combined with increase of population has required a new proportioning between farm and city. The popular notion that our real task is to get more people onto the farms and keep them out of the towns has no foundation. Our real problem is to get more people off the farms and into the towns in order to maintain a population equilibrium. Over-population or underpopulation on the farms has to be judged, not by any preconceived notions about the pleasures of life in the great outdoors, but by the balance struck between consumers and producers in the economic markets where the outputs of farm and of factory are exchanged. During the third decade of the present century, the problem in the United States is to keep enough people off the farms to prevent over-production, for over-production brings a price slump which is reflected in a drastic decrease of farm income. How to keep farm incomes commensurate with other incomes is chiefly a question of limiting the population on the farms to that number which will not cause over-production of farm supplies.

The future balance of farm and urban population in the United States cannot be prognosticated with any accuracy, since it is controlled by many unknown future conditions, such, for instance, as further applications of science and invention to agricultural technique or as the extent to which the country may draw its future food supply from overseas regions. A glance at other countries shows that no fixed ratio between farm and urban population exists. In the United States, less than onethird of the population makes its living on the land; in England the ratio is less than one-tenth; in France more than two-fifths; in Germany more than one-third; in other predominantly agricultural countries more than two-thirds. The United States is now more than self-supporting in basic food supply, but her degree of independence is diminishing with the rapid growth of population. The other leading world powers are not self-supporting. Germany under pre-war conditions supported from her

own farms about 72 per cent of her population, France about 70 per cent, Italy about 64 per cent, England about 50 per cent, Belgium about 37 per cent. The trend of the near future promises to be a declining export of farm food products from the United States, followed by an increasing import of food products from abroad. Such a tendency would not unlikely be accompanied by a declining ratio of farm to urban population, and a balance between the two corresponding more and more to that struck in England.

The Balance in Production between Agriculture and Industry.In spite of the fact that farm population has not increased in anything like the proportion by which the total population has increased, nevertheless the production on the farms has tended to increase at a rate slightly greater than the growth of population. This fact is brought out by the following table: "

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According to these indexes, the physical volume of agricultural production has on the whole slightly exceeded the growth of population over a period of about forty-three years. The balance of production between agriculture and industry may further be analyzed by comparing indexes of output in leading lines of production with indexes of the number of people engaged in each line."

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5 See Harvard Review of Economic Statistics, July, 1923, p. 196.

• See Report No. 1, Research Council, National Transportation Institute.

The indication clearly is that the productive capacity of the average farmer increased fully one-third in the space of two decades. The productive capacity of the average factory worker increased only 10 per cent, that of the railroad workers 47 per cent, and that of the miners thirty-six per cent. The two decades of agricultural production show a history of greatly increased efficiency. The balance of production. was maintained in agriculture by superior individual effectiveness in production.

From the viewpoint of the population as a whole, rather than farm population alone, the per capita production of agriculture was sustained at about a constant amount, but the per capita production of manufactured and mined product increased about 60 per cent. Our output of food in 1920 was as much for each one of our 105,000,000 of people in 1920 as it had been in 1900 for our 75,000,000 people, and our output of non-agricultural products was 60 per cent more per person. This increase of product has been the source of a rising standard of living for the masses of the population and of a general increase of socially provided amenities and enjoyments. The balance of production, therefore, has consisted of a steady per capita output of farm product accompanied by 60 per cent greater per capita output of other products than in 1900. The growing efficiency of the farmer has liberated a new population year by year from the necessity of tilling the soil, and has left these people free to engage in industry and trade and thereby to augment the national productive power in all urban lines of enterprise.

It is important to inquire what future changes in farm production in the United States are probable in light of the increasing congestion of population. Although no definite forecast can be given in answer to such a question, nevertheless valuable suggestions may be derived from contemplating the experience of some of the older countries with their already congested populations. The Belgian farmer, carrying intensive cultivation to an extreme, cultivates about five acres per man as compared with twenty-six acres per man in the United States, but in spite of his putting five times as much labor on his land, the Belgian farmer secures only slightly more than twice as great an output per acre. The Japanese farmer applies fifty times the labor to his land that the American farmer does, and yet the yield per acre is only half as much again as the American. The English farmer by intensive cultivation secures about 75 per cent greater output per acre than the American, the German farmer about 69 per cent greater output, and the French farmer about 23 per cent greater output. The probability is that the more intensive use of labor on American farms would not increase output per acre by much more than 50 per cent at any time in the approximate future, and would not double output per acre until extreme density of population compelled an ultra-intensive application of labor to each The future balance of production must, therefore, rest upon the assumption of very limited gain from additional use of labor. The most 6a Edward M. East, Mankind at the Crossroads, pp. 169-179.

acre.

6a

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