other state. The average price of Iowa farm land advanced $63 per acre or 32 per cent from March 1919 to March 1920. The farmers' position in the boom is indicated by the fact that 65.3 per cent of the purchasers were farmers, but only 36 per cent of the sellers were farmers. The increased value was appropriated by the town residents, and the farmers assumed the mortgage debts. A good example of some sensational cases of land sales is one reported in the local paper of Waterloo, Iowa, July 25, 1919.

Waterloo, July 25-When Con Mahoney bought back his one hundred and sixty-acre Lincoln township farm for $20 an acre advance, after having disposed of the place less than a year ago, some of his neighbors thought he was a poor financier. But listen to this:

Buying this farm back at an advance of $20 an acre has been the means of netting Mr. Mahoney a gain of $24,800, plus this year's crop-all within twelve months!

Mr. Mahoney sold the place a year ago for $250 an acre. Last autumn he bought it back for $270 an acre. Now he has sold the place to a farmer from Clutier for $425 an acre, or a total of $68,000. The land is highly productive and the improvements are good.

The relation between speculation and the volume of farm mortgage indebtedness is shown by comparing the farm mortgage debts of the country on farms operated by their owners in 1920 with that in 1910 as reported by the United States Bureau of the Census. In 1910 the farm mortgage debts aggregated $1,726,172,851 and in 1920 the huge sum of $4,003,767,192. While the aggregate value of the mortgage debt more than doubled, the number of farms in the country mortgaged increased only 11.4 per cent; the ratio of mortgaged farms to the total number of farms increased from 33.2 to 37.2 per cent; and the average value of farms mortgaged increased from $6,289 to $11,546. The statistics

for mortgaged farms as collected by the United States Census include only a little more than half the farms of the country and are therefore not a fair statement of the total mortgage debt. These statistics were collected immediately after the period of land speculation which accompanied the high prices following the World War, and illustrate admirably the effect of speculation upon the mortgage debt.

All fair-minded people will admit that it is bad for the country and unethical for the speculator to take advantage of the uninformed people in this way. Such ravages will lead to an unfortunate social unrest and we shall have nobody to blame but ourselves.

Tariffs and Farm Mortgages

The protective tariff system maintained for industry and agriculture by the United States is a handicap to American agriculture the total detriment of which cannot be estimated. From the Civil War down to date almost all manufacturers who have asked for it have been protected against foreign competition. How does this harm agriculture? Since the Civil War the number of people who are wholly dependent upon agriculture for a living has steadily decreased, but at this time about half of the one hundred and five million people in this country derive their maintenance directly or indirectly from agriculture. This half of the population pays more in agricultural products for the products of manufacturers than they would have to pay for them without the tariff. For example, if corn is 50 cents a bushel and a suit of woolen clothes $25 without a tariff, and a tariff is placed upon imported woolens which raises the price of a suit to $35, but no tariff is placed upon corn (and a tariff could not benefit the corn farmer because America produces a surplus of corn) it will now require seventy bushels of corn to buy one suit of clothes which before the

tariff required only fifty bushels. The purchasing power of the products of corn land has thus decreased 40 per cent because of the tariff on the products which the farmer must buy. This decreases in the same proportion the value of the corn land because land is worth only as much as its net products will exchange for, capitalized at the interest rate for money. The farmer who exchanges his produce for manufactured goods after the tariff would find the payments much larger than he anticipated.

On the other side of the question a traff on agricultural products of which the farmers produce less than the national consumption, would be a greater detriment to American agriculture than a tariff on manufactured goods, unless the tariff was imposed once for all, uniform and unvarying henceforth. Suppose a tariff was imposed upon beef products and the beef production was less than the annual consumption so that the price of beef would be increased until the net income of the livestock farmer was increased 100 per cent the value of livestock producing farms would be increased 100 per cent. This would certainly be fine for the landlord. But in America farms change hands about once every twentyfive years. The coming generation of farmers would buy these lands and mortgage them. Then, suppose the law makers acting according to the public demand remove the tariff; the value of the land would shrink to half, but the mortgages to be paid would not. More or less of this kind of practice has been going on in this country for sixty years, and the coming generation of farmers is compelled to invest in land valued far above its real worth due to the present tariffs on sugar, lemons, rice and other products.

The Value of Farm Land

The actual value of farm lands at a given time is the money value of the net product capitalized at the current

interest rate. This value is equal to the prices received by the farmer minus the costs of production and marketing. Since the frontier disappeared the prices of agricultural lands have steadily increased. Roughly speaking land has gone up $2 an acre for every cent a bushel of true advance in corn values.

When corn was 20 cents a bushel in 1890 corn land was $30 an acre.

When corn was 55 cents a bushel in 1913 corn land was $100 an acre.

With corn at $1 a bushel corn land is worth about $190 an acre.

In speaking of corn values, we are referring not to the values as influenced by the size of the crop or extraordinary demand conditions, but to the ordinary value with an average crop and an average demand. Other farm crops could be used as well as corn in determining the value of land. Cotton and wheat could be used. Grazing land value could be determined by the selling price of beef cattle.

There are several factors that influence the value of land. The population tends to increase in a geometric ratio while the land area is limited. A farmer always buys land next to his own farm if possible. This is apt to increase the value of local lands. There are often community influences that tend to increase the value of land. The Amish, Dunkards, and several other religious sects prefer to live near their church. In the last few years the farmers have been putting more improvements into their farms.

A rapid development has characterized the agriculture of this country. The number of farms increased 215 per cent from 1850 to 1890; the total farm acreage increased 112.3 per cent, the improved acreage, 216 per cent, and the unimproved acreage, 47.1 per cent. The

largest increase of improved land within a decade since 1850 was 50.7 per cent from 1870 to 1880; next to this was an increase of 44.3 per cent from 1850 to 1860; third in order was the decade 1880 to 1890, with an increase of 25.6 per cent; the lowest percentage of increase was 15.8 during the Civil War decade. Conspicuous among the causes of the rapid and aggressive development of agriculture in the United States is the large area of public land that has been available (at low prices) to immigrants as well as to natives. The number of farms increased 25 per cent from 1890 to 1900, 10 per cent from 1900 to 1910, and 1.4 from 1910 to 1920. From 1870 to 1900 land values increased slowly. This was doubtless due to the cheap land in the Middle West and West.

From 1872 to 1900 Iowa farm land values doubled; 1900 to 1908, they again doubled; and 1908 to 1918, they again doubled. Although these figures are for Iowa, they are representative for all agricultural lands in America.

The panic of 1873 had its effect upon farm lands. Because of the lack of definite data upon the yearly price of land, corn will have to be taken as the basis for determining what effect the panic had upon land prices. The average price of corn for the five years preceding the panic was 46.3 cents and the average price for the ten years following the panic was 42.7 cents. Corn prices did not begin to show the effects of the panic until 1875 and did not show signs of recovery until 1879. Land prices during the decade 1870 to 1880 showed an increase of 76 cents, while the preceding decade showed an increase of $1.94 per acre. This is a difference of $1.18 and is almost negligible. The panic undoubtedly had some effect upon the value of land, but the decade 1870 to 1880 showed the largest increase in the area of improved land of any decade before or