Webster City freeman. [volume] (Webster City, Hamilton County, Iowa) 1884-1946, 1920-05-24
A REPORT ON
BOOM
F1Ut3rsat+s --=-=
Department of Agriculture
Finds Iowa Land Went
up $63 Acre in a
Year.
PRICE is TOO HIGH
Land at TOday's Price Will
Yield but 3 per
Cent.
PRICE IS TOO HIGH
FACTS ABOUT THE BOOM.

the United States during the. past
year, amounting to n per cent.
The increase was mare extreme
in Iowa than elsewhere, averaging
$63 an acre, or g. per cent, from
March, 1910, to March, 1920.
While there were a few sales at
unusually high prices, less than 5
per cent were at $500 an acre or
more.
Contrary to general belief, prob
ably less than 10 per cent OF all
farms changed hands during the
boom.
About % per cent of the farms
for which figures were obtained
we're sold twice during the boom,
AZ per cent three times, 81 per
cent four times or more.
Farmers constituted 65.3 per
cent of the purchasers, and only 81
per cent of the sellers.
Analysis Of the occupations and
intentions of buyers and sellers
indicates that there has been an
immediate tendency toward an in
crease in the proportion of farms
owned by farmers and also toward
a decrease in the proportion to be
operated by tenants.
About twO-thirds of the increase
in value on farms bought and re-
sold during the boom was appro-
priatcd by residents of towns and
cities.
The land boom that swept Iowa
during the summer of 1919 forced
prices of farm lands in the state up
L. p-.l - .l:I, 4 ,,.,,
for any but the exceptional farmer to
make more than 3 per cent on his
Capitalization, and made it out of the
question for a large proportion of the
tenants to buy land OH borrowed CAPT
tai with a fair chance of paying out.
These are among the outstanding facts
brought out by an investigation of land
values in 60 Iowa counties, just com
plcted by the United States department
of agriculture in cooperation with the
Iowa State college. In commenting on
these facts department specialists take
pains to point out that the current high
capitalization of land in Iowa has been
assumed on the basis of the actual sale
of comparatively few farms (about 10
per cent? and that this high valuation
is not justified by the earning power
Of the land.
1t was found that the increase in
average value of farm landS i'll the
counties in which the investigation was
conducted was greater during the year
of the boom ($G3) than during the
fifty years from 1850 to 1900. At this
rate the increase in farm capitaliza-
ton for the year in the state as a
whole would be over two billion dol
lars. If the comparison is made be-
tween values in 1919 and 1920. the in
crease in value per acre is S121, and
for the state nearly four billion dollars.
An analysis of total increase in value
was made for 392 cases in - counties.
The total increase in value for these
cas- was $7,O3S,3iG. OF this incre-
ment, 1897 .OSi, or AZ per cent, was
received by people living in towns and
cities, while $3,711,2G 6 was received
by people living in the country. These
increments are based Oh the price
Mt the time the farm was bought, no
matter how long agO. If the cases OF
farms purchased and rcsOld during the
boom alone are considered, nearly 20
per cent of the increase vas received
by persons dwelling in towns and
cities.
1t appears that farmers were more
active rs buyers than as sellers, since
they constitute 81 per cent OF the buy
ing class. as reported, and hut 36 per
cent of the selling class. About 10 per
cent of the sellers, however, were re-
tired farmers. Real estate men con
sti;uted 90 per cent of the buyers ana
11.j per cent of the sellers.
Current Prices Not justified.
The fact that current prices of land
are not justified by the actual earning
power of the soil is emphasized by the
relative financial disadvantage of own
ing, as compared with selling out mt
present high valuation, operating as a
tenant, and investing surplus capital
in other ways. OF course, if all farm
crs in the region We're to do this II
sha rp reaction would he precipitatcd,
but under present conditions the owner
with the average farm capitalization
Of nearly S9O,OO could make nearly
twice as much by operating as Il tenant
and investing his remaining capital III
five per cent bonds, than he can by
owning the farm he operates. The de-
partment points ont that it does not
follow, however, that it would be de-
Slrn Dte IOf all IiTIIltIS W wv thiS' oihNN
in certain cases, even at current hlSh
prices, the many advantages OF farm
ownership might outweigh II high
return OH small investment made by
the tenant.
1t is pointed out that at current
prices for land it Is not only financially
unavoidable for the tcnant to become
owner, but that for the great major
ity Of tenants it is practically imTos-
sible. The average net worth OF
tenants, as determined by this study.
is only about l. cent of the value OF
the average farm capital. Even If the
tenant can borrow the remainder OF the
necessary to become an owner.
he could expect to earn. under the faN-
conditions with respect to crops
md prices prevailing in 1918, less than
49, per cent on the total capital hor-
rowed. Falling prices for farm prod
nets or u%nfavOrable crops would make
the prospect even less satisfactory.
Checking Tenancy Evils.
3 A logical inference from these facts
Is that an improvement in credit ar
frequently suggested as a
tor the increase OF tenancy.
may MT no rcya rlcd as a fundamental