FARM ORGANIZATION
In the last chapter were discussed the most common methods by which a
young man acquires an opportunity to engage in farming. This chapter
will discuss some less common arrangements by which may be bridged
that period between the time the son is ready to go into the business
and the time he may assume the complete control of the ancestral or
other farm. It will also suggest a method for the continuous business
management of a farm enterprise.
As stated, the most common reason for a farm changing from one family
to another is the fact that no heir is willing to assume the
obligation which is involved in paying for the interest of the other
heirs. Connected with this problem is the further fact that the father
is not usually ready to give up the management of the farm at the time
one of his sons reaches the age to go into active business.
The reason for this state of affairs is made clear by the results of
insurance statistics. The period that a man may be expected to live
can be obtained by taking the difference between his present age and
90 and dividing the remainder by two. Thus, a young man who is 20 may
reasonably expect to live 35 years, or until he is 55 years old. A man
at 50, however, still has an expectation of life of 20 years, and the
man of 70 of 10 years.
A farmer of 50 will usually have one or more sons ready to go to
farming if they ever expect to engage in farming. But, as has been
shown, a man of 50 has a reasonable expectation of 20 more years of
life and cannot turn over the farm to his son, completely, without
destroying his own opportunity for earning a livelihood. As things are
usually arranged, therefore, there is no place on the average farm for
the son, except as a hired hand, which is not desired permanently by
either father or son.
Frequently the father fails to appreciate the earning power of his
son, and, what is more important, that the boy has grown into a man.
One day a teacher called a student of agriculture to his office, when
the following conversation occurred:
[Illustration: John Armstrong, Austinburg, Ashtabula county, Ohio, was a
dairy tenant farmer for twenty years with nothing to show for his labor
but a debt of $500. He then bought the farm of 144 acres on which he
lives, without cash payment, assuming a debt of $7,000. At the end of ten
years he owned his farm and equipment valued at $20,000. He has two sons
who have been important factors in his success. A year ago one of them
married and went to a farm of his own, the father paying him $3,000 for
his former labor.]
[Illustration: John M. Hunt, Ackley, Iowa, two years a student at Iowa
State College. He returned to the home farm of 120 acres, which, without
any capital, he rented from his father. At the age of 25 his gross
receipts from this farm were a little over $4,000. After paying rent,
living, keeping a family of four, a few trips to fairs and corn shows,
he had net $1,500 for his year's work. Picture shows home with father,
mother and sister in the foreground.]
"The Bureau of Soils at Washington," said the teacher, "has asked me
to recommend several of our students to them for positions as field
assistants. If you desire to have me do so, I would be glad to
recommend you for one of these positions. The compensation is $1,000 a
year and field expenses."
"I do not believe that I can accept," said Mr. Manning, "my father is
in poor health and needs my help on the farm."
"Does your father want you to take charge of the farm and manage it so
that you can make your training count?"
"No; my father expects to continue to manage the farm. He wishes me to
work for him."
"How much does your father expect to pay you?"
"Thirty dollars a month."
The teacher found it extremely difficult not to interfere, but he
merely said, "This is a case of filial duty which you must settle for
yourself. I must have nothing further to say."
The young man returned to the ancestral home and is probably still
there. It is, of course, impossible to determine the merits of an
individual case, but this incident represents a type of cases where
the son makes two important sacrifices from the sense of duty.
First, he sacrifices present, and, perhaps, future opportunity to earn
the wages of which he is capable and to which he is justly entitled.
And, second, and more important, he sacrifices the opportunity to
develop his own powers and make concrete his own abstract self.
There are two things that every young man should do. One is to earn a
living. A man that cannot or does not earn a living is of no value to
himself or to anyone else. The other is to develop within himself his
latent possibilities. He must apply himself to some problem, or
problems, and through them develop his own personality. There is no
place where more intricate and satisfying problems may be found than
in the development of a successful farming enterprise. In the instance
cited, the father may have been unable to pay his son the wage he
might have obtained elsewhere, but he did not need to dwarf his son's
development by treating him merely as a hired hand. His willingness to
do so was probably due to his failure to appreciate that his son had
become a man.
Sometimes a father is astute enough to reorganize his business so as to
retain a place for himself while giving to his sons that opportunity
which every man must have who develops himself normally.
An Ohio farmer once came to the Dean's office. He had a son in college
who was just completing the first year of a two years' course in
agriculture.
"I should like to have you find a place for my son in a cheese factory
during the coming summer," said Mr. McKinley.
"I own a farm of 130 acres on which I have a herd of Jersey cattle,"
continued the father. "I have two sons and one daughter. I would like
to have my sons about me, but there is no place for them on my farm
because I am there and cannot get away. In fact, I do not desire to
give up the management of the farm and the development of the herd of
cattle."
"Not every father sees the situation as clearly as you do," interjected
the Dean.
"This is my plan. After my son has spent a summer in a cheese factory,
I want him to come back to your school for another year. I want him to
learn, especially, all you teach about dairying. I will then build a
cheese factory on my own farm and my son will make into cheese the
milk of my own herd, and also from the herds of our neighbors. By the
time he has completed his work with you, my younger son will have
finished the high school. He has some liking for trading, and he will
sell the cheese at wholesale and deliver it to the surrounding towns
where markets are unexcelled. As for the daughter," continued this
practical man, "she will get married and that will take care of her."
What became of the daughter is not known to the writer, but the rest
of the program was carried out successfully and continued for many
years.
A German came to this country and settled in New Jersey, where he
established a large orchard. In course of time his two sons grew into
manhood. While, of course, requiring plenty of laborers, the
orchardist did not need the sons in the management of his farm. He,
therefore, established one of these sons in the commission business in
Philadelphia, thus, at least, keeping the profits on the sale of the
products of his orchard in the family. He also needed cold storage for
his fruit. The other son started a cold storage plant, which plays an
important part in the profitable management of the orchard. Thus both
sons have independent employment requiring managerial ability and the
orchard is much more profitable than it otherwise would be.
Our land laws, our traditions and our practices are based upon the
idea that a farm is to provide activity and support for but one
family. In order, therefore, that the son may marry and begin to
develop his life in his own way, it is essential to reorganize in some
manner the method of managing the farm or to enlarge or, perhaps,
specialize its activities. This may be accomplished on a simple
partnership basis, or it may be in some such line as outlined in the
illustrations which have been given. In other occupations such
co-operative effort is the rule rather than the exception. That it is
more difficult to effect satisfactory arrangements in farming must be
conceded, else they would be more common. Doubtless it will often tax
the ingenuity of father and son to devise the plans best suited to
meet their particular problem.
There still remains to consider another form of business relation as
applied to farming which has become almost universal in trade and
transportation. The following incident may illustrate and emphasize
the problem better than abstract discussion: One day a man walked into
an office and stated that a friend had a half million dollars to
invest in farming, provided that he could be convinced that the money
would be invested profitably.
"Does your friend desire to buy land in any particular locality?"
"Yes," replied the promoter, "he wishes to buy land near ----. He has
some sentiment about it. He was born in that neighborhood."
"Well, that is a rather bad beginning. Farming on sentiment is
dangerous, especially when the sentiment is in no way related to the
business."
The facts were that the region indicated was recognized to be one of
the most unpromising sections of the state.
"If you undertake to invest a half million dollars in one neighborhood,"
continued the adviser, "you will pretty certainly fail to earn interest
on your investment."
"Why?" inquired the promoter.
"Before you could possibly buy any considerable part of the land the
owners of the farms you desire to buy would have doubled or perhaps
trebled the price asked for their holdings. It is one thing to earn
interest on an investment of $30 an acre and quite another to earn an
equal per cent on $60 or $90 an acre.
"In the second place, farmers are content to accept less per cent on
their capital than they would if it was loaned at interest, because
the farm furnishes a home as well as a business. When you buy up all
these farms and convert them into a single enterprise you will destroy
their home value. You cannot hope to compete with the man, who,
because his farm furnishes him a home, is content with an otherwise
small return on his investment."
There were other reasons, of course, why such an enterprise would
fail, which the speaker did not stop to explain.
"You are mistaken," challenged the promoter. "I intend to meet both
your objections. My plan is to form a corporation and issue both
preferred and common stock. The preferred stock shall bear 5% and that
will belong to my friend who furnishes the money. I will retain the
common stock. Five per cent is all the owner of the money is entitled
to, while if the business returns more than that amount, it will be
due to my management. I, and those associated with me, are entitled to
all that is made above five per cent. By retaining the common stock
the surplus income will come to us. Neither will I destroy the home
value, because I shall associate the former owners with me in the
conduct of the estate and may give them some of the common stock, so
that they will be interested with me in making a profitable return. If
they wish to keep their money invested in the farm, they will be given
preferred stock in place of cash for their farms."
It is needless to say that the promoter never convinced his friend
that he could successfully invest for him a half million dollars along
the lines indicated. Nevertheless the corporate plan is not without
merit. For example, if a father should incorporate his farm, he could
provide for the inheritance of the preferred stock, among the heirs,
as he desires. He could give to the son who operates the farm all the
common stock, together with what preferred stock he is entitled or the
father may desire him to have. The common stock would provide the
means by which the income from the farm, which was due to the sons
skill and management, might go to him. As time went on the son could
acquire additional preferred stock from the father or other heirs, or
he could invest his earnings elsewhere, as might seem most expedient.
On the death of the parents, the preferred stock would be distributed
as inheritance or the will provided without in any way interfering
with the continuity of the farm enterprise. If at any time the son
desired to discontinue the management of the farm, all he would need
to do would be to dispose of his interest in the common stock at
whatever he might be able to secure from the man who succeeded to its
management. He could sell or retain his preferred stock.
Farming is the one remaining great industry that has not been
organized so that a single enterprise may have a continuous existence.
A corporation never dies, but at least three generations of men occupy
the farms of the United States each century.