Wartime Changes in the Financial Structure of Agriculture

Report Foreword: The report on which this statement is based was an attempt to measure the impact of World War II on the financial structure of agriculture in the United States. A 30-billion-dollar increase in the equities of all owners of farms and all tenant farmers during this war has seemingly placed agriculture in a strong financial position. Moreover, about 12 billion dollars of cash and other liquid intangible assets owned by farmers on January 1, 1944 give agriculture as a whole an added flexibility for meeting post-war adjustments. But it must be remembered that a major part of the increase in equities is the result of higher prices and higher valuation of farm real estate. Equities in the future wall be influenced greatly by the future level of prices as well as by the amount of debt that farmers incur and the uses they make of their accumulated war bonds, bank deposits, and currency. How farmers spend or use their wartime accumulations may well influence the financial welfare of farm families for the next two or three decades. An understanding of the many and diverse effects of the war on agriculture and rural people is necessary to the success of any future effort directed toward making and keeping agriculture a healthy segment of our national economy

Impact of the War on the Financial Structure of Agriculture

Excerpts from the report: War has a profound effect upon agriculture, just as it has on other basic industries. The stimulus of wartime demand for foods and fibers increases the flow of funds into and out of agriculture, thereby affecting the amount and distribution of farmers' assets and liabilities. Through price disturbances, war affects the financial structure of the farm business by changing the values of such assets as livestock and crop inventories and real estate, and particularly by altering the relation of assets to debts. So far during this war, agriculture has again felt mainly the stimulating influences of wartime buying of foods and fibers and of the huge expansion of credit incident to the financing of a great war—even though modified by certain brakes and restraints set up by the system of price control. On the whole, this is the period of stimulus and expansion which usually occurs while a war is in full blast. It seems timely, therefore, to draw up a list of assets and equities now, in order to see clearly what significant changes may have developed so far in the country's farm business as a whole as a result of the pressure of the second World War, and what the current tendencies may indicate for the future