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We have already observed the influence of transportation and the growth of markets in revolutionizing the self-sufficient farming of the pioneer and the industrial self-dependency of the isolated community, but we must give further consideration to the influence of markets on rural community life, for the world is now facing problems of the readjustment of its whole economic system which necessitate a better understanding by the farmer of his dependence on markets and by urban populations of their dependence upon the raw materials produced by the farm, if the mechanism of our complex modern civilization is to be maintained.

These relations involve the largest questions of the interdependence of industries and of national and international policy in relation thereto, and we can but call attention to some of the more fundamental principles involved. An understanding of some of the elementary principles of agricultural economy in relation to national and international economy by the masses of our farmers, but particularly by their local leaders, is essential to any permanent progress not only of agriculture, but of industry and commerce.

Before the time of railroads when rural communities were isolated from the few cities situated on the seaboard and along the larger waterways, there was little incentive for the inland farmer to raise more than he needed for the use of his own family. As a result there was inefficient farming and a low standard of living.[25] Railroad transportation made it possible for the farmer to send his products to the existing markets and so made it an object for him to produce a surplus, but, more important, it also made possible the rapid growth of numerous industrial and commercial centers and so was directly responsible for the creation of new and growing markets. Steam power, the use of coal, and the economies of the factory system made it possible to manufacture in large city factories many articles previously produced in the farmer's home or in the village centers. Thus a division of labor was effected which was profitable to all parties; the growth of industrial populations gave the farmer a market for his produce, and in turn he was able to purchase from the city many goods previously unknown to the farm--fertilizers, agricultural machinery, factory-made clothing, furniture, and other factory products too numerous to mention. Furthermore, transportation and reasonably stable government made possible the growth of international commerce so that the markets of many staple farm products became practically world-wide and a division of labor arose between certain nations. England and Germany are dependent on other countries for a considerable part of their food supplies and raw materials, while certain agricultural countries depend on them for manufactured goods.

The point which must ever be borne in mind in considering the relation of rural and urban communities is their interdependence; that the development both of modern industrial centers and of modern agriculture and the higher standards of living on American farms, have been due to an exchange of commodities and services which was mutually advantageous. Without the growth of markets our farms would still be self-sufficing, but they would lack the many comforts and cultural advantages which they now enjoy, and this rise in the farmer's standard of living has stimulated further growth of industry and so made better markets.

These considerations are particularly pertinent at the present time of agricultural and business depression. The present position of American agriculture, and its lack of buying power in our markets, has been largely due to the fact that Europe has heretofore furnished an open market for our surplus agricultural products. Today Europe is unable to purchase this surplus. The cause seems to be chiefly an economic paralysis resulting from the political interference by the tariff walls of newly-created states with the established economic relations of agricultural areas and manufacturing centers, and an unwillingness of the farmer to do business with a currency so debased that its value is highly problematical. So we see the great city of Vienna,[26] once one of the gayest and most brilliant capitals of Europe, now reduced to destitution, and the cities not only of Russia but of Germany being forced to revert to the ancient system of barter in order to secure adequate food.

The ultimate dependence of all cities upon the farms and mines is to-day exemplified in Europe with such appalling tragedy, that even the smug isolation of the American farmer and the American business man is broken down, not only by human sympathy but by the necessity of a better adjustment of their own economic system to the world crisis from which they are unable to escape.

This shift of control from the city to the country has been powerfully portrayed by Norman Angell:

      "Moreover, the problem (of feeding Great Britain) is affected by what is perhaps the most important economic change in the world since the industrial revolution, namely the alteration in the ratio of the exchange value of manufacture and food--the shift over of advantage in exchange from the side of the industrialist and manufacturer to the side of the producer of food."[27]

      "Before the War the towns of Europe were the luxurious and opulent centers; the rural districts were comparatively poor. To-day it is the cities of the continent that are half-starved or famine-stricken, while the farms are well-fed and relatively opulent. In Russia, Poland, Hungary, Germany, Austria; the cities perish but the peasants for the most part have a sufficiency. The cities are finding that with the breakdown of the old stability--of the transport and credit systems particularly--they cannot obtain food from the farmers. This process which we now see at work on the continent is in fact the reverse of our historical development."[28]

But although the farmer may have sufficient food for the time--though in Russia millions are starving, due in considerable measure to the economic and political chaos of the nation--yet if this reverse process should go on, rural civilization would be reduced to that of former generations, and its advance would be possible only when the industries which furnish its material basis were revived and confidence in the medium of exchange were again established. The city owes its existence to the farm, but without the city the farm would go back to the hoe and the sickle and the "age of homespun."

I am not seeking to justify the modern city, for its economic and social weaknesses are ever increasingly apparent, but it is important that we fully realize the fact that rural progress has been chiefly due to the goods and services received in exchange from urban markets. We have already noted the tendency toward specialization in agriculture and its effect on the rural community, and that specialization has been chiefly due to markets. One of the chief factors in encouraging specialization in the growth of certain products by whole communities and sections is the fact that a larger volume of a given product ensures better marketing facilities and a better price to the producer as long as the supply is not in excess of the demand. Where there is a considerable volume of a certain product, buyers can meet their demands more easily and are attracted to it, whereas a small lot of howsoever good a product must seek a buyer. Freight rates are reduced, damage in transit is reduced, and better transportation is secured in carload and trainload than in small shipments. The middleman's charges are less if he is assured a considerable volume of business. Thus specialization makes possible a more effective system of marketing than is possible with indiscriminate production.

Not only must there be sufficient volume of a given product, but it must be so standardized with regard to varieties, grade and quantities or packages that the reputation of the goods may be established in the market. In order to secure uniformity it has been found necessary to standardize varieties and to grow a few well-known varieties of a given product which are best adapted to local conditions and to the market, rather than a number of varieties, as might be feasible if they were all sold directly on the local market.

Uniformity of grading and packing is also essential to establish a reputation on the market. A concern like the California Fruit Growers' Exchange cannot afford to spend half a million dollars a year in advertising unless it knows that its product will be as advertised, for advertising an unreliable product may secure temporary sales, but will hardly be a profitable investment, for the value of advertising an honest product is cumulative. To secure necessary uniformity of grading and packing it has been found necessary with almost all agricultural products to have the grading and packing done at a central establishment rather than on the farm. For even assuming the honesty and good intent of the farmer, the standards and skill of different farmers will vary to such an extent that uniformity is impossible. Uniformity of grade and package must be secured at some stage of the process of marketing before the goods are bought by the retailer. Until recently much of this service has been performed by the commission men at the central markets, who have taken what was shipped to them or what their agents purchased and graded it to meet the demands of the trade, and who, of course, had to charge for their services. It has been found more profitable with most products to have the grading and packing done as near to the farm as is possible to secure a sufficient volume of business for the enterprise. Thus we have local packing houses for fruits, potatoes, poultry products, grain elevators, etc., usually located at the point of primary shipment. These local plants, as well as local creameries, canneries, and other agricultural factories and storage plants, become community institutions as they meet the needs of the farmers within the areas tributary to the centers where they are located. It is true, of course, that many of these plants are located in the open country or at mere railroad stations, and that many of them draw their patronage from several communities; yet more commonly than otherwise they are located at village centers and serve the areas tributary to them. With the advent of good roads and motor trucks, the areas served by such establishments will tend to become larger, but there are many local circumstances which will tend to limit the process of centralization. Whether these plants are operated by private individuals, by stock companies, or by coöperative associations of the producers, they are essential to an effective marketing system and may greatly strengthen community life. If, however, there be two or three elevators in a little village, each operated for profit by a private owner, where all the business could be more economically handled by one concern and where the competition creates friction and suspicion, then like the rivalry between an excessive number of churches, they tend to divide the community.

Students of marketing problems seem agreed that better marketing systems will benefit the farmer through greater efficiency which will reduce the costs of the process rather than through greater profits from higher prices, and that in many lines the largest improvement is possible in the grading, packing, and shipping from the local station. This being the case, it seems obvious that the solution of the marketing problem will increasingly depend upon community action.

Better transportation and storage facilities tend to stabilize prices over large areas and to give the larger markets increasing advantage in bargaining for the farmer's products. Not that there is any concerted action upon the part of the buyers to take an undue advantage of the farmer, for there is usually keen competition between them, but inevitably the "centralization" of the buying power of the larger markets makes it possible for them to very largely determine the price, just as the large employers of labor can to a considerable extent determine the wages they will pay if labor is unorganized; for whenever there is a surplus the individual farmer must sell, while the buyer can, within limits, purchase where or from whom he chooses. Thus for the same reason that labor is forced to organize trade unions to maintain its wages and working conditions, farmers are forced to organize to market their products together and to bargain collectively for their price. This is the outstanding agricultural movement of the past decade and at the present time is so successfully challenging the established system of marketing as to command national attention. The success of such a movement depends primarily upon the solidarity and efficiency of the local units, so that collective bargaining requires the organization of the agricultural community into selling associations for its various products. The whole process encourages the economic organization of the rural community and heightens community consciousness through the effort of its members to defend their common economic interests.

The method of collective selling may vary, but in practice the coöperative selling association has proven the most satisfactory and will be discussed in the following chapter.

When the most successful farmers on the best land in Illinois lose twenty-five cents on every bushel of corn they raised, as was the case in 1921, and when it is easier for isolated farmers in Kansas to burn corn than to buy coal at the prices current, while at the same time millions of innocent women and children are starving in Europe, it seems evident that the complex system of marketing upon which modern industry and civilization has depended, is pretty well out of gear and that national and international questions must be wisely solved before it can again function. Yet in last analysis the solution of the complex problems of marketing rests not alone with international treaties, but with the farmers' selling associations of the rural communities. If we are to have a marketing system which is truly functional, which is built on the principle of the greatest service at the lowest cost, rather than on the principle now implicit in business of sufficient service to secure the maximum of profit which the traffic will bear, then it must be a coöperative system, the primary unit of which is the local coöperative association, whose success depends upon the loyalty of its members to the coöperative principle. So coöperation is a community problem.

Nor can we expect marked progress in other phases of rural life as long as the economic question is acute. It is not true that economic prosperity in agriculture will of itself ensure the higher culture of the countryside; but it is true that so long as the farmer is compelled to devote all of his strength and time to making a competence for his family, that his attention must necessarily be fixed on economic ends and that he will have neither the means nor the time for those satisfactions of life which are possible to one with some leisure. Says "A.E.": "I believe the fading hold the heavens have over the world is due to the neglect of the economic basis of spiritual life. What profound spiritual life can there be when the social order almost forces men to battle with each other for the means of existence?"[29] For weal or woe the material existence of both farmer and townman throughout the civilized world is inextricably inter-dependent. If a better economic system is to arise it must come through the general understanding of these relations by the education of all parties and by a willingness to find satisfaction in the well-being of all rather than in the largest individual profit. Unless these attitudes can be established in the local community, how can we expect to secure harmony of interests among larger groups? Loyalty to the common good must first be developed in the local community among neighbors.

In subsequent chapters we shall have occasion to consider various forces and methods for creating this spirit of community, and we shall see that whereas the higher culture of rural life awaits a better economic system, this spirit of loyalty which is essential for coöperative organizations may be developed through various forms of community activity.


[25] See Percy Wells Bidwell, "Rural Economy in New England at the Beginning of the Nineteenth Century." Trans. Comm. Acad. Arts and Sci., Vol. 20, p. 253, 1916; and E. G. Nourse, "Agricultural Economics," p. 65.

[26] See the account of Mr. A. G. Gardiner, _Manchester Guardian_, Weekly Edition, Feb. 6, 1920, quoted by Norman Angell in "The Fruits of Victory," p. 27: "Suddenly all this elaborate structure of economic life was swept away. Vienna, instead of being the vital center of fifty millions of people, finds itself a derelict city, with a province of six millions. It is cut off from its coal supplies, from its food supplies, from its factories, from everything that means existence. It is enveloped by tariff walls."

[27] "The Fruits of Victory," p. 12, New York, 1921.

[28] _Ibid._, p. 14.

[29] (George William Russell), "The National Being," p. 167.