Читать книгу The Young Farmer: Some Things He Should Know - Thomas Forsyth Hunt - Страница 6

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Of the three essentials to successful farming—capital, knowledge and love for the calling—only the first can be obtained on credit, and this only in part. Usually when a man desires to buy a farm he must have, at least, one-third of his desired investment in cash. The amount to be invested will include, not only the cost of the land, but the cost of the necessary equipment of the farm. The percentage of the total capital which may be borrowed, however, will depend on many circumstances and is usually a matter of first importance. No man should borrow more than a banker or other reputable business man considers a safe investment.

Usually there is no better counselor as to a safe investment than the local banker. The banker should, and generally does, stand in much the same relation to the financial welfare of the community as the physician to its physical, the minister to its moral and spiritual welfare. The inexperienced person, even if he does not need to borrow money, would do well to consult some responsible banker in the neighborhood before making an investment in farm lands.

The young man should, as early as possible in life, open an account with the local bank, not merely for the sake of the habit of saving which this will encourage, but in order to come into personal business relations with the banker. Instead of concealing from the bank his business operations, he should seek the advice of his banker on all important financial matters.

On an average, every farm changes hands at least three times in a century. Every farm, therefore, must be acquired by purchase, inheritance or gift at more or less irregular intervals. In the neighborhood in which the author was born, there is not a farm but has changed hands since he can remember. In many cases the farm is now in the possession of a son; in some instances in that of a grandson of the owner as known by the writer in his boyhood days. In this particular community the acquirement of a farm by a person not related to the former owner has occurred in relatively few instances.

As a rule, when the farm has been acquired by a son, the latter has operated the farm as tenant or partner for a period previous to his ownership and during lifetime of the father. In some instances the son has boarded with the parents or the parents with the son and his wife; or, in the case of a daughter, with the daughter and son-in-law.

Where there are several heirs, as is apt to be the case, the son operating the farm is required to purchase or rent the interest of the other heirs, unless the farm is large enough to be divided, which is less seldom the case than is popularly supposed. Thus, if there are 200 acres of land worth $50 an acre, and five heirs, the young farmer may inherit $2,000, and be required to assume the remaining $8,000 as an obligation. He may borrow this money at the bank, placing a mortgage upon the farm, thus settling with the other heirs at once. Or he may pay the other heirs rent on their share of the farm. In any case he will, if successful, gradually cancel his obligation and become owner of the farm. That no heir is willing to assume this responsibility is the most common reason for a farm changing from one family to another, and the disruption of community interests.

The customary, or normal, method of acquiring land has been and still is a combination of tenancy, inheritance and mortgage. Without some tenant system and without the farm mortgage, it would be impossible for the average young man to acquire a farm. That men are constantly advancing from farm tenant to landowner is shown by statistics giving the percentage of tenants by ages. The majority of farmers under 30 are renters. Most farmers over 45 are owners of farm land. Thus in Illinois, in 1900, approximately 75% of the farmers under 25 years of age rented their farms, while less than 20% of the farmers over 55 years of age were tenants.

The question for the young man to consider is not what effect the tenant system has upon the welfare of the nation or what political ills may be connected with farm mortgages, but how to make use of these necessary and beneficent agencies for the acquirement of a farm. A system of tenancy which leads to absent landlordism and a permanent tenant class is thoroughly vicious, while a practice which enables a man to become, within a reasonable period, a land-owning farmer is a thoroughly approvable and, indeed, necessary method of acquiring land.

As already indicated, most young men will need in some form or other to employ more capital than they possess when they start farming. They must, therefore, determine what is the best form of obtaining the necessary capital, viz.: whether to borrow the money on a farm mortgage, or whether to use the capital someone else has invested in a farm by paying him rent for it. The conditions of tenancy in this country are often not the most fortunate, yet the young man of character may well find, for a time, at least, it would be best for him to rent a farm and invest his own capital in the necessary machinery and live stock to conduct it properly.

Much will depend on the character of the arrangement which may be made. Usually more favorable terms can be secured from landlords owning large numbers of farms than from the owner of one or two farms. The large landowner is content with a moderate income from each farm, because in the aggregate his income is sufficient for his needs, while the retired farmer who must live off the proceeds of a single farm is apt to drive a hard bargain and may not be over particular concerning the maintenance of said farm. The writer knows a farmer who owns a good farm purchased from the proceeds of a rented farm. He continues to live on the rented farm and rents his own, because, it is said, his landlord is willing to make him more favorable terms than he makes to his tenant.

The more capable the tenant the more favorable the terms he may exact. Certain tenants are in demand and can have their choice of farms. A prosperous-looking man was pointed out recently as an example of a tenant capable of buying a farm in one of the most highly developed counties in the United States. It was stated that as a renter he could have his choice of any farm in the county, but that he did not have a dollar invested in farm land. Possibly he invests his surplus earnings in stocks and bonds.

It is not the present purpose to determine the relative merits of the different systems of land tenure, but to try to be helpful to the beginners by discussing the usual practices in order that he may know whether the arrangement he is considering is customary and whether it is likely to prove satisfactory.

Every third farm in the United States is rented under one of three methods:

1. A definite money rent may be paid, ranging from $2 to $6 an acre for land on which the ordinary, staple crops are raised. Perhaps $3 to $4 is more commonly paid for such land.

2. In the South it is common for the landlord to require a definite number of pounds of cotton per acre or a certain number of bales of cotton for a one or two-mule farm, as the case may be. This is classified by the census authorities as cash rent, but will here be called crop rent. Crop rent is less common than either cash or share rent in the northern and western states, although perhaps the most common form in the South. Crop rent, however, is met with in some sections, as in western New York where certain large landowners require a definite number of bushels of wheat, oats or maize and make certain stipulations as to hay and straw. They charge a cash rent for pasture.

3. Much the most common form of tenancy, however, is that where a certain percentage or share of the product is given the landlord for the use of the land.

Before entering into a discussion of the customary conditions under which land is rented on shares it may be helpful to point out the fundamental differences between cash rent, crop rent and share rent. In case of cash rent, the landlord takes no risk, either as to the price or the amount of product. In the case of crop rent, he shares the risk as to the variation in price, but not as to the amount of crop raised. The latter may depend upon the clemency of the weather or upon the industry and skill of the tenant. In the case of share rent, both landlord and tenant share equally as to variation in the price and the amount of product.

Three forms of share rent may be recognized:

(a) Where landlord furnishes only real estate (land and buildings), the tenant supplying everything else, including teams, machinery, labor, seeds and fertilizers. Under these conditions it is customary for the landlord to receive one-third and the tenant two-thirds of the crop raised or the product produced.

(b) The second form of share rent is where the landlord furnishes the real estate; the tenant supplies teams, tools and labor, while the landlord and tenant own equally all live stock other than teams, and bear equally all other expenses, as for seeds, fertilizers and cost of threshing. Under this system, it is customary for landlord and tenant each to receive one-half of all sales. As each owns one-half of all the live stock (teams excepted), each shares equally in all increase. The landlord pays for the cost of permanent improvements such as new buildings, fences, repairs and drainage. The tenant, in making these improvements, in some cases, agrees to furnish two days labor for one days pay. The theory is that, while the increased value of the real estate is of advantage only to the landlord, the improved facilities are of some benefit to the tenant. Since he can do this work at odd times when not otherwise employed, he can afford to take a generous view of the matter. It is obvious that if he remains on the farm long enough the tenant will come into his share of the benefit, while if he intends to leave the farm soon he may not. There is in the mind of the writer a prosperous tenant who, after eighteen years on a single farm, declared he had no desire to make a change, and doubtless there are thousands of similar instances.

Under the plan in which the tenant furnishes everything except the real estate, the tendency of the farm is apt to be downward both as to the improvements and the crop-producing power of the soil. The interests of the landlord and tenant are not mutual. This condition of tenancy leads to growing only those crops which can be readily sold from the farm and to frequent changes of the tenant, with its accompanying auction sales of property. In one region, where this system prevails, it has been facetiously remarked that each tenant has a sale every year to determine how much he is worth. It is less trouble than taking an inventory.

In the second form of share rent, the interests of landlord and tenant are more nearly mutual. Under this system, animal husbandry is possible, which, generally, involves pasturing and feeding a considerable part of the crops upon the farm, and even the purchase of nitrogenous by-products. All this leads to permanency of tenant, since the landlord and tenant are both interested in the live stock and other personal property, which cannot be divided, with economy, each year. It is interesting to note that the house is the least likely to be kept in repair. The improvement of the barns and fences or the laying of tile drains increases the landlords income, but he has no financial interest in the house, so long as the tenant is willing to live in it.

There are, of course, many variations in the arrangement of details between the landlord and tenant. On many dairy farms in the northeastern states it is customary for the landlord to own the cows. While the landlord and tenant share equally from the sale of milk, butter or cheese, in such cases the increase in the herd belongs to the owner of the land. Hence, money from the sale of any animal, old or young, goes to him. This is because the landlord must keep up the herd. If a cow is sold, he must furnish another to take her place.

(c) The third type of tenant farming is where the tenant furnishes nothing but his labor and managerial ability, and receives a share of the sales, which may be one-third. This is rather an unusual type of tenancy, since, where the landlord furnishes all the capital, it is much more common to employ a farm manager at a monthly wage. The wage varies greatly, but is seldom below forty dollars or above seventy-five dollars per month without board, especially to those who have not hitherto had much managerial experience.

Various attempts at profit sharing have been made. A recent instance is of a young married man taking 160 acres of tillable land where the landlord has a fairly well-stocked farm. The young man is to have a house and everything in the way of living the farm can furnish. He is to receive $20 a month and one-half the net proceeds, or, what is called in Chapter XI, the farm income. In considering a contract of this kind it is necessary to make a careful distinction between: (1) Gross sales, (2) net proceeds, viz.: the gross sales less the expenses of running the farm, and (3) profits, which may be defined for the purpose of this discussion as the net proceeds less the interest on the investment.[A]

Assuming 160 acres of land, all tillable, devoted to dairy farming in eastern United States, gross sales may be estimated at $20 an acre, or an annual gross income of $3,200, and the net proceeds at $10 an acre, or $1,600. Under these conditions the young mans income would be $240, received as wages, plus $800, as his share of the net proceeds, or a total of $1,040 a year.

Generally speaking, probably a more satisfactory method, both for landlord and the farm manager, would be to pay the latter as nearly as may be what his services should be worth and give him in addition one-half the profits; that is, one-half of that which was left after deducting the expenses of running the farm and interest on the capital invested.

Merely for illustrating the method of calculation, let us assume this farm with its equipment to be worth $100 an acre, or $16,000. Let the farm manager be paid $840 a year. Assume the same gross income, $3,200, and the same cost of operating, $1,600, to which add $600, the additional salary of the manager. The total expense is then $2,200, and the net proceeds $1,000. If 4%, or $640, was charged on the investment, there would be $360 to be divided between landlord and manager, making the salary of manager $1,020. A simple calculation will show that if 5% were charged, the salary of the manager would be $940 a year, and if 6%, $860 a year. The advantage of the latter method of employment is that the young man runs less risk, while both receive equally any surplus beyond fair wages and fair interest on the investment.

In this connection it is important to consider how much may be reasonably paid for managerial ability. A study of the figures on page 133 will show that the labor income from a considerable number of farms of the better class was about 7% of the capital invested in the farms. The inference is, therefore, that if a man has $10,000 wisely invested in a farm he may pay $700 for a working manager; or, to put it in another form, before the owner of a farm can afford to pay $1,200 a year for a farm manager, he should have about $17,000 invested. Moreover, this investment must be in a form calculated to return an income. If part of it consists of investments for pleasure or fancy, such investment will not only not add to the income, but will detract from it by increasing the cost of maintenance.

This is scarcely less important to the employee than it is to the employer, since if the owner pays a higher salary than the manager can earn, he quite surely will sooner or later discharge his manager. This may result disastrously for the discharged young man, not merely on account of the loss of employment, but because his failure may militate against his securing satisfactory employment elsewhere. When an employer is seeking a man, he looks for one who has succeeded. There is an old saying, Nothing succeeds like success, and it is only too true that nothing fails like failure.

[A]

Profit is sometimes defined as that part of the product which the producer can consume without reducing his means of production.