20

COUNTRY GENTLEMAN

February, 1935

 

PHILI

EDITORIALS

A FIRMER FOUNDATION

ITHOUT being much noticed some basic readjustments have

been taking place in agriculture. Among them are reduced. taxes,
a lower interest load and strengthened country banking conditions.
These mean the savings of considerable sums as well as the removal of
disadvantages that have weighed heavily upon farming.

Tax relief is of greater importance than is generally realized. Reach-
ing their peak in 1929, farm taxes came down only slowly until 1933,
when accumulated public demand forced a sharp drop. The total farm-
tax levy for that year, so far as it is calculable, was more than $110,-
000,000 below the 1929 top. With the adoption of replacement taxes,
such as sales and gross income taxes, and property-tax limitations in
a number of states, the lightening of the burden has been carried still
further. Indications are that the total is now close to $200,000,000
below the one-time peak.

The farm-tax cut is most pronounced in the Midcountry and Plains
areas, though it is effective in some degree in fully three-fourths of the
states. The figures tell the trend. In Nebraska the total tax bill for all
purposes is now some 35 per cent below the maximum of the ’20’s.
Here are the taxes paid in 1931 and in 1934 on four representative
160-acre farms in Dodge County: $227.13 in 1931, now $129.77;
$189.48, now $119.21; $201.79 and $113.12; $193.56 to $104.09. Farm
taxes for Oklahoma, as a whole, are more than 40 per cent below 1929.
Since that year taxes on farm lands and improvements in Kansas have
dropped from $31,099,920 to $19,192,770. An average 160-acre farm
in Doniphan County paid $256.76 in 1931 and $155.81 last year.

Widening the tax base is helping to reduce farm taxes in Iowa,
Illinois and Michigan. The sales tax enabled Illinois to eliminate the
state property tax of 50 cents on the $100 valuation. Along with this
came a general decrease in farm taxes through local economies. For
one example, the taxes on the 736-acre property of an outstanding
livestock farmer in Kane County fell from $1447.05 in 1931 to $820.02
last year. Michigan adopted a tax limitation of 114 per cent on the
assessed valuation of real property and followed it with a sales tax.
This permitted the state to lift almost $20,000,000 in taxes off property.

Property-tax levies for all purposes in Iowa have fallen from $107,-
966,592 in 1930 to around $80,000,000. They are expected to go still
lower as the state’s new three-point tax system becomes fully effective.
This includes a 2 per cent sales tax, a personal net income tax and a
corporation income tax. The state will be entirely out of the property-
tax field this year.

To reduce the burden on property, which in 1931 was bearing 80
per cent of the tax load, Indiana fixed a flat*$1.50 tax limit per $100
valuation. This cut property taxes $40,700,000, too severe a reduction
without other revenue to compensate, so the legislature then enacted a
gross income tax and improved intangibles and excise taxes. The new
tax system has provided funds for replacement purposes, especially
for schools.

Reliable estimates show about a 40 per cent lowering of Ohio’s farm
tax level. This has been achieved by several methods: Drastic cuts in
the personal-property or chattels taxes, reductions in appraised valua-
tions, and constitutional amendments now limiting the property tax to
1 per cent. Any taxing district has to get the approval of its voters to
exceed this limit, and 775 school districts sought such approval at the
fall election. Either they had a bonded indebtedness or wished serv-
ices beyond the revenue provided by the 10-mill limitation.

The varying financial condition of local communities makes the tax
reduction uneven in all states. The biggest single cut has come through
local economies, but communities with heavy fixed charges on bonded
indebtedness have been unable to effect such savings. They have had
also to get around reduced valuations and property-tax limitations by
higher rates and special levies.

The number of states levying general replacement taxes, to the re-
lief of real property, has multiplied rapidly in the past three years. As
none suffered more from the excessive dependence on property taxes,
farmers are the most directly benefited by a broadening of the tax base.

There are other benefits also. An Indiana farmer voiced the opinion
held by many when he said that high taxation was one of the causes of
recent overproduction. With prices falling, farmers simply had to pro-
duce more and more to meet fixed charges such as taxes. As this forced
an undue emphasis on products that could be readily turned into cash,
the fertility of the land was bound to suffer. The land should be one of
the biggest gainers from reduced taxes.

A general opinion is that lower farm taxation will further a more bal-
anced farming in the Corn Belt. ‘‘ Lower land values, reduced taxation
and the necessity of taking some of their land out of cultivation will
cause farmers to consider raising more of their own beef cattle,” is an
opinion expressed by a prominent livestock breeder. ‘‘ With lower taxes
they can afford to devote their rougher or more worn land to pasture
rather than cash crops.”

Going along with lower taxes is a very sizeable reduction in farm
interest charges. W. I. Myers, Governor of the Farm Credit Adminis-
tration, recently stated that ‘‘The annual interest saving to farmers
under the Emergency Farm Mortgage Act and the refinancing pro-
gram is over $31,000,000 a year, and most of this will be a permanent
saving.” This has been accomplished in several ways. On more than
500,000 mortgage loans made by the FCA farmers are paying 11% per
cent less interest than formerly.

In addition, an overhead indebtedness of more than $65,000,000 has
been written off through scale-downs of farmers’ debts to a point where
the FCA could refinance them. Further scale-downs have been made
through local conciliation committees. One can hear various com-
ments, favorable or otherwise, about these scale-downs. But they have
been made, they have reduced farm outgo appreciably and they have
removed some overhanging uncertainties.

Of the money advanced through the FCA more than $325,000,000
has gone to local banks to liquidate frozen farm assets. In this and
other ways the resources of country banks have increased generally
since the middle of 1938. It is not uncommon to find that deposits
have doubled in that time.

“Our problem now is not one of solvency but of finding profitable
uses for the funds of country banks,” is the way the president of one of
the largest state banking groups summarized the situation.

Country banking has definitely emerged from the period of impair-
ment caused by falling farm values which set in with 1920.

The readjustments in taxation, interest charges and banking facili-
ties have put a firmer foundation under agriculture. The elements that
make up the agricultural community are now in a stronger position.
Given a continuance of recovery farmers are better situated to realize
on it. More of the money they take in will be their own.

PRACTICE IN STRATEGY

MONTH or so ago when President Roosevelt personally con-

ducted negotiations for a couple of mules which were needed on
his farm at Warm Springs, the occurrence received only incidental
mention in the daily press. If the political commentators had under-
stood, even vaguely, the niceties of mule trading, profound inferences
might have been drawn.

Did the President come off best or second best in his dickering?
The newspaper correspondents, of course, should have investigated.
If he actually skinned the Georgia mule trader, even his enemies could
no longer deny him the title of America’s shrewdest politician.

And where was Mr. Farley? A good many of us naturally supposed
that he would seize the opportunity to announce that here was another

_ reason for the ascendancy of the Democratic Party. Stuffy Republi-

cans might content themselves with trading in bonds and shares, but
the foremost Democrat of all, the nation’s Chief Executive, sharpened
his wits in our greatest school of strategy. Among folks who know,
it is an accepted fact that diplomacy rises to its highest pinnacle, not
in Wall Street or Washington, but in the mule marts of this country.

Thoughtful prophets, had they been more alert, might have dis-
covered even deeper meaning in the Warm Springs trade. Although
the mule’s philosophy of life has never been fully fathomed, he has
long been suspected of leaning to the Left. At least, we know that he
disapproves of the established order. If the President is able success-
fully to appraise and evaluate this rebel of the animal kingdom, then
obviously there is hope that Senator Long and other recalcitrants of
his own party will not prove too much for him.

It is rather astonishing that our political interpreters—who hereto-
fore have been able to foretell the President’s drift to the Right or the
Left by analyzing his luncheon menus or the shade of his neckties—
should have passed up the Georgia episode. The only possible conclu-
sion is that they are better versed in social hypotheses than in mules.

THE GIRLS WILL GET IN

NE can’t help feeling a little surprised, perhaps even a bit wistful,
over the fresh young courage of the Future Farmers of America,
who recently slammed the door of their organization against feminine
membership. Clearly, these Spartan lads have a thing or two to learn
about the futility of opposing women’s rights.

At the annual convention of Future Farmers—a national associa-
tion of vocational agricultural students—the girls, who labor side by
side with the boys in the “‘ag”’ classes, sought and were denied entry
to the organization. The action of the conference is the more puzzling
when one recalls that the Future Farmers are chiefly high school upper-
classmen, who by all ordinary calculations should be just emerging into
that quivery period of life when a silken knee or a fetching little spit
curl shortens the respiration.

One explanation might be that the boys want no female competi-
tion. In that other national organization of farm youth, the 4-H Clubs,
an alarmingly large number of first prizes—awarded for superior lambs
and calves and fowls—have been carried off by the girls. The more
probable answer, however, is that the Future Farmers have been de-
luding themselves with the quaint and amusing theory that this is a
man’s world.

The only evidence of male capitulation at the F. F. A. convention
was a resolution to investigate the girl problem during the coming year.
But even this grudging concession, one fancies, will prove fatal. A year
is twelve months, and in the meantime there will be skating parties,
after-school skylarking six deep in stripped-down flivvers, palpitating
glances in the agricultural lab, hayrack rides under a melting moon.
Quite obviously the Future Farmers have underestimated the cosmic
wallop of the lipstick, the powder puff and the permanent wave. The
girls, we may be sure, will be sweet about it, but sooner or later they
will get in.

 

P S. ROSE
Editor