People's Pilot, Volume 2, Number 43, Rensselaer, Jasper County, 14 April 1893 — Monopoly in Agriculture. [ARTICLE]

Monopoly in Agriculture.

Monopoly being an incident of our modern industrial life it may be interesting as well as instructive to make an inquiry into the possibility of the fanning class being capable of entering into a league for the purpose of controlling production, which we, in other fields, are pleased to call monopoly. It is a principle easily maintained that all capital intelligently applied tends to make every business a monopoly, also one of increasing returns.

The first part of the statement is self explanatory, but the expression “increasing returns” may be a little vague. Follow closely this illustration: Mr. A. has a farm which produces 15 bushels per acre of wheat. By the application of a little more labor and capital it will produce 20 bushels and continually applying to the land new capital and labor he may produce 25 bushels of wheat. By this simple illustration we have the very important law known as the “increasing returns.” Expressed, it is this: That upon a given field the application of a given amount of capital and labor will produce a proportionate return n crops. But it is apparent to every farmer that there is a joint where the land can not be made to yield much, if any, more wheat or any other crop, with all the labor and capital which could be applied. This is the “point of diminishing reurns.” Let us inquire, then, as to the statement that all capital intelligently applied tends to make agriculture a monopoly and also a business of increasing returns.

First, we will direct our attention to the last part of the statement. Is agriculture a monopoly and also a business of increasing or diminishing returns? Have we in this business, near or far, when increased capital will be rewarded with increased returns? These questions open up the long mooted controversy between large and small farming. The value of each system must be judged by its ability to receive capital at increased production with decreased cost. There are strong advocates of each system from these positions. If we were to look at na-

tions as a whole we might cite France as an illustration of the small farmer and that of England that of the large holder. So far as the application. of improved cultivation, as machinery of a high order to be applied to large farms is concerned I think it can readily be conceded that the English holder has the advantage over the French. We are not to consider the social or intellectual effects of the two systems but only the economical aspects. The cost of production on the large estates in England has been greatly reduced, if I have read correctly, while the French small holder is more prosperous. These seem opposing opinions, but not necessarily from an economical view. If we notice the tendency in our own country in this direction we will be led to the conclusion that farming on a large scale is fast gaining ground. Some statistics on this may not be amiss. Table showing relation of small and large farms in 1870-80:

Farms under 100 acres. Increase 10 per cent. Farms over 100 acres and undersoo, Increase 200 per cent. Farms over 500 acres and under 1,000, Increase 500 per cent. Farms over 1,000 acres, increase 800 per cent. In 1860 Massachusetts, Maine and Vermont contained 97,723 holders of land of 100 acres; in 1880 73,892 holders of the same amount. In farms over 100 acres in this same period there was an increase of 34,435 in 1880 from 23,412 holders in 1860. Also in this period there were 64,550 acres held in farms of 500 acres and upwards in 1860 while in 1880 this had increased to 856,000 acres.

The above statistics would indicate that small farming in New England is on the descendency. Here is one locality where the law of diminishing returns affect farming when capital must be applied to small holdings. Yet we are inclined to believe this is not responsible for the widespread desertion of farms and their concentration in larger holdings. Yet the same process is at work in Canada. The bonanza farms of the west are an example of production on a large scale. As the most noteworthy of them we may take the Dalrymple farm. Here it has been the aim to reduce production to the lowest possible scale. So low that the labor of one man will represent the production on 640 acres for one year. This has not been as yet reached. On his wheat field of 100 square miles 400 men cultivate the

grain, doing a work, which it is estimated would require 5, (XX) men in the ordinary way. This seems overwhelming evidence, which is only one in many, in favor of large farms from the view of production. It is estimated that wheat on these large farms can be raised at a profit for 40 cents per bushel, while as far east as Indiana or Ohio this could not be done for less than 75 cents. The advantage of small and large farms as a system of production may be stated best in groups. Advantages of large farms: 1. Division of labor on alarge

scale. 2. Improved machinery of a high order can be best used. 3. Machinery and fertilizers can be bought in large quantities at better prices. 4. A higher degree of business management is assured. 5. Capital in large quantities can be best employed. Advantages of small farms: 1. Direct personal supervision. 2. Large wastes may be more effectually avoided. 3. Soil may receive a more thorough cultivation. If we carefully compare the advantages of each system given above we will be led to conclude

that with a given area the cost of production is less on large farms in proportion to capital and labor employed. “Production on a large scale is the only possible production of the future.” Then if we are warranted in our above conclusion the remaining point to be considered is whether agriculture under a system of large farming will not too soon approach the limit of decreasing returns. As said above, New England may be cited as an instance of sectional decreasing returns. After sustaining themselves for many generations they have at last succumbed. Great capitalization is found on their farms where the soils for purely farming purposes have failed to respond to culture then in vogue. Even the more improved methods of cultivation must soon find a limit in the resources of nature alone. The point of diminishing returns must be reached some where in any industry applied to a given area. The point may be farther off in manufacturing, for the reason of concentrated energy in capital, labor and management. Because of the inability to have a high degree of concentration of capital and labor in agriculture the point must be soon reached in this industry.

Without further discussion we may refer to our question asked in the beginning. Is agriculture a business of decreasing or increasing returns? We are led from our following discussion to answer, that under a system of production on a large scale the point of diminishing returns is pushed farther ahead, but the point is not so far as to warrant a great application of capital to a limited area. The extension of the land is only a lowering of the ratio already existing between the native properties of soil and the amount of capital and labor used in pi*oduction. The conclusion is sufficient to follow that monopoly in agriculture would not we in any way possible. It has been suggested that that fact would only tend to make monopoly possible. Aside from the conclusion it may be desirable to set forth the forces that tend to accelerate and to retard monopoly in agriculture. Those forces which tend to make monoply possible in agriculture: ' 1. Limited geographical area which makes, through soil and climate, the production of certain kinds of farm products. Among them may be mentioned: mining, fruit regions of California, Delaware and Michigan, early strawberries and melons of the south, wheat and corn regions of the Mississippi valley, sugar beet of Germany and France, tropical fruits, tobacco and cotton. These illustrations seem fanciful in the presence of existing facts. There was such an attempt on the part of a Dutch company to control the price of nutmegs. This failed as we would expect. The Pacific fasUfruit line is an attempt to manipulate the market of Chicago and other eastern cities in the interest of the fruit growers of California. It seems to me correct to say that the region of the Mississippi valley could effectually control the markets of this country aijd effect materially those of Europe if production could be controlled in this region. 2. Area of available land re-

quired to support a given center of population. V7e need, only refer to the milk supply at large cities. Also certain non-perish-able vegetables could y>e held. Sub-treasury scheme. 3. Specialization in agricultural pursuits. Mining, creameries, gardening, stock raising, fruit growing and ceria) s. These lead to greater control because the units to be conibined are less numerous. 4. Land in large farms. This we have noticed at beginning. 5. Better utilization of improved machinery in production. 6. Diffusion of intelligence among farm producers. This is a force that agricultural communities are beginning to-day to more effectually use by the understanding of business methods. 7. Limit of all available free lands will makp the fertile lands more susceptible to control. This brings to light the relation of population to agriculture. What effect would increase of population have on monopoly in agriculture? If it tended to increase the units it would be re-

tarding. If the surplus population is to be absorbed by our cities it would be an accelerating force. 8. Private property in land may be considered accelerating. Those forces which tend to retard monopoly in agriculture. It may be stated that many of the forces stated as accelerating may possibly be more properly included as retarding forces. 1. Diminishing returns in agriculture. This covers a catalogue of deterrent forces. 2. The number of units to be combined. This alone is a most positive force. 1. Individuals are too widely separated. Individual tendency. 4. Lack of present business insight into products on large scale. The above may be a crude grouping of the forces which may act to accelerate or retard the movement of agricultural monopoly. The three or four forces given as retarding are so powerful that it seems at present folly to conclude that there could be any possible monopoly only in a very limited field. The element of transportation brings the competing areas of the world so close together that It becomes a deterrent force. If Chicago were compelled to buy her fruit of Michigan there would be a chance for Michigan fruit growers to stipulate prices. The same is true of gardening around the city. The wheat area of the whole world competes in the markets of Liverpool. As we pass to more concentrated forms of agriculture as creameries, stock raising and mining we find the elements of combinations and consequent possible monopoly. I see no reason why the creameries of the country should not combine to control the price of their products. This has been attempted but has failed. The element of food substitutes enters here, but the farmers have been able to baffle it through legislation. If mining can be classed as an agricultural pursuit then we have a clear case of monopoly. The nearer the processes of production in agriculture confirm to factory methods the nearer control can be exercised. But as we view the present methods, extent of territory and facilities of transportation we see the force of competition absolutely unrestrained. Here overwhelming production in the face of this individual and sectional competition has enabled the consumer of this product to dictate their price. The cotton oil trust has reduced the price they pay for the seed from 17 to $4 per ton. It seems that the grower of cotton, especially large plantations, could so effectually combine as to thwart this, reduction. The peculiar position of the agriculturist on the other hand forces him to witness, helplessly, the passage of his rew material into the field of trust and monoply prices. There have been efforts to control prices of farm products but this has signally failed as would be expected. It seems that a monopoly much above competitive prices, is scarcely possible in any business, unless endowed with favored privileges or franchises. In this, mining as a branch of agriculture, would obtain pure agriculture, while endowed with all these requisites is too universal in privilege. ** Then the proposition that capital intelligently applied tends to make agriculture a monopoly and a business of increasing returns will not stand the test of fact and logic. While there may be conditions of com-

bination which could possibly develop into powerful centers of control they must full In the presence of the law of diminishing returns, facilities of transportation and widespread area to be controlled, and if controlled at all, must be very limited in extent and feele in power. * *