, 1925-01-04

the ratio OF the farm dollar to the
Industrial dollars is today higher
than 1t has been for any time since
1910.
This particular occurrence has
been referred 10 ~variously as the re-
turn OF farm purchasing power. the
recovery of the farmer. the .readjust-
ment OF prices, and the narrowing
Of the price scale. All OF them mean
that h farmer is again in the
market with both money and the in
~clination to spend II.
"a return implies absence and to
get the full Significance of this de
velopment we must understand just
where the farmer has been and why
he has been there. In 1923 things
were supposed to have been in a rea-
sonable balance. We may assume
that the farmer was then receiving
81 for his crops. 81 for HIS livestock
and TINT he was paying 81 for the
Industrial commodities that he need
ed. Under these circumstances trade
may GO on freely md everyone may
keep busy. BY 1920 we find that
things have changed. The farmer
Is now receiving 50 for his crops. an
Increase in income OF 200 perl cent.
and he is paying $3.50. or an increase
of $50 per cent for the things that
he u buy. Money flowed freely.
The following year the most
drastic price decline In history broke
In upon this generally pleasant
scene. Farm prices tobogganed un.
til the farmer was again receiving
81 for his crop. Industrial prices
also came in for readjustment. but
they did lot suffer so seriously and
the c'ose OF the year found commod.
'ty prices at $3.50, Thus the. farmer
had but 81 and the things he want
ed were priced at $3.50. No salei
I'm 1923 the situation was some
what better. but still the farmers
income from his crops was only
sl.40. while the things he needs in
the Industrial world cost SIZE. The
year 1924. however. las seen the re-
adjustment completed. Farm prices
for crops havL risen to s1.5S and in.
dustrial prices have receded to
si.55. The farmer is again in the
market for the first time since
1920. He has almost a billion dol
lars more than he had last year. in
cash. and the accumulated needs Of
three can years clamor to be filled.
This balancing OF income and out
&C is vitality important 10 the farm
err and to those who do business
with him directly. but It is also of
unusual Importance to everyone. in
the United States regardless OF oc-
cupation or financial position, Firs'
the farmer is a primary producer.
Money in his hands works its way
through our whole commercial fab
ric. More important than this Is the
fact that the farmer represents fully
80 per cent of our total market, and
It is impossible to have a period Of
real prosperity unless all groups are
relatively prosperous and are buying
actively. The squirt In business
which started in the fall of 1922
and ran over into 1923 was doomed
FOR this reason: with but 10 per
cent Of the prospects buying. the
factories filled all the orders and
soon got ahead of themselves.
THE return If the son of the soil
to our markets. therefore. deserves
first position as the most important
and significant development of 1924
General business ms reflected by the
Babsonchart is now slightly above
normal. We may or may o see
continuous and growing prosperity
this year. but at least one Of the
| necessary conditions for such pros
perity has been fulfilled"